Palantir Technologies (NYSE:PLTR) is yet another high-profile tech stock boosted by the recent spike in popularity of any stock with exposure to the artificial intelligence mega-trend. PLTR is up by more than 129% since the start of 2023.

Most of these gains have arrived since early May. During this time frame, shares in the AI and data analytics software provider have zoomed from around $7.50 per share to around $14.50 per share today.

However, while still up massively in a little under two months, Palantir’s turbo-charged rally has lost momentum. Worse yet, in more recent trading days, PLTR has pulled back.

There are many reasons for this, not just mere profit-taking from traders. So, if you’ve yet to buy this stock, and are interested in adding a position, what’s the best move? Let’s take a closer look and find out.

PLTR Stock Rally Is Both Hype and Substance

Clearly, “the trend was your friend” with Palantir shares during May, and during the first half of June. In hindsight, it’s not surprising that this stock made such big moves in so short a span of time. As you may recall, this stock has in the past similarly-epic moves.

For instance, during the “meme stock” wave of 2021. During the height of “meme stock mania,” PLTR stock became very popular among retail speculators, who bought primarily to piggyback on sentiment, rather than due to the stock’s underlying fundamentals.

Admittedly, Palantir’s latest epic move higher has been driven in large part by hype. However, the market wasn’t completely wrong in re-rating this stock. The rise of AI bodes well for the company’s future prospects. At least, based on some recent announcements from the AI software firm.

There are two such examples. First, the announced expansion of the company’s partnership with technical services provider Jacobs Solutions (NYSE:J).

Second, Palantir’s winning of a large contract (up to $463 million) from the U.S. Department of Defense. Both developments are arguably signs that Palantir is already starting to capitalize on this trend, and that growth re-acceleration is taking shape.

Not Necessarily an ‘Avoid’ Situation

There is substance alongside the hype surrounding PLTR stock, but unfortunately, the hype is simmering down. Like I mentioned above, this is not just due to speculators demonstrating a short-sighted “take the money and run” sort of mentality.

Following the stock’s massive run-up in price, one analyst firm is making the argument that shares have moved up too far, too fast. As InvestorPlace’s William White reported earlier this week, analysts at Raymond James have changed their rating on PLTR from “strong buy” to “outperform.”

The latest remarks from the Federal Reserve have the market thinking twice about moving back to a “risk on” mindset over the past few weeks.

Yet while PLTR is once again experiencing weakness, and could continue to do so in the immediate term, I wouldn’t call this an “avoid” situation.

That is, if you are approaching this stock as an opportunity to make a long-term wager on the mass adoption of AI and machine learning. If you’re buying for this reason, the time to make your move may be just around the corner.

Bottom Line: The Best Move Today

It may be awhile before PLTR stock takes off again. I’m talking about both the immediate-term, and over a medium-length time horizon (the next few months).

Those buying on momentum risk bad timing. Instead of buying at $14.50 per share, and flipping at $20 per share, short-term traders could end up taking a big loss.

Even those less “fast money” with their investing could end up scared out of this stock far too early. Uncertainty over future growth, as well as valuation concerns, could get the better of you.

However, if you believe that mass adoption of AI will ultimately bring the company back into prior levels of revenue growth, with a big increase in profitability, consider the next big plunge for PLTR stock to be a possible buying opportunity.

PLTR stock earns a B rating in Portfolio Grader.