Palantir Technologies (PLTR) experienced a decline of over 4% in its stock price to $72.67 during midday trading. This drop occurred despite the recent announcement that Palantir will be added to the Nasdaq 100 before the market opens on December 23.

Analysts believe that the decline may be due to holiday profit-taking. Despite this recent decline, Palantir's stock has seen a significant surge of over 300% year-to-date, driven by its strong position in the defense sector and advancements in artificial intelligence.

While Palantir's outlook remains positive, concerns have been raised about the stock being overextended. Currently, the stock is trading over 160% above its buy point and 104% above its 200-day moving average. Analysts from Baird have cautioned against chasing the stock's gains, as its performance has significantly outpaced the S&P 500, indicating high investor expectations.