The Motley Fool·2025-12-08 08:51Core Viewpoint - Two leading AI stocks, Palantir Technologies and Tesla, are projected to experience significant declines in their stock prices, with potential drops of 72% and 96% respectively by 2026, according to Wall Street analysts [3][15]. Group 1: Palantir Technologies - Palantir Technologies has seen its stock price increase by nearly 2,700% since the beginning of 2023, making it one of the top-performing AI stocks [6]. - The company has a sustainable competitive advantage with its AI platforms, Gotham and Foundry, which have no significant competitors [6][7]. - Analyst Rishi Jaluria from RBC Capital predicts that Palantir's stock could fall to $50 by 2026, indicating a downside potential of up to 72% from its closing price of nearly $178 on December 4 [8]. - Palantir's price-to-sales (P/S) ratio was 117 as of December 4, which is significantly higher than historical thresholds for identifying stock market bubbles [12]. - The company faces challenges related to the scalability of its Foundry platform and its high valuation, which could make it vulnerable if an AI bubble bursts [10][13]. Group 2: Tesla - Tesla, a leading electric vehicle manufacturer, is projected to see its stock price drop by 96% to $19.05 according to analyst Gordon Johnson [18]. - The company has delivered approximately 1.8 million EVs in consecutive years and has been profitable for the last five years [16]. - Johnson highlights Tesla's structural disadvantages, including its reliance on lower-margin hardware sales compared to higher-margin software sales of competitors [20]. - Tesla's forward price-to-earnings (P/E) ratio is 200, which is significantly higher than the typical high-single-digit P/E ratios of other auto stocks, despite expected sales declines in 2025 [21]. - The company has faced criticism for unmet promises regarding its full self-driving technology and robotaxi ambitions, which could lead to a significant devaluation of its stock [22].