We recently published a list of Top 10 AI Stocks on Wall Street’s Radar. In this article, we are going to take a look at where Palantir Technologies Inc. (NASDAQ:PLTR) stands against other AI stocks on Wall Street’s Radar.
As reported by Reuters, Wall Street’s main indexes rose on Monday to more than one-week highs, driven by a rally in semiconductor stocks and news suggesting that the incoming Trump administration could adopt a less aggressive tariff stance than previously anticipated.
READ ALSO: Top 10 AI Headlines Shaping Wall Street for 2025 and 10 AI Stocks Taking Wall Street by Storm
Microsoft has recently announced that it plans to invest $80 billion in AI-enabled data centers in fiscal 2025, suggesting how semiconductor demand is expected to remain strong this year. According to Citigroup, the company’s spending plan was a “modest positive” update as it removed the risk of a drop in capital expenditures.
Ever since OpenAI launched ChatGPT in 2022, investments in AI have surged drastically. Since AI requires drastic computing power, tech companies have been investing billions to enhance their AI infrastructures and broaden their data center networks. The race, however, isn’t just limited to the US. Efforts are being made to protect the country’s leadership in AI against the rest of the world, particularly China. China, in turn, has begun offering developing countries subsidized access to scarce chips, and it’s also promising to build local AI data centers. Moves like these could position the country as an AI leader in the future, something that the US is actively making efforts to avoid.
However, regardless of the capital expenditures companies are making toward AI, one analyst says that these are no longer going to be enough in 2025. David Dietze of Peapack Private Wealth Management said that a major theme for 2025 is going to be “Show Me The Money”. Dietze said that even though major companies have been investing billions in AI partnerships and similar initiatives, investors are soon going to be demanding proof of returns.
“Wall Street’s the type of place where it’s like, ‘Show me the money, like, yesterday…These investments and capital expenditures are great, but when does the cash flow start coming in? And right now many AI companies have gotten a pass on that, but I think increasingly Wall Street’s going to say, ‘No, we’ve seen the capital expenditures, you’ve got the AI label, but now we want to see the cash flows coming in from that. And that’s what we’re gonna be watching so carefully next year”.
– David Dietze, Peapack Private Wealth Management.
For this article, we selected AI stocks by going through news articles, stock analysis, and press releases. These stocks are also popular among hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
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Palantir Technologies Inc. (NASDAQ:PLTR)
Number of Hedge Fund Holders: 43
Palantir Technologies Inc. (NASDAQ:PLTR) is a leading provider of artificial intelligence systems. Palantir (NASDAQ:PLTR) has had a spectacular year fueled by artificial intelligence, but an analyst from Morgan Stanley has recently turned negative on the red-hot stock. On January 6th, analyst Sanjit Singh assumed company coverage with an “Underweight” rating and placed a $60 price target on the stock, an estimated 25% downside from Friday’s close. According to Singh, despite Palantir’s (PLTR) early AI strides, the potential risks seem to outweigh the potential rewards. The firm, which hadn’t previously rated the stock, acknowledged that the company has been performing well and has good momentum, but also contended that the stock price already reflects this success which is “more than priced in at the current multiple premium”.
“The skills/capabilities of the enterprise with respect to building AI applications should likely improve, which may make it difficult for Palantir (PLTR) to sustain its current level of momentum, creating downside risk given the premium valuation of the shares”.
-Morgan Stanley Analyst
Overall, PLTR ranks 8th on our list of AI stocks on Wall Street’s Radar. While we acknowledge the potential of PLTR as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than PLTR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
