Palantir Technologies (PLTR) stock experienced a significant decline, falling 12.5% in the first week of January 2026, with a 5.83% drop on Friday alone. This sell-off, which has reduced its market capitalization to approximately $382 billion, follows a strong rally in late 2025. Analysts attribute the volatility to a "valuation reckoning," citing Palantir's high P/E ratio of 389 and forward P/E of 190. Investors are awaiting the February 2 earnings report, with high expectations for CEO Alex Karp to demonstrate sustainable profits from the AI revolution.