Palantir Technologies (PLTR -3.66%) fell further on Tuesday, slumping as much as 6.4% and continuing the downward trajectory that began last month. As of 11:35 a.m. ET, the stock was still down 3.9%.

The catalyst that sent the artificial intelligence (AI) software and data mining specialist lower was the opinion of a Wall Street analyst.

Too far, too fast?

Palantir has been on an epic run over the past three years, gaining 575% (as of this writing), but has fallen more than 30% from its peak, as some believe the stock has simply gotten ahead of itself. Among those is Jefferies analyst Brent Thill, who reiterated his underperform (sell) rating while maintaining his price target of $60. This suggests Palantir stock could still fall another 31% compared to Monday's closing price.

The analyst attended the company's customer event, AIPCon, last week. Thill noted that he was "impressed" with Palantir's technology and the multiple case studies that illustrated a strong return on investment (ROI). Despite his seemingly bullish takeaway, the analyst suggested that much of potential growth is already baked into the stock price, calling it the "most expensive stock in our coverage." He also highlighted recent insider sales as a concern.

I'm a Palantir bull, but the analyst has a point. Even as the stock has entered correction territory -- losing 33% of its value -- it's still selling for 150 times next year's expected earnings. That makes the stock a risky proposition at this valuation.

Don't get me wrong: I believe Palantir is a best-in-class provider of cutting-edge AI solutions for business and government. That said, investors buying the stock at this point should steel themselves for a bumpy ride, understanding that Palantir could still have further to fall.