Palantir stock sinks below a key technical level, extending a steep two-day drop. History suggests buying the dip could pay off—big.

Palantir ( PLTR -5.81%) stock is getting hit with another substantial round of sell-offs Wednesday on the heels of a big valuation pullback in yesterday's trading. The artificial intelligence ( AI) leader's share price was down 7% as of 11:15 a.m. ET and had been down as much as 9.8% earlier in trading.

Tech stocks were under pressure this week as Wall Street’s AI enthusiasm slowed and investors adjusted portfolios after a strong summer rally.

Palantir shares have fallen nearly 20% over the past two days following a large post Q2 earnings rally earlier this month. Learn more on PLTR stock here.

Palantir stock (NASDAQ: PLTR) took a sharp hit on Wednesday, falling about 7% as high-valuation tech stocks pulled back across the market. The AI and data analytics company had hit record highs earlier in the month,

Palantir Technologies was the worst performer in the S&P 500 on Tuesday, with the stock continuing to surrender gains following a blowout earnings report earlier this month.

U.S. technology shares are showing signs of vulnerability after a massive run, which has some investors pointing to overdone AI-driven gains while funds have taken steps to position away from the high-flying sector.

Andrew Left argues that investors have overhyped Palantir stock, and its valuation pales in comparison to a true AI leader like OpenAI.

Short-seller Citron targets PLTR again, using a Databricks comparison to argue the stock is overvalued after its report sent shares falling.