With the advent of the artificial intelligence revolution, semiconductor stocks have largely seen huge returns, as they’re essential for building out the necessary infrastructure. However, one pure-play AI company has managed to outshine them all — and that’s Palantir (NASDAQ: PLTR).
The Alex Karp-led venture has long been a favorite of retail investors. Hedge funds and institutional investors were rather skeptical — but a streak of impressive earnings calls in 2024 did away with the skepticism. Once the institutions piled in, PLTR stock ran through all the stop signs.
At the beginning of 2024, the price of a single Palantir share was approximately $16.33 — by press time on December 6, 2025, it had rallied by 374.07%. Since the beginning of the year, prices have gone up by an additional 3.61%.
Naturally, valuation concerns have sprung up — with a lot of growth already priced in, investing in PLTR shares has become risky. Now, another major Wall Street firm has assumed coverage on the stock — and the outlook isn’t rosy.
Morgan Stanley sees significant downside in the cards for Palantir stock
On December 6, Sanjit Singh, a Morgan Stanley (NYSE: MS) enterprise software equity analyst, gave Palantir stock an ‘Underweight’ rating, with a $60 price target. If met, his forecast would equate to a 24.78% downside from the current price of a Palantir share.
In a note shared with investors, the researcher repeated oft-stated worries that Palantir is simply trading too far ahead of its intrinsic value. He also noted that, while free cash flow estimates are up 41% in 2024, this is largely due to expense discipline — as revenue estimates have only increased by 10% in the same timeframe.
The Morgan Stanley researcher also reflected on the fact that the stock is already pricing in a 10-year 30% compound annual growth rate (CAGR) with 41% free cash flow (FCF) margins — a trajectory that will be hard to achieve.
Lastly, Singh highlighted that the business’s momentum appears to be stabilizing, rather than trending upward — with 13 of 23 key performance indicators (KPIs) trending down on a quarter-over-quarter (QoQ) basis.
With the exception of Jim Cramer’s $100 price target, Wall Street has largely soured on Palantir stock — with even the most bullish of price targets now representing a downside. While the company’s long-term growth prospects are still admirable, investors would be wise to wait for a correction and a more reasonable entry point.
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