Palantir Technologies (PLTR) has officially entered bear market territory, with its stock price falling more than 20% from its recent all-time high of $84.80. This sharp decline comes as the company faces increasing skepticism from top analysts, including a recent reduction in its stock position by Cathie Wood’s Ark Invest and a reaffirmed “Sell” rating from Deutsche Bank.
While Deutsche Bank raised its price target for Palantir from $26 to $35, the new target still reflects a significant downside of nearly 50% from its current levels. The bank’s cautious stance stems from concerns surrounding the broader software sector outlook, especially in the context of slow adoption of generative AI and potential challenges in capital expenditures. Brad Zelnick, Deutsche Bank’s five-star analyst, has seen a success rate of 68% in his stock ratings, with an average return of 12.2% per rating, reinforcing the weight of his analysis.
Adding to the negative sentiment, Morgan Stanley initiated coverage on Palantir this week with a “Sell” rating and a price target of $60. The firm believes that Palantir’s stock, which has surged more than 350% over the past year, is overhyped due to AI-driven speculation. Although Morgan Stanley acknowledges some positive trends for Palantir, it doubts the stock can sustain its valuation without significant earnings upgrades.
With two major investment firms voicing caution and highlighting the AI-related hype that has boosted Palantir’s stock, investors are left wondering whether the company’s future growth potential justifies its lofty valuation. Palantir’s connection to the AI boom may not be enough to secure long-term gains, especially if its earnings growth fails to meet the market’s high expectations.
As the debate over Palantir’s future intensifies, the question remains: is Palantir a stock worth holding, or is it time to sell?
