Wall Street analysts are predicting significant declines for two technology stocks: Palantir Technologies (PLTR) and Super Micro Computer (SMCI). Despite their strong growth over the past two years, most analysts believe that the stocks are overvalued.
Palantir’s stock has advanced 1,110% in the last two years, but Wall Street estimates a 52% decline to $39 per share. Deutsche Bank analyst Brad Zelnick predicts a 68% decline to $26 per share.
Super Micro Computer’s stock has soared 305% over the past two years, but analysts think it is too expensive. The median target price of $28 per share implies a 15% decline to $33 per share. Susquehanna analyst Mehdi Hosseini predicts a 55% decline to $15 per share.
The main reason for these declines is valuation. Palantir’s current P/E ratio of 225 is very expensive, and its earnings are expected to increase only 31% over the next four quarters.
Both companies face challenges, including accounting scandals and regulatory issues. Super Micro Computer has been accused of accounting manipulation, and it is under investigation by the Justice Department. However, these issues may be resolved in the near future, which could lead to a significant rebound in the stock price.
In contrast, Palantir’s valuation is seen as a major concern by analysts. The company’s earnings are expected to increase only 31% over the next four quarters, and its current P/E ratio of 225 is very expensive.
Investors should exercise caution when considering these stocks. While they have potential, the risks associated with their valuations and challenges outweigh their benefits at this time. It may be wise to avoid them until they trade at more reasonable prices.
Source: https://finance.yahoo.com/news/2-popular-ai-stocks-sell-090500306.html