Despite a 17% drop from highs, Palantir is still the top-performing stock in the S&P 500 this year.

While there doesn't appear to have been any major business news behind Palantir's valuation contraction today, the broader market saw moderate selling pressures that seem to have impacted the stock. The stock is now down 10% over the last week of trading and 16% from its all-time high.

While the operational momentum is clearly solid, investors should pay closer attention to the risks. History shows Palantir stock can fall hard as sentiment shifts.