Palantir Technologies stock was falling early Thursday after tumbling 10% late in the previous session as investors grappled with several reasons to suddenly worry about the red-hot artificial-intelligence stock.

After a 10% drop Wednesday, the stock pointed 5.5% lower at $109.48 in morning trading Thursday. A couple of factors were weighing on the data-analytics company.

Firstly, CEO Alex Karp adopted a new plan to sell up to 9.975 million shares, through Sept. 12 this year—worth close to $1.2 billion based on the stock’s Wednesday closing price.

Karp canceled an existing plan adopted in Dec. 2023 for sales of up to 48.9 million shares, though it isn’t clear how much of the previous plan he completed. He sold a total of 40.7 million Palantir shares in 2024, according to Barron’s calculations.

Another blow came in the form of potential defense budget cuts. Defense Secretary Pete Hegseth has directed the military to identify $50 billion in programs that could be cut next year. The data-analytics company has several contracts with the government department for use of its AI technology.

Earlier this week, Barron’s argued it was a good time to sell  Palantir stock, which is up almost nineteen-fold since 2022. However, some bulls are still backing the shares.

“In our view Palantir’s unique software approach will enable the company to gain MORE IT budget dollars at the Pentagon…not less despite these initial knee jerk reactions from the Street,” wrote Wedbush analyst Daniel Ives in a research note.

Ives reiterated an Outperform rating and $120 target price on Palantir stock.

The stock is still the second-best performer in the S&P 500 this year, even after its 10% slump Wednesday—up 48% in 2025 and 379% over the past year. The shares trade at an eye-watering 202 times future earnings.