Wall Street says buy one thing and sell another

• In 2025, shares of Palantir rose 135%, and shares of Sandisk rose 559%, as artificial intelligence trading continued to drive the market.

• Palantir is a leader in artificial intelligence and machine learning platforms, but it is also one of the most expensive software stocks in history.

• Sandisk is a major beneficiary of the flash memory shortage created by the buildout of artificial intelligence infrastructure, but its share is pricey.

• 10 stocks we like better than Palantir Technologies ›

The S&P500 (SNPINDEX: ^GSPC) rose 16% last year as artificial intelligence trading continued to drive the market. Palantir Technologies (NASDAQ:PLTR) return of 135%, the ninth best performance in the index. And Sandisk (NASDAQ: SNDK) returned 559%, the best performance in the index.

Interestingly, while artificial intelligence will undoubtedly be a major investment theme in 2026, Wall Street expects shares of Palantir and Sandisk to move in opposite directions, with one rising and the other falling.

• Among 29 analysts, Palantir has an average price target of $200 per share. That implies an upside of 17% from the current share price of $171.

• Of the 24 analysts, Sandisk has an average price target of $317 per share. That implies a 23% downside from the current share price of $414.

The consensus estimates mentioned above imply that investors should buy Palantir and sell Sandisk. Here are the important details.

Palantir builds data analytics and artificial intelligence (AI) platforms for clients in the public and private sectors. The key differentiator is ontology-based software, meaning the products are built around a decision-making framework that is made more effective over time by machine learning (ML) models. Use cases range from retail demand forecasting and supply chain management to hospital resource allocation and battlefield analytics.

By 2024, Forrester research ranked Palantir as the best AI/ML platform in terms of current capabilities and growth strategy, scoring it above comparable products from Alphabet, AmazonAnd Microsoft. The analysts noted, “Palantir is quietly becoming one of the biggest players in this market.” And in 2025, Forrester recognized Palantir as a leader in AI decision platforms.

The problem with Palantir is the valuation. Shares currently trade at 117 times sales, making it several times the most expensive S&P 500 company. In fact, Palantir could fall as much as 65%, and it would still be the most expensive stock in the index. Very few software companies have ever achieved a price-to-sales ratio above 100, and none have been able to maintain such a rich valuation indefinitely.

What does that mean for investors? Palantir’s shares may continue to rise in the coming months, as Wall Street expects, but the risk-reward profile is tilted toward risk. That means the stock could fall sharply for any number of reasons, including reasons that aren’t specific to the company, such as those related to economic data. I think investors should avoid the stock, or at least keep their positions very small.

Sandisk designs and manufactures data storage solutions based on NAND flash technology. The company achieves cost efficiency and supply chain security through a joint venture with Kioxia, a Japanese flash manufacturer with which it shares research and development (R&D) costs and capital expenditures associated with process technology development and memory wafer production.

Sandisk is the fifth-largest supplier of NAND flash technologies, but the company has gained a percentage point of market share in the first half of 2025, and that momentum is likely to continue. Two hyperscalers recently started testing their solid-state drives (SSDs), while a third hyperscaler and major OEMs (Original Equipment Manufacturers) plan to start testing their SSDs this year.

Sandisk reported financial results for the first quarter of fiscal 2026 (ending October 2025) that beat estimates on the top and bottom lines. Revenue increased 23% to $2.3 billion, driven by strong revenue growth in the data center and edge (personal computers and mobile devices) segments. Still, non-GAAP (generally accepted accounting principles) earnings fell 33% to $1.22 per diluted share.

Importantly, management expects non-GAAP earnings to nearly triple sequentially in the second quarter. The construction of artificial intelligence data centers – which require fast and energy-efficient flash storage – has led to an unprecedented shortage of memory supply (including but not limited to NAND flash), causing prices to rise significantly.

Wall Street expects Sandisk’s adjusted earnings to rise 79% annually through fiscal 2029. That makes the current valuation of 170 times earnings very expensive, especially because Wall Street may be overestimating future earnings. Demand for memory chips is notoriously cyclical JPMorgan Analysts see the limited supply as a sign that the current cycle is nearing its peak.

According to Grand View Research, NAND flash memory sales are expected to grow 14% annually through 2030. That suggests much slower earnings growth than what Wall Street is forecasting, in which case the market would likely offer Sandisk a lower price-to-earnings ratio. I think the stock is too hot to touch: it’s already up 74% in January, after rising 559% in 2025. Shareholders with large positions should consider trimming.

Consider the following before purchasing shares in Palantir Technologies:

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JPMorgan Chase is an advertising partner of Motley Fool Money. Trevor Jennewine has positions in Amazon and Palantir Technologies. The Motley Fool holds positions in and recommends Alphabet, Amazon, JPMorgan Chase, Microsoft, and Palantir Technologies. The Motley Fool recommends the following options: long January 2026 $395 calls to Microsoft and short January 2026 $405 calls to Microsoft. The Motley Fool has a disclosure policy.

Palantir Stock vs. Sandisk Stock: Wall Street Says Buy One and Sell the Other was originally published by The Motley Fool