Shares of Palantir Technologies (NYSE: PLTR) and Super Micro Computer (NASDAQ: SMCI) advanced 169% and 83%, respectively, over the past year amid soaring interest in artificial intelligence (AI). But certain Wall Street analysts expect the stocks to fall sharply over the next 12 months, as detailed below:
In August, Rishi Jaluria at RBC Capital Markets reaffirmed his price target on Palantir of $9 per share. That forecast implies 79% downside from the current share price of $43.
In August, Aaron Rakers at Wells Fargo lowered his price target on Super Micro Computer to $37.50 per share. That forecast implies 20% downside from the current share price of $47.
Investors should never take forecasts at face value. Here are the details required to make an informed decision about these two companies.
Palantir helps businesses manage and make sense of complex data. Its primary platforms, Gotham and Foundry, integrate information and artificial intelligence models into an ontology, a digital representation of the relationships between real-world objects. Users can interact with the ontology through analytical applications that surface insights to improve decision-making. Palantir says its ontology-based software is an important differentiator.
Last year, Palantir debuted AIP (Artificial Intelligence Platform), which enhances Foundry and Gotham with support for large language models, allowing businesses to integrate generative AI into analytical applications. Some analysts are impressed by the product. For instance, Forrester Research has recognized Palantir as a leader in artificial intelligence and machine learning platforms.
Other analysts are less impressed. Consultancy Gartner didn't even mention Palantir in its latest report on data science and machine learning platforms, and scored the company below a dozen other vendors for its data integration tools. Additionally, RBC Capital analyst Rishi Jaluria told CNBC that Palantir "does not appear to be anything truly differentiated when it comes to generative AI."
Palantir reported solid financial results in the second quarter. Revenue increased 27% to $678 million, the fourth consecutive sequential acceleration, and non-GAAP net income jumped 80% to $0.09 per diluted share. CEO Alex Karp attributed the strong quarter to an "unrelenting wave of demand from customers for artificial intelligence systems that go beyond merely performative and academic."
In the third quarter, Palantir announced a $100 million contract with the U.S. government that will bring access to its AI targeting tools to more military personnel. The company also said that gas and oil giant BP will adopt AIP to "improve and accelerate human decision-making with suggested courses of action based on automated analysis of the underlying data."