Palantir Technologies led a retreat in high-valuation artificial-intelligence stocks, sinking 9.4% on Tuesday and extending its losing streak to five sessions. The slide has wiped about 16.5% from the software group’s market value since 13 August, marking its sharpest five-day decline since March. The sell-off followed a bearish report from short seller Citron Research that set a $40 price target on Palantir, alongside fresh doubts about the near-term payoff from AI. A study released by the Massachusetts Institute of Technology found that 95% of companies are seeing no measurable return from generative-AI investments, while OpenAI chief executive Sam Altman cautioned last week that investors could be caught in an AI bubble. Palantir’s tumble coincided with a broader pullback in the sector. Nvidia dropped 3.5%, Arm Holdings fell 5% and Meta Platforms lost 1.8%, helping to drag the Nasdaq Composite down 1.5% to 21,307.84—its steepest one-day drop since 1 August. The S&P 500 slipped 0.6% to 6,411.15 as investors rotated into defensive industries. Despite the correction, Palantir remains the S&P 500’s best-performing constituent in 2025, still more than doubling year to date after its first $1 billion revenue quarter earlier this month. Analysts say the recent pullback may test whether the market’s enthusiasm for generative-AI leaders can be sustained at current valuations.