Retail traders say institutional investors are selling software to invest in chip stocks, which have been rallying hard.
- PLTR dropped 7% on Monday, while CRM declined 1%.
- Investors are perplexed by the sharp selloff in software leaders despite consistently strong financial results.
- Analysts expect PLTR to gain 53% in the next 12 months and CRM to rise 68%; retail view is cautious.
Shares of Palantir Technologies slid 7% on Monday and dropped further overnight, extending losses into a fourth straight day, while Salesforce closed in the red for a record 14th consecutive session, deepening fresh concerns about the health of the software sector.
Investors appear perplexed by the severity of the selloff, particularly given that many of these companies have continued to deliver strong financial results in recent quarters. The weakness echoes a rout earlier this year, when Anthropic's rollout of new AI tools — and a growing conviction that general-purpose AI could erode demand for specialized software — triggered a broad exodus from the sector.
The contrast with semiconductors could hardly be sharper. Intel and Marvell have nearly tripled in 2026, while memory chip stocks have staged an almost unprecedented run: Micron is up 324% and SanDisk has surged 858%.
SaaS In Doldrums Again
On the other hand, Palantir and Salesforce — two software stocks most analysts say are poised for a rebound are down 33% and 43% year to date, respectively.
PLTR’s stock dropped nearly $119.50, its lowest level since June 5, 2025, and is considerably below the $127 support level seen since February. CRM stock has now shed 28% in its 14-session losing streak.
The iShares Expanded Tech-Software Sector ETF (IGV), seen as a proxy for the software sector, has declined 19% this year, even as the tech-heavy Invesco QQQ Trust Series 1 (QQQ) climbed by the same degree.
Analyst, Retail View On PLTR, CRM Stocks
Still, Wall Street believes a rebound is imminent. Currently, 19 out of 32 analysts have a ‘Buy’ or higher rating on PLTR, while 11 rate it ‘Hold’ and two rate it ‘Sell’ or lower, per Koyfin. Their average price target of $182.75 implies a 53% upside from the stock’s close on Monday.
Similarly, 37 out of 49 analysts have a ‘Buy’ or higher rating on CRM, with their average price target of $251.53 implying a 68% upside.
Retail investors are slightly more cautious. In an ongoing Stocktwits poll, nearly half of the traders who voted said they would turn buyers of PLTR when it slides to under $100.
“PLTR bear flag down. I have been calling this short and it's working well,” a trader remarked.
Another trader wrote: “$CRM $INTU $ADBE $NOW $ZS Funds needed money to rotate into chip stocks. Nobody wants to miss that train. However, when that party quiets down, I’m assuming there will be some type of narrative that will say AI replacing SAAS was overblown and all of a sudden they’ll rotate back in. Never fails. Until then, diamond hands required here.”
Retail sentiment on Stocktwits was ‘neutral’ for PLTR and ‘bullish’ for CRM as of late Monday.
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