Other short-sellers have joined the fray in recent weeks. At the end of July, Palantir had a short interest of 54.7 million shares, representing around 2% of all its public stock. Short interest in the firm has increased around 2% since the prior month, according to data from MarketBeat.

But the stock has gotten far ahead of the business, and Palantir is now caught up in a broader rotation away from AI-related stocks as valuations soar. While high-growth stocks often warrant higher valuations, Palantir has stood out among them.

Palantir Technologies Inc (NASDAQ: PLTR) has pulled back rather significantly in recent weeks as investors bailed on high-flying artificial intelligence (AI) stocks due to valuation concerns. Despite the retreat,