Palantir and CoreWeave have delivered monster returns this year, but certain Wall Street analysts anticipate substantial losses in the coming months.Palantir Technologies (PLTR -2.04%) shares have gained 105% this year, while CoreWeave (CRWV 1.84%) shares have advanced 115%. Yet the Wall Street analysts listed have sell ratings on the stocks, and their target prices imply substantial losses for shareholders:Brent Thill at Jefferies has set Palantir with a 12-month target price of $60 per share. That implies ...

Group 1: Palantir Technologies - Palantir Technologies is positioned to benefit from the transformative potential of artificial intelligence, with an implied upside of 184% from its current market value of $352 billion [4][9] - The company reported a 39% increase in revenue to $884 million, marking the seventh consecutive quarter of acceleration, driven by strong demand from U.S. commercial and government customers [6] - Non-GAAP earnings rose 62% to $0.13 per diluted share, and management raised full-year guidance, forecasting a 36% revenue increase in 2025 [6] - Palantir's unique ontology-based software operationalizes AI more effectively than competitors, creating a feedback loop that enhances decision-making and insights over time [5] - Despite its strong growth, Palantir trades at a high valuation of 325 times adjusted earnings, which raises concerns about its future performance [7] Group 2: AppLovin - AppLovin has an implied upside of 100%, with a 12-month bull-case target price of $700 per share, up from its current price of $350 [8][9] - The company reported a 40% revenue surge to $1.4 billion, driven by strong advertising segment performance, despite a decline in mobile games sales [11] - GAAP earnings increased 149% to $1.67 per diluted share, with guidance for 69% advertising sales growth in the second quarter [11] - AppLovin differentiates itself with a "best-in-class machine learning ad engine," which enhances its targeting capabilities through a network effect [10] - The company is testing a self-service platform to provide brands with greater control, which is expected to unlock significant opportunities [12] - Wall Street anticipates AppLovin's earnings to grow at 55% annually through 2026, making its current valuation of 64 times earnings appear reasonable [12]

Core Insights - Palantir Technologies has significantly benefited from the AI boom, achieving a 340% gain last year and a 66% gain this year, making it one of the top performers in the S&P 500 [1] - The company is popular among retail investors, but concerns about its valuation have emerged after substantial returns over the past two years [2] - Analyst Dan Ives predicts Palantir could reach a market value of $1 trillion in two to three years, suggesting a 245% upside from its current valuation of $290 billion [2] Company Overview - Palantir is a leader in decision-intelligence software and AI platforms, providing data analytics software that integrates information for improved decision-making [5] - The company offers an AI platform called AIP, which enhances its data analytics capabilities with natural language processing, allowing users to interact with the platform conversationally [6] Market Position - Palantir has been recognized as a market leader in decision intelligence software by IDC and as a technology leader in AI and machine learning by Forrester Research, positioning it well for future growth [7] - The AI platform market is expected to grow at an annual rate of 40%, reaching $153 billion by 2028 [7] Financial Performance - In the first quarter, Palantir reported a 39% increase in customers, reaching 769, and a 24% rise in average spending per customer, contributing to a 39% revenue increase to $884 million [8] - Non-GAAP earnings rose 62% to $0.13 per diluted share, driven by strong sales growth in the government segment [8] Valuation Concerns - Despite strong performance, Palantir's stock is considered very expensive, trading at 64 times forward sales, significantly higher than its closest competitor, CrowdStrike, at 18 times [10] - Analysts suggest that even a 70% drop in Palantir's stock price would still leave it as one of the most expensive software stocks [11]

Core Viewpoint - The recent decline in AI stocks, including Palantir Technologies, raises questions about potential buying opportunities despite a significant drop in stock price [1][4]. Company Overview - Palantir Technologies has experienced a stock decline of over 35% from its all-time high, yet it remains a popular choice among AI stocks due to its advanced data analytics software [1][4]. - The company originally focused on government applications but has expanded its software use to commercial sectors, with government revenue still constituting the majority of total revenue [1]. Product Innovation - Palantir's AIP (Artificial Intelligence Platform) allows clients to integrate AI into their business operations, enhancing control over sensitive information and promoting AI usage among employees [2][3]. Financial Performance - In Q4, Palantir's revenue increased by 36% year-over-year to $828 million, with expectations of continued growth into 2025, projecting Q1 revenue of $860 million and 2025 revenue of $3.75 billion [4][11]. - The company remains profitable, although profit margins were impacted by a spike in stock-based compensation due to management rewarding employees for strong performance [5][6]. Valuation Concerns - Valuing Palantir's stock is challenging due to the lack of sustained earnings; the forward P/E ratio stands at 150, indicating a potentially overpriced stock [7][8]. - Projections suggest that if Palantir achieves $10.6 billion in revenue and $3.19 billion in profits over the next five years, it would still be valued at 61.3 times earnings, indicating a lack of margin of safety in the current stock price [8][9]. Growth Projections - Palantir's revenue growth is expected to remain around 30% over the next five years, with profit margins potentially rising to 30%, positioning it among top software companies [11].