2 Hot AI Stocks to Sell Before They Fall 25%, According to Wall Street Analysts

Group 1: AI Stock Market Overview - The popularity of AI stocks has surged, but investors should not overlook valuation as it is crucial for long-term success [1] - Many AI stocks have experienced significant price increases, with some rising by three-figure percentages in the past year, indicating potential risks for investors [1] Group 2: Palantir Technologies (PLTR) - Palantir has shown remarkable growth, with total revenue increasing by 39% year-over-year to $884 million, and U.S. commercial revenue growing by 71% [5][6] - The stock has appreciated nearly 400% in the last 12 months, leading to a market capitalization of $317 billion [6] - Wall Street analysts have set a cautious price target of $107.90, which is 25% below the current trading price of around $135, suggesting potential overvaluation [7] - Palantir's price-to-sales ratio stands at 107, indicating unsustainable growth expectations [7] - Even in an optimistic scenario where revenue could grow tenfold in the next decade, the projected annual earnings would still suggest overvaluation with a price-to-earnings ratio above 30 [8][9] Group 3: BigBear.ai (BBAI) - BigBear.ai has seen a staggering 441% increase in stock price over the past year, but analysts have a consensus price target of $5.83, below its current price of $7.75 [11] - The company has a price-to-sales ratio of 12, which is more reasonable than Palantir's, but its revenue growth is significantly slower, with only a 5% increase to $34.8 million last quarter [12] - BigBear.ai's gross margin is only 21.3%, well below the typical software company margin of over 50%, and it has reported negative free cash flow of $42 million over the last 12 months [12][13] - The company's slow growth and weak financials suggest it is not a leader in the AI space, making it a candidate for selling after its recent price surge [13]