Jefferies analyst Brent Thill downgraded Palantir Technologies (PLTR) stock to underperform, citing concerns about the company being "overhyped on AI."
As of the latest market data, Palantir stock experienced a 1.8% decline, reaching $15.95 in morning trades. Notably, the stock had already faced a 5% dip in the year 2024 by the close of Thursday's market.
Palantir, known for its significant 167% stock surge in 2023, has been a focal point for investors who view artificial intelligence software as a key growth factor. The company has successfully tapped into the AI market, particularly with government clients, where its technology is utilized for intelligence gathering, counterterrorism, and military applications.
The heart of Palantir's AI endeavors lies in generative AI technologies, leveraging pattern recognition and statistical data for predictions. These AI models process user-defined "prompts," like internet search queries, to autonomously generate text, images, video, and code.
Palantir introduced its "Artificial Intelligence Platform" in early 2023, targeting diverse sectors such as health care, energy, and manufacturing. However, the company has not disclosed pricing for its AI products, raising concerns among bearish analysts who emphasize the need for Palantir to demonstrate progress in developing new revenue streams from generative AI.
While Palantir has expanded its reach into various industries, some technical ratings have seen a decline. The Relative Strength Rating currently stands at 95 out of a possible 99, indicating a slight reduction, and the Composite Rating is at 93 out of 99, according to IBD Stock Check-up.
As the market reacts to these developments, industry observers remain watchful, with Thill's downgrade reflecting skepticism about Palantir's AI-focused growth strategy. The company's ability to translate technological advancements into sustained revenue remains a key concern for analysts and investors alike.
