Palantir (PLTR) Retreats After Another Bearish Assessment Issued

Palantir (PLTR) stock is sliding for a fourth consecutive trading session, with the shares giving back about 4%, after yet another research firm poured cold water on the company’s outlook.

Specifically, Trefis Team, writing in Forbes today, warned that “Palantir stock faces some challenges” and concluded that the stock’s valuation is too high.

Trefis’ bearish article comes after Morgan Stanley, Deutsche Bank,  and Morningstar also issued negative assessments of the stock’s outlook this month.

 Significant Challenges and a Steep Valuation

According to Trefis, the performance of Palantir’s commercial business has been “mixed.” The research firm noted that, although the company’s “commercial-related sales” had jumped 27% in the third quarter, analysts, on average, had expected the unit to deliver higher revenue. Meanwhile, its government unit, on which it is “very reliant,” is “more unpredictable and irregular,” according to Trefis.

What’s more, the company’s offerings are too costly and “complex” for many small and medium businesses. Finally, Palantir is facing steep competition from huge tech firms such as Microsoft (MSFT) on the one hand and “specialized data analytics firms targeting niche markets” on the other, Trefis stated.

Noting that PLTR is changing hands for over 140 times analysts’ average fiscal 2025 earnings estimate, Trefis called the stock’s valuation “too rich.” The research firm pointed out that Nvidia (NVDA), by contrast, is only trading for 31 times the mean earnings estimate for its upcoming fiscal year.

While we acknowledge the potential of PLTR, 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.