Shares of Palantir Technologies (PLTR, Financials) declined sharply Friday after Goldman Sachs reiterated a neutral rating and investors questioned the pace of artificial intelligence investment, partly due to a downsized initial public offering from CoreWeave.

Palantir shares closed at $85.85, down 4.7% on the day, and slid a further 4% to $82.38 in pre-market trading Monday. The stock is still up 14.1% for the year but remains 27% below its mid-February peak.

The Denver-based software company has seen growing demand for its artificial intelligence platform, known as AIP, which helps enterprises consolidate fragmented datasets into unified systems. Its ontology framework, which contextualizes and links business entities and workflows, has drawn particular attention from commercial clients seeking to accelerate AI deployment.

Goldman Sachs analyst Gabriela Borges maintained her $80 price target in a note published Friday, emphasizing that Palantirs ontology continues to deliver quick implementation timelines and measurable returns. However, she cited concerns about broader AI investment trends as a moderating factor in her outlook.

In February, Palantir reported fourth-quarter earnings of $0.14 per share, ahead of analyst estimates. Quarterly revenue jumped 36% year-over-year to $827.5 million, bolstered by AI-related products in its commercial business. For 2025, the company forecast revenue of approximately $3.75 billion, topping consensus estimates from London Stock Exchange Group. Commercial revenue alone is projected to grow 54% year-over-year to $1.08 billion.

Still, uncertainty around U.S. defense spending has weighed on investor sentiment. Defense Secretary Peter Hegseth proposed cutting the Pentagon budget by $290 billion over five years, a move that could impact Palantir, which generated 17% of its revenue in 2024 from the U.S. Department of Defense, according to the companys annual report.

Market watchers are also monitoring CoreWeave, a Nvidia-backed AI infrastructure provider, which recently slashed its IPO price and valuation by around 35%. The company now targets a $23 billion valuation, raising concerns about near-term AI demand, especially among enterprise clients.