In a recent development, Palantir has been downgraded to “Underperform” by Jeffries, with its price target slashed to $13. The firm argues that Palantir’s valuation has become unsustainable due to the lack of an AI boom. While Palantir’s technology holds promise, the hype surrounding AI has outpaced the reality, according to Jeffries Senior Analyst Brent Thill.
Thill notes that while AI adoption is expected to grow, the revenue materialization will be slower than anticipated in the market. As a result, Thill advises investors to wait for the AI hype to subside before reconsidering investments in Palantir and other similarly hyped companies.
Instead, Thill highlights software firms like Microsoft and Adobe, which have diverse product line-ups spanning multiple sectors. These companies have seen success in the AI space but also prioritize other areas such as public cloud and productivity applications. Thill suggests that investors focus on these companies that have a more comprehensive approach to technology.
The downgrade serves as a reality check, indicating that Palantir’s value may have been inflated due to the anticipation of an AI boom that has yet to occur. While Palantir still possesses an AI technology advantage, the current valuation may not be justified.
In conclusion, the downgrade of Palantir highlights the need for caution amidst the AI hype. While AI has significant potential, its impact on revenue may take longer to materialize than expected. Investors are urged to consider companies with a broader technological focus and approach.
The source of the article is from the blog scimag.news