An analyst downgraded data analytics software maker Palantir Technologies on Thursday on views its valuation is inflated amid investor buzz over generative artificial intelligence. Palantir stock fell solidly.
Brian White, analyst at Monness, Crespi, Hardt & Co., downgraded Palantir stock to sell from neutral. He set a price target of 20 on Palantir stock.
"On the back of this unprecedented generative AI hype cycle, Palantir surged in 2023 and the stock's upward trajectory has continued in 2024, leaving the company with what we view as an egregiously rich valuation," he said in a report.
Palantir Stock Up 43% In 2024
On the stock market today, PLTR stock fell 6.1% to close at 23.01. As of Wednesday's market close, Palantir stock was up nearly 43% in 2024. But shares have retreated from a high of 27.50 set on March 7.
Founded in 2003, Palantir has already mined the AI opportunity with government customers for intelligence gathering, counterterrorism and military purposes. Now Palantir aims to use generative AI to spur growth in the commercial market. The software maker has expanded into health care, energy and manufacturing.
New generative AI models process "prompts," such as internet search queries, that describe what a user wants to get. Generative AI technologies create text, images, video and computer programming code on their own.
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Palantir Stock: Technical Ratings
Palantir has not disclosed pricing for AI products.
At a customer conference on March 7, Palantir showcased its Artificial Intelligence Platform," rolled out in early 2023. The AI platform has been gaining traction with commercial customers, Palantir said at the conference.
Palantir stock holds a Relative Strength Rating of 97 out of a best-possible 99.
"In our view, Palantir is well positioned to benefit from the long-term AI trend and capitalize on volatile geopolitics," White said. "However, revenue from government-related contracts has proven lumpy, execution spotty and valuation is excessive."
Also, Palantir stock holds a Composite Rating of 99 out of a best-possible 99, according to IBD Stock Checkup.
IBD's Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.
Palantir stock holds an Accumulation/Distribution Rating of B-plus. That rating analyzes price and volume changes in a stock over the past 13 weeks of trading. A+ signifies heavy institutional buying; E means heavy selling. Think of a C grade as neutral.
Follow Reinhardt Krause on X, formerly Twitter, @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
