Shares of Palantir TechnologiesPalantir Technologies fell 7% on Monday and continued to decline in overnight trading, marking a fourth consecutive day of losses. Meanwhile, SalesforceSalesforce ended lower for a record 14th straight trading session, raising fresh concerns about weakness across the software sector.
The recent selloff has surprised many investors, particularly because several major software companies have continued to report solid earnings and strong business performance.
AI Concerns Weigh on Software Stocks
The weakness resembles an earlier selloff that followed the introduction of new artificial intelligence tools by AnthropicAnthropic. Investors increasingly worry that powerful general-purpose AI systems could reduce demand for certain specialized software applications.
This shift in sentiment has pressured software valuations, especially among cloud and SaaS companies.
Semiconductors Continue to Outperform
The struggles in software stand in sharp contrast to the semiconductor sector, which has experienced substantial gains in 2026.
- IntelIntel and Marvell TechnologyMarvell Technology have nearly tripled this year.
- Micron TechnologyMicron Technology has surged approximately 324%.
- SanDiskSanDisk has risen roughly 858%.
Investor enthusiasm has increasingly shifted toward companies that provide the hardware and infrastructure powering artificial intelligence.
Palantir and Salesforce Under Pressure
Palantir shares have fallen approximately 33% year to date, while Salesforce has declined around 43%.
Palantir recently dropped to roughly $119.50, its lowest level since early June, falling below the key $127 support level that had held since February.
Salesforce shares have lost about 28% during their 14-session losing streak.
The broader software sector has also struggled. The iShares Expanded Tech-Software Sector ETFiShares Expanded Tech-Software Sector ETF has declined about 19% this year, while the Invesco QQQ Trust ETFInvesco QQQ Trust has gained a similar amount.
Analysts Remain Optimistic
Despite the recent decline, Wall Street analysts continue to maintain a positive outlook.
For Palantir:
- 19 of 32 analysts rate the stock as Buy or stronger.
- 11 analysts recommend Hold.
- 2 analysts maintain Sell ratings.
- The average price target stands at approximately $182.75, implying significant upside from recent levels.
For Salesforce:
- 37 of 49 analysts carry Buy ratings.
- The average price target is roughly $251.53, suggesting substantial potential gains.
Retail Investors Wait for Lower Levels
Retail sentiment appears somewhat more cautious. Many individual investors indicate they would become buyers of Palantir only if the stock falls below the $100 level.
Outlook
The recent weakness highlights a growing divide within the technology sector. Investors have increasingly favored AI infrastructure companies, semiconductor manufacturers, and data-center suppliers, while software firms face questions about how generative AI could reshape their business models.
Whether software stocks recover may depend on their ability to demonstrate that AI becomes a growth driver rather than a competitive threat. For now, many analysts believe the current selloff may have created attractive valuations, but investor confidence has yet to fully return.
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