Editor's note: Any and all references to time frames longer than one trading day are for purposes of market context only, and not recommendations of any holding time frame. Daily rebalancing ETFs are not meant to be held unmonitored for long periods. If you don't have the resources, time or inclination to constantly monitor and manage your positions, leveraged and inverse ETFs are not for you.

Investing in the funds involves a high degree of risk. Unlike traditional ETFs, or even other leveraged and/or inverse ETFs, these leveraged and/or inverse single-stock ETFs track the price of a single stock rather than an index, eliminating the benefits of diversification. Leveraged and inverse ETFs pursue daily leveraged investment objectives, which means they are riskier than alternatives which do not use leverage. They seek daily goals and should not be expected to track the underlying stock’s performance over periods longer than one day. They are not suitable for all investors and should be utilized only by investors who understand leverage risk and who actively manage their investments. The Funds will lose money if the underlying stock’s performance is flat, and it is possible that the Bull Fund will lose money even if the underlying stock’s performance increases, and the Bear Fund will lose money even if the underlying stock’s performance decreases, over a period longer than a single day. Investing in the Funds is not equivalent to investing directly in PLTR.

Few companies embody the market’s enthusiasm—and its anxiety—around artificial intelligence as sharply as Palantir Technologies Inc. (Ticker: PLTR). The Denver-based software firm has long promoted itself as an indispensable partner for organizations seeking to tame sprawling datasets, marrying its Gotham and Foundry platforms with machine learning, automation, and an ontology framework that helps stitch together information into actionable insights.

That positioning made Palantir one of Wall Street’s early AI darlings in 2025, with shares surging as investors chased exposure to companies at the front lines of the generative AI boom. But like other richly valued names, Palantir has since been caught in the downdraft of the late-summer, AI-driven tech selloff, as CNN.com recently reported. PLTR is currently hanging around its 50-day moving average.*

Below is a daily chart of PLTR, as of August 28, 2025.

Source: StockCharts.com.

Candlestick charts display the high and low (the stick) and the open and close price (the body) of a security for a specific period. If the body is filled, it means the close was lower than the open. If the body is empty, it means the close was higher than the open.

The performance data quoted represents past performance. Past performance does not guarantee future results.

The reversal has left traders debating whether Palantir is poised to ride the next leg higher—or whether it’s pricey in an increasingly skeptical market.

Bullish Case: Positioned at the Core of AI Spending

For bulls, Palantir’s pitch is straightforward: it has already built the infrastructure needed for enterprises and governments to put AI to work.

• Cutting-Edge AI Software: The company’s Gotham and Foundry platforms are recognized for their ability to integrate siloed data, support automation, and provide real-time intelligence. Its ontology framework, in particular, has been cited as a differentiator that enables organizations to scale AI deployments efficiently, according to Motley Fool.

• Enterprise and Government Demand: Palantir continues to sign contracts with both corporate clients and U.S. government agencies, underscoring its appeal across sectors. Its tools are being used to streamline supply chains, detect fraud, and modernize defense capabilities—all areas where budgets for AI and data analytics remain robust, IBD reports.

• AI Spending Leverage: With many firms under pressure to demonstrate return on investment (ROI) on AI initiatives, Palantir offers a ready-made platform. If AI budgets expand, PLTR could serve as a high-beta* expression of that spending cycle.

Direxion’s Daily PLTR Bull 2X Shares (Ticker: PLTU) seeks daily investment results, before fees and expenses, of 200% of the performance of Palantir Technologies Inc. common stock.

Bearish Case: Insider Sales and Valuation Risks

Skeptics point to cracks beneath the surface of Palantir’s story.

• Valuation Stretch: Despite the recent pullback, Palantir continues to command a premium multiple relative to peers, raising questions about whether its fundamentals justify the price tag, according to Business Insider.

• Insider and Hedge Fund Selling: CEO Alex Karp recently sold more than $60 million in stock, a move that some read as a lack of confidence. At the same time, billionaire Stanley Druckenmiller pared back positions in both Nvidia and Palantir, underscoring the risk of fast-shifting institutional sentiment, Motley Fool notes.

• AI Bubble Jitters: A recent M.I.T. study found that roughly 95% of generative AI pilot programs produced little to no measurable bottom-line improvement, fueling concerns that the hype cycle is running ahead of results, according to Fortune. If companies curb spending or fail to see returns, Palantir’s growth story could be challenged.

• Regulatory Overhang: Palantir’s deep ties to government surveillance and national security continue to draw scrutiny. Privacy advocates and policymakers alike have questioned whether its data-mapping tools give too much visibility into individuals’ lives, The Conversation reports.

