Is It Time to Trim Your Positions in These 2 AI Stocks?

Group 1: Market Overview - The AI trend is driving major indices higher, raising concerns about overextension amid record-high valuations, prompting some investors to consider locking in gains on high-flying stocks [1] - The top-performing sectors this year are tech and communication services, with gains of approximately 17% and 21% respectively, both heavily leveraged to AI [1] Group 2: Palantir Technologies - Palantir Technologies has a concerning trailing P/E ratio of 531 and a forward P/E of about 200, indicating elevated valuations [2] - The stock experienced an 18% loss during a tech selloff in early August but has since recovered nearly 12% [3] - Palantir's federal contracts are expected to support stock performance, but the company's debt has increased significantly, with total liabilities rising from $819 million in 2022 to $1.25 billion in 2024, a 52% increase [8] - Cash flow for Palantir fell 105% from positive $1.33 billion in Q4 2024 to negative $64 million in Q2 2025, raising concerns about financial health [9] - Institutional ownership has decreased to 46%, with outflows of $29 billion over the past 12 months exceeding inflows of $13.6 billion [10] Group 3: Oracle Corporation - Oracle has a market cap of $820.38 billion and is leveraging its cloud infrastructure and enterprise software for AI applications [12] - The stock is experiencing a P/E correction, with a TTM multiple of 70.3 improving to a forward P/E of 45.44 [13] - Earnings have slowed by almost 15% between the past two quarters, from $1.22 per share to $1.04 per share, alongside a negative investing cash flow of -$8.7 billion in Q1 2026 [14] - Total liabilities for Oracle increased from $109.3 billion in 2022 to $168.4 billion in 2025, a 54% rise [16]