Shares in Palantir Technologies fell again on Monday extending its slide to four trading sessions. While there was no news on Palantir stock on Monday, reports over Microsoft pulling back on data center leases generally weighed on artificial intelligence stocks.
On the stock market today, Palantir stock fell 10.5% to close at 90.68.
With Monday's loss, Palantir stock has gained 20% in 2025. Further, Palantir is among AI stocks to watch.
Palantir stock suddenly pulled back in late February after hitting all-time highs, ostensibly tied to possible Department of Defense budget cuts. One concern could be Palantir's exposure to U.S. Army contracts.
PLTR stock hit its all-time intraday high of 125 on Feb. 18 and closed at 124.62.
"Shares have been volatile with the prospect of budget cuts and a potential shift in funding from the U.S. Army to the other armed services," said William Blair analyst Louis DiPalma in a report on Friday.
Microsoft Cancels Data Center Leases?
TD Cowen analyst Mike Elias, meanwhile, published a report on Friday stating that Microsoft has canceled leases with "at least two data private center operators" in the U.S., amounting to a few hundred megawatts of capacity.
On Monday, Elias updated his views in new report: "While we have seen a pullback in demand from Microsoft relative to the torrid pace of leasing seen in 2023 and (early) 2024, we are seeing a commensurate rise in demand from Oracle driven by the Stargate Project. We continue to believe that the pullback in Microsoft data center demand is related to a shift in incremental OpenAI workloads to Oracle/SoftBank as we have seen a material ramp in Oracle requirements in the last three months, at a scale we have not seen from Oracle prior."
Wall Street analysts debated the significance of Microsoft's possible data center pull back on Monday.
"Microsoft's recent actions to slow down data center development are due to the company's foresight to lease huge amounts of data center space to get ahead of peers in building infrastructure," said Jefferies analyst Jonathan Petersen in a report.
"Microsoft has a clear first-mover advantage on data center capacity given the enormous leasing in 2023 and a digestion period was inevitable."
Microsoft stock fell 1% to near 404. Shares in data center operator Digital Realty Trust were off 3.4% to 159.69.
The emergence of Chinese AI model developer DeepSeek recently raised questions over the need for massive AI infrastructure.
Palantir Stock Boomed In 2024
Also, PLTR stock ranks No. 2 on the IBD 50 roster of growth stocks.
Further, Palantir stock advanced 340% in 2024, with much of the gain coming after Donald Trump's Presidential election win.
Meanwhile, Palantir's Relative Strength Rating stands at 99 out of a best-possible 99.
Also, Palantir stock holds a Composite Rating of 99 out of a best-possible 99, according to IBD Stock Check-up. IBD's Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.
PLTR stock holds an Accumulation/Distribution Rating of B-minus. That rating analyzes price and volume changes in a stock over the past 13 weeks of trading. A+ signifies heavy institutional buying; E means heavy selling. Think of a C grade as neutral.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
