Palantir and Super Micro Comp (SMCI) Stock Lead Nasdaq Drop as AI Bubble Deflates
Today Palantir shares have are 3% lower, while Super Micro Computer Stock has fallen more than 6% as AI bubble fades, downgrades.
AI Stocks Struggle as Market Sentiment Shifts
The once-dominant AI rally has lost momentum in early 2025, with major tech stocks struggling to maintain their gains. Companies like Palantir, Tesla, Google, and Nvidia all saw sharp declines today, while Super Micro Computer (SMCI) has dropped nearly 15% this week alone. The Nasdaq Composite is also under pressure, down 0.53% at the end of the US session as investor enthusiasm for AI-related stocks continues to fade.
Super Micro (SMCI) Stock Hit by Goldman Sachs Downgrade
Super Micro’s stock decline isn’t just about fading AI hype as investors understood they ran ahead of themselves—it was also dragged lower by a bearish rating from Goldman Sachs. The investment bank downgraded SMCI from “neutral” to “sell,” citing an unfavorable risk/reward balance and setting a price target of just $32. Since Goldman Sachs carries significant influence in the market, the downgrade intensified selling pressure, pushing SMCI below $35 today—a 6.26% drop. If the stock breaks below this March low, the next key support level sits at $26, the February low.
Palantir (PLTR) Faces Heavy Volatility Amid Pentagon Budget Cuts
Palantir stock has been highly volatile in 2025, surging 60% early in the year before tumbling 40% from its February peak of $125. The latest plunge came after Donald Trump announced an 8% cut to the Pentagon’s budget, sparking concerns over reduced federal spending. Since Palantir relies heavily on government contracts, investors quickly reassessed the company’s growth prospects. Despite an expected 30% year-over-year increase in government revenue to $1.2 billion for 2024, the stock closed at $74.57 today, reflecting ongoing uncertainty.
AI Boom Losing Steam?
While Palantir remains a key player in the AI sector, its stock price has surged well ahead of its business fundamentals. With the broader AI bubble showing signs of deflation, investors may need to temper expectations and reassess their risk exposure before chasing further rallies in AI-related stocks.
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