Big data analytics and software company Palantir Technologies (NYSE: PLTR) is among the firms that rode the artificial intelligence (AI) wave, introducing unique products that boosted its stock.
Notably, the company, known for attracting military contracts, launched its Artificial Intelligence Platform (AIP), which was well-received by investors over the past year.
However, the stock has failed to sustain the gains from the AI hype, experiencing notable losses in recent months. Over the past six months, Palantir is down almost 20%, and in 2024, the equity has dropped almost 3%, with the last recorded price at $16.09.
Picks for you
This decline aligns with a period when analysts believe that the AI hype, which propelled the stock to 167% gains in 2023, is fading. Although the short-term impact on PLTR’s stock price is partly attributed to the overall market sell-off, there is ongoing interest in how the equity will perform in the coming months, given its recent downward trend.
Wall Street analysts set PLTR stock price
When examining PLTR’s price, Wall Street analysts forecast a continued decline in the equity’s valuation. Specifically, 14 analysts from TipRanks project that Palantir Technologies will decline by 16.41% in the next 12 months, settling at $13.45. This projection is grounded in the stock’s performance over the last three months.
The experts have also set a low price target of $5 and a high forecast of $21. Among these analysts, six recommend selling the stock, while four advise holding the equity.
Palantir’s challenges
The challenges for Palantir can mainly be tied to its business model, which relies heavily on government partnerships, constituting over 55% of its total operations. Notably, recent months have seen a slowdown in government spending.
This is evident in Palantir’s estimated total revenue growth of around 16% in 2023, with analysts pointing out that this represents the company’s slowest annual growth, hindered by the deceleration in government expenditure.
Facing a slowdown in U.S. demand, Palantir is also encountering difficulties penetrating the European market, with growth in continental Europe deemed challenging. France and Germany pose specific challenges, primarily related to concerns about data privacy in Palantir’s expansion into the region’s cyber-defense industry.
Adding to these challenges, Jefferies analysts downgraded the company’s stock, citing an ”overhype” of AI contributing to Palantir’s subdued prospects.
Despite challenges, PLTR inventors have reasons for optimism as the company expects a resurgence in U.S. government business beyond the current 10% YoY growth. Another bullish factor in the company’s anticipated 2024 revenue of $2.66 billion.
At the same time, the stock could see positive results with potential acceleration from its commercial customers.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
