Artificial intelligence (AI) stocks Palantir Technologies (PLTR) and Super Micro Computer (SMCI) are under scrutiny from Wall Street analysts who have set target prices that imply substantial downside in the next year. RBC Capital’s Rishi Jaluria recommends selling PLTR with a target price of $40, implying 62% downside from its current share price of $106. In contrast, Susquehanna’s Mehdi Hosseini suggests selling SMCI with a target price of $15, representing a 74% decline from the current share price of $59.
Both analysts express concerns over the companies’ valuation and competitive positioning in their respective markets. Palantir’s software is unique in its ability to operationalize AI, but consultancy Gartner has scored the company below a dozen other vendors for its data integration tools. In contrast, Super Micro Computer faces criticism from Hosseini, who argues that the company lacks a proprietary advantage and relies on contract manufacturing.
The companies have also faced regulatory issues, including non-compliance with the SEC’s reporting requirements. Super Micro Computer has not published its Form 10-K for fiscal 2024 or Forms 10-Q for the first two quarters of fiscal 2025, leaving shareholders without externally audited financial results for over a year. The company has since cut its revenue outlook by 13% for fiscal 2025 but still faces uncertainty.
Investors should exercise caution when considering PLTR and SMCI stocks, particularly if they represent a significant portion of their portfolios. While Palantir’s adjusted earnings are expected to increase at 31% annually through 2026, the current valuation appears overvalued. Similarly, Super Micro Computer’s stock may experience sharp price movements once regulatory issues are resolved.
Source: https://www.fool.com/investing/2025/02/22/2-ai-stocks-sell-before-drop-62-and-74-wall-street