An analyst has demoted the data analytics software maker Palantir Technologies (PLTR) believes on Thursday that its valuation is too high due to investor buzz about generative artificial intelligence. Palantir shares fell sharply.
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Brian White, an analyst at Monness, Crespi, Hardt & Co., downgraded Palantir stock to sell from neutral. He set a price target of 20 on Palantir shares.
“As a result of this unprecedented generative AI hype cycle, Palantir soared in 2023 and the stock’s upward trajectory continued into 2024, leaving the company with what we consider an extremely rich valuation,” he said in a report.
Palantir shares rise 43% in 2024
In today’s stock market, PLTR stock fell 6.1% to close at 23.01. As of the market close Wednesday, Palantir stock was up nearly 43% in 2024. But shares have retreated from a high of 27.50 on March 7.
Founded in 2003, Palantir has already leveraged its AI capabilities with government customers for intelligence gathering, counterterrorism and military purposes. Now Palantir wants to use generative AI to drive growth in the commercial market. The software maker has expanded into healthcare, energy and manufacturing.
New generative AI models process “prompts,” such as web searches, that describe what a user wants to get. Generative AI technologies create text, images, video and computer programming code on their own.
Palantir Stocks: Technical Reviews
Palantir has not announced prices for AI products.
At a customer conference on March 7, Palantir presented its Artificial Intelligence Platform, which will be rolled out in early 2023. The AI platform is gaining traction among commercial customers, Palantir said at the conference.
Palantir stock has a relative strength rating of 97 out of a best possible 99.
“In our view, Palantir is well positioned to benefit from the long-term AI trend and take advantage of volatile geopolitics,” White said. “However, revenues from government-related contracts have proven lumpy, execution is spotty and valuation is excessive.”
Additionally, Palantir stock has a composite rating of 99 out of a best possible 99, according to the IBD Stock Checkup.
IBD’s Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a composite rating of 90 or higher.
Palantir stock has an accumulation/distribution rating of B-plus. That rating analyzes price and volume changes in a stock over the past 13 trading weeks. A+ means heavy institutional purchases; E means heavy selling. Consider a C class as neutral.
Follow Reinhardt Krause on X, formerly Twitter, @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
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