This Popular Artificial Intelligence (AI) Stock Could Plunge More Than 70%, According to 1 Wall Street Analyst

Palantir Technologies (Ticker: PLTR) stands at a critical juncture in the stock market, captivating both retail and institutional investors due to its role in the rapidly evolving field of artificial intelligence (AI). Despite being one of the leading performers within the S&P 500 this year—exhibiting over a 23-fold increase in its share price since the beginning of 2023—recent analyses from Wall Street have cast shadows over its future viability. Among those analysts, Rishi Jaluria from RBC Capital has emerged as a notable detractor, asserting that Palantir’s stock could plummet by more than 70%. This article aims to dissect the underlying factors driving this analysis, examine the company’s current standing, and provide an informed perspective on Palantir’s potential trajectory.

### Current Performance and Valuation

Palantir Technologies has indeed captured the spotlight, celebrating an impressive 48% year-over-year revenue growth in the second quarter of 2025. CEO Alex Karp actively promoted this growth, emphasizing the company’s trajectory as unprecedented for a firm of its stature. However, Jaluria raises critical questions about the sustainability of such explosive growth in relation to the company’s valuation metrics. He estimates a 12-month price target of around $40 to $45, implying a significant downturn for an entity currently enjoying premium trading multiples.

The current forward price-to-earnings (P/E) ratio of Palantir stands at a staggering 250, a statistic that has alarmed multiple analysts and indicates a market sentiment that may not align with economic fundamentals. Jaluria’s concerns echo a broader sentiment among analysts: while the growth figures are impressive, they are outstripped by a valuation that many perceive as fundamentally unsound.

### Analysts’ Perspectives

While Jaluria’s forecast notably diverges from the optimistic outlook shared by other Wall Street analysts, it’s essential to position his insights within a broader analytical framework. In a recent survey, LSEG found that approximately 17 analysts have rated Palantir as a “hold,” while four others regarded the stock as a “buy.” Despite this moderate optimism, three analysts have suggested a sell or underperform, which reveals a growing dichotomy in Wall Street’s perception of Palantir’s stock.

Interestingly, Jaluria is not outright bearish on AI companies. He has directed praise toward software giants like Microsoft and Intuit, suggesting that they are likely to capture greater market share as AI continues to embed into various industries.

### The Risk-Reward Profile

Jaluria’s thesis hinges on the perceived risk-reward profile of investing in Palantir. He describes the current stock valuation as “unsustainable,” which resonates with other analysts who see an impending correction. Despite Palantir’s robust growth prospects, analysts like Brent Thill of Jefferies have articulated concerns that the current premium multiples are out of sync with even the most optimistic future growth scenarios. Such evaluations lead to the conclusion that while Palantir’s growth is substantial, it may not be sufficient to justify the lofty valuations placed upon its shares.

### Could Palantir Plunge More than 70%?

The enigmatic question remains: Could Palantir’s stock really plunge more than 70%, as Jaluria forecasts? While his projections indicate a pessimistic view that cannot be dismissed outright, it may be overly alarmist. There are varying perspectives on Palantir’s unique business model and its ability to adapt, particularly given its distinct positioning within the AI space.

Analysts like Gregg Moskowitz from Mizuho have suggested that Palantir’s uniqueness warrants a higher valuation floor, highlighting the company’s ability to capitalize on trends such as AI integration and government digitization. If Palantir successfully navigates these opportunities, it might prove resilient against significant downturns.

### The Importance of Business Fundamentals

Investing in high-flying stocks like Palantir demands careful consideration of business fundamentals. While the company’s revenue and growth metrics are compelling, potential investors should weigh these against the prevailing market sentiment regarding its valuation. The fear that Palantir’s stock could experience drastic declines is underscored by the higher volatility typically associated with tech and AI stocks; they often react more sharply to shifts in investor sentiment than companies in more stable industries.

### Conclusion

In summary, the markets naturally ebb and flow, and Palantir Technologies currently finds itself at a pivotal crossroads. The opinions of analysts like Rishi Jaluria remind investors to tread carefully. While Palantir has exhibited extraordinary growth and has become a darling of many retail investors, a critical analysis of its valuation suggests that caution is warranted.

Investors must grapple with a volatile marketplace characterized by both tremendous opportunities and notable risks. Although Palantir has proven its capability within the AI landscape, the growing sentiment among analysts that its valuation may be inflated demands careful vigilance and consideration.

As with any investment, due diligence remains paramount. Understanding both the potential and the pitfalls will help guide investors as they consider their positions in Palantir Technologies and the broader AI market. The future may still hold exciting possibilities for Palantir, but the journey will invariably involve navigating complexities, uncertainties, and the watchful eyes of analysts.

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