Palantir Technologies and CrowdStrike face big selloffs after massive AI-fueled rallies. Wall Street is slashing their price targets, signaling tough times ahead.
Palantir (PLTR) stunned markets with a 2,290% jump in 2023. Market cap climbed over $350 billion. But analysts are cooling off fast. Only 7 say buy, 17 say hold, and 4 say sell. RBC’s Rishi Jaluria nailed the worst hit: a $40 price target. That’s a 74% drop from its current price.
Palantir’s revenue and U.S. commercial growth surged, driven by its Artificial Intelligence Platform (AIP). AI-powered insights are expanding Palantir’s customer base. First-quarter U.S. commercial revenue spiked 71%. Operating margins hit 44%, up from 36% last year. CEO Alex Karp bets on product over sales and marketing. 
Still, Jaluria warns valuation is sky-high:
“We cannot rationalize why Palantir is the most expensive name in software. Absent a substantial beat-and-raise quarter elevating the near-term growth trajectory, valuation seems unsustainable,” he said.
Palantir trades at 228 times forward earnings and 78 times projected revenue. That’s wild—most S&P 500 stocks don’t even hit 26 times sales.
CrowdStrike (CRWD) rocketed 352% in 2023 off its Falcon security platform. After a global outage in July last year, it bounced back fast. Market cap nearly $120 billion. But top analysts are pulling back. Buy ratings fell from 41 to 31 in just three months. Lowest price target now $350, a 26% cut from current levels.
CrowdStrike’s customer base is growing, with 48% using six or more modules. It’s pushing AI with its new Charlotte platform that acts on threats immediately, plus advanced machine learning for detection. Recurring revenue rose 20% in Q1, beating guidance.
The problem: valuation again. CrowdStrike trades at 22 times next-year revenue and a staggering 135 times earnings.
It’s one of the most expensive names in the S&P 500, right behind Palantir.
Both stocks show strong fundamentals but Wall Street says the price tags are too steep. Investors might want to take profits and scout for cheaper AI plays.
Image source: Getty Images.
