The only thing that’s harder than getting to the top, is staying there.
Palantir Technologies (NYSE: PLTR), once the crown jewel of retail investors and the best-performing stock of 2024 with a jaw-dropping 340% gain, is now facing a steep downturn. After soaring at the start of 2025 on artificial intelligence hype, the stock has plunged for two consecutive days — falling 5.22% Thursday, on top of a 10% drop on Wednesday.
Meanwhile, Super Micro Computer (NYSE: SMCI), a lesser-known AI hardware firm, has quietly overtaken Palantir as the best-performing stock on the S&P 500 this year, despite its own turbulent history.
Related: The 10 Best Performing Stocks in the Last 25 Years
What’s Behind Palantir’s Sudden Sell-Off?
Palantir, which specializes in big data analytics and AI-driven software solutions, has historically relied on lucrative U.S. government contracts, particularly in the defense sector. However, reports indicate that Secretary of Defense Pete Hagseth has proposed an 8% annual reduction in defense spending over the next five years. With Palantir’s government business accounting for nearly 50% of its total revenue, investors fear that these budget cuts could lead to contract reductions, threatening the company’s growth trajectory.
Adding to concerns, Palantir disclosed in a recent regulatory filing that CEO Alex Karp has been granted the option to sell up to 10 million shares of the company over the next six months. While executives selling shares isn’t always a red flag, it has fueled uncertainty about the company’s valuation and long-term potential.
Palantir’s boom-and-bust cycle highlights the risks of a retail investor-heavy shareholder base. Unlike institutional investors who take long-term positions, retail traders often drive rapid price swings based on sentiment and momentum. When the narrative shifts, they can exit just as quickly as they entered.
Notably, Wall Street analysts remain lukewarm on the stock — the median rating from The Wall Street Journal remains a neutral “hold.”
Related: Talking AI With Manuj Aggarwal
Super Micro Computer: From Underdog to Market Leader
While Palantir falters, Super Micro Computer has surged into the spotlight. The company, which manufactures high-performance AI servers and hardware, has climbed over 97% year-to-date, surpassing Palantir’s 41% gain in 2025.
Super Micro’s rise is remarkable considering its history. Founded in 1993, the company has long been a key supplier of high-performance computing infrastructure, but it wasn’t until the AI revolution gained momentum that it became a major player on Wall Street’s radar. Last year, the company struggled with supply chain issues and lackluster growth, finishing 2024 with just an 8% stock increase. Adding to its troubles, Super Micro faces a looming Nasdaq delisting risk due to delays in filing its required 10-K financial report with the SEC.
Despite these challenges, investors have been bullish on Super Micro because of its role in powering AI-driven computing. The company recently forecasted $40 billion in revenue for its fiscal 2026 — far exceeding analyst expectations. The explosion of AI data centers, fueled by companies like Nvidia, OpenAI, and Microsoft, has led to soaring demand for the kind of high-powered server systems that Super Micro produces.
Will Super Micro Hold the Throne?
Super Micro’s rise highlights how quickly fortunes can change in the stock market. Just last year, the company was struggling for investor attention. Now, it’s one of the most closely watched AI infrastructure plays. However, it still faces significant hurdles, particularly its delayed SEC filings. If the company fails to submit its 10-K in time, it could be delisted from the Nasdaq, potentially triggering a stock price collapse.
For Palantir, the future remains uncertain. While AI-driven demand has helped it pivot toward commercial business growth, its reliance on government contracts remains a double-edged sword. If defense budget cuts materialize, Palantir may need to accelerate its push into private-sector AI applications to maintain its valuation.
The takeaway? The market can turn on a dime. Today’s high-flying stock can quickly become tomorrow’s cautionary tale. Investors may want to tread carefully, as the battle for 2025’s best-performing stock is far from over.
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Bautis Financial LLC is a registered investment advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.