Direxion’s Daily PLTR Bear 1X Shares (Ticker: PLTD) seeks daily investment results, before fees and expenses, of 100% of the inverse of the performance of Palantir Technologies Inc. common stock.

The AI Pendulum Swings

The broader AI market appears to be entering what some analysts describe as a pendulum phase. On one side, private investors continue to place eye-popping valuations on firms like OpenAI and Databricks, pushing those companies to heights that rival or exceed publicly traded incumbents. On the other side, public investors have grown more cautious, spooked by studies questioning the immediate ROI of AI deployments and by heavy insider selling across the sector.

Palantir sits squarely at the intersection of these opposing forces. Its platforms remain mission-critical for organizations determined to embrace AI, but its stock has become a lightning rod for debates about valuation, hype, and execution. For traders, the upcoming quarter will be pivotal: evidence of enterprise adoption and government contract growth could restore confidence, while any stumble may reinforce the notion that AI spending still hasn’t lived up to the hype.

Either way, PLTR is likely to remain one of the most volatile proxies for the shifting psychology around AI, making it a prime candidate for traders tactically using leveraged and inverse ETFs.

*Definitions and Index Descriptions

An investor should carefully consider a Fund’s investment objective, risks, charges, and expenses before investing. A Fund’s prospectus and summary prospectus contain this and other information about the Direxion Shares. To obtain a Fund’s prospectus and summary prospectus call 866-476-7523 or visit our website at direxion.com. A Fund’s prospectus and summary prospectus should be read carefully before investing.

Direxion Shares Risks – An investment in a Fund involves risk, including the possible loss of principal. Each Fund is non-diversified and includes risks associated with a Fund concentrating its investments in a particular security, industry, sector, or geographic region which can result in increased volatility. A Fund’s investments in derivatives such as futures contracts and swaps may pose risks in addition to, and greater than, those associated with directly investing in securities or other investments, including imperfect correlations with underlying investments or the Fund’s other portfolio holdings, higher price volatility and lack of availability. As a result, the value of an investment in a Fund may change quickly and without warning.

Leverage Risk – The Bull Fund obtains investment exposure in excess of its net assets by utilizing leverage and may lose more money in market conditions that are adverse to its investment objective than a fund that does not utilize leverage. A total loss may occur in a single day. Leverage will also have the effect of magnifying any differences in the Fund’s correlation with PLTR and may increase the volatility of the Bull Fund.

Daily Correlation Risk – A number of factors may affect the Bull Fund’s ability to achieve a high degree of correlation with PLTR and therefore achieve its daily leveraged investment objective. The Bull Fund’s exposure to PLTR is impacted by PLTR’s movement. Because of this, it is unlikely that the Bull Fund will be perfectly exposed to PLTR at the end of each day. The possibility of the Bull Fund being materially over- or under-exposed to PLTR increases on days when PLTR is volatile near the close of the trading day.

Daily Inverse Correlation Risk – A number of factors may affect the Bear Fund’s ability to achieve a high degree of inverse correlation with PLTR and therefore achieve its daily inverse investment objective. The Bear Fund’s exposure to PLTR is impacted by PLTR’s movement. Because of this, it is unlikely that the Bear Fund will be perfectly exposed to PLTR at the end of each day. The possibility of the Bear Fund being materially over- or under-exposed to PLTR increases on days when PLTR is volatile near the close of the trading day.

Palantir Technologies Inc. Investing Risk – Palantir Technologies Inc. faces risks associated with: a limited number of customer accounts for a substantial portion of its revenue; the development and deployment of new technologies; reliance on or capability with third-party products and services; the ability to hire, retain, train and motivate qualified personnel and senior management; sales and operations; intense competition; among other risks.

Information Technology Sector Risk — The value of stocks of information technology companies and companies that rely heavily on technology is particularly vulnerable to rapid changes in technology product cycles, rapid product obsolescence, government regulation, and competition, both domestically and internationally, including competition from competitors with lower production cost.

Software Industry Risk — Companies that develop and implement computer software can face risks associated with intense competition, especially in new product development, deployment and delivery, product obsolescence or saturation, cybersecurity risks as well as changes in regulation especially with respect to consumer or customer data, and risks associated with technology.

Additional risks of each Fund include Effects of Compounding and Market Volatility Risk, Derivatives Risk, Counterparty Risk, Rebalancing Risk, Intra-Day Investment Risk, Industry Concentration Risk, Market Risk, Indirect Investment Risk, and Cash Transaction Risk. Additionally, for the Direxion Daily PLTR Bear 1X Shares, Shorting or Inverse Risk. Please see the summary and full prospectuses for a more complete description of these and other risks of a Fund.
ALPS Distributors, Inc.