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Palantir lost about $40 billion in value as CrowdStrike and Okta fell roughly 10% on Nov. 5, when investors sold software's biggest AI winners.
- Palantir fell 9.7% to $154.99, wiping out about $40 billion, its worst session since February.
- CrowdStrike dropped 9.9% and Okta 10.4%, with Palo Alto Networks and Cloudflare also sharply lower.
- The S&P 500 lost 4.36% and the Nasdaq Composite 5.52% as the VIX jumped nearly 70%.
Lead
Palantir Technologies (PLTR) closed down 9.7% at $154.99 on Thursday, Nov. 5, a $16.71 drop that erased about $40 billion of market value. CrowdStrike (CRWD) fell 9.9% and Okta (OKTA) 10.4%. The declines came in a broad rout across ai stocks that took the Nasdaq Composite into correction territory. Investors sold the software names that had gained the most this year and largely left the year's laggards alone.What Happened to Palantir, CrowdStrike and Okta?
The three stocks fell about 10% each in a single session. Palantir's drop was its largest since February and extended a slide to eight straight losing sessions. The stock now trades roughly a quarter below its Oct. 9 record.
The damage reached across security and infrastructure software. Palo Alto Networks (PANW) lost 9.6%, Rubrik (RBRK) 11.1%, Cloudflare (NET) 8.3% and Oracle (ORCL) 6.9%. Several of these names had posted outsized gains before the sell-off. CrowdStrike had roughly doubled this year, Okta had more than doubled, and Palo Alto was up nearly 90%.
Why Did Software's AI Winners Sell Off?
The sell-off followed the Nov. 3 midterm elections, in which Democrats won control of both chambers of Congress. Campaigns in both parties had targeted AI data centers, and investors moved to reduce exposure to companies tied to the AI build-out. Software that trades alongside chip and infrastructure demand was caught in the same selling.
Positioning also played a role. After a year of large gains, funds had strong incentives to lock in profits before year-end, and the stocks with the biggest returns were the easiest to sell. The move was a rotation out of winners rather than a reassessment of any single company's fundamentals.
How Did Palantir's Earnings Fit In?
Palantir's slide began before Thursday. The company reported third-quarter results on Nov. 2, with revenue up 96% from a year earlier to about $2.31 billion and adjusted earnings of $0.44 a share against $0.41 expected. It also raised its full-year outlook, and U.S. commercial revenue exceeded government revenue for the first time.
The detail that unsettled investors was in bookings. U.S. commercial total contract value reached $1.5 billion, up 11% from a year earlier, a sharp slowdown from $2.1 billion and 153% growth in the second quarter. The company attributed part of the decline to shorter contract durations. The shares slipped on results day and kept falling as the broader sell-off arrived, leaving the stock with a premium valuation and a softer growth signal.
Which Software Stocks Held Up?
Software companies that had not led the rally were barely affected. Salesforce (CRM) fell 2.1%, Adobe (ADBE) 0.8% and Intuit (INTU) 0.5%. Adobe and ServiceNow are each down about 30% this year, and Intuit is down nearly 50%.
AppLovin (APP) was the main exception, jumping about 31% after strong quarterly results and an upbeat outlook. The split showed that selling was driven by prior performance and AI exposure, not by weakness across the software sector as a whole.Market Reaction
The software rout was part of a wider sell-off. The S&P 500 fell 4.36% to 7,354, and the Nasdaq Composite lost 5.52% to 24,315, entering a correction. The Dow Jones Industrial Average dropped 1,833 points, or 3.44%, to 51,523. The Nasdaq-100 fell about 6.3%, erasing roughly $2.3 trillion in market value. The VIX, Wall Street's gauge of expected volatility, rose 69.66%.
Semiconductors fell harder than software. Nvidia (NVDA) lost 9.2%, Micron (MU) about 12% and AMD (AMD) about 15%. The chip declines point to the same trade: investors cutting exposure to the AI build-out across hardware and software.
What Comes Next for AI Stocks?
Three questions now shape the near-term outlook. The first is policy: whether the new Congress moves from campaign rhetoric to legislation or permitting limits on data center construction, which would affect demand for the infrastructure that AI software relies on. The second is earnings: results from the remaining AI-exposed software companies will test whether growth, like Palantir's commercial bookings, can hold up against high valuations. The third is positioning: after a 70% jump in the VIX in one session, volatility is likely to keep moving prices of the year's biggest winners.
Outlook
Thursday's session was a sell-off in what had worked best this year, driven by the election result, concern over data center policy and year-end profit-taking. Palantir, CrowdStrike and Okta each fell about 10%, while less AI-exposed software names held up. Whether the move deepens or fades will depend on how quickly policy intentions in Washington become concrete and on the next round of corporate earnings.
Mentioned tickers: PLTR, CRWD, OKTA, PANW, NET, RBRK, ORCL, CRM, ADBE, INTU, APP, NVDA, MU, AMD
