Artificial Intelligence Stocks to Consider Ditching Before They Plummet by 49% and 75%, as Predicted by Certain Wall Street Advisors
In the rapidly evolving tech landscape, two companies – Super Micro Computer and Palantir Technologies – have recently released their Q2 financial results, shedding light on their current standing and future prospects.
Super Micro Computer
Michael Ng at Goldman Sachs has set a target price of $24 for Super Micro Computer, suggesting a potential 49% downside from its current share price. The company's Q2 earnings report showed a 33% decrease in GAAP earnings to $0.31 per diluted share, accompanied by a narrowed gross margin of 9.5%. Despite this, Supermicro's revenue increased 7% to $5.8 billion in the June quarter, and the company's earnings are expected to grow at 28% annually through the fiscal year ending in June 2027.
However, Supermicro has historically missed the consensus earnings estimate by an average of 13% over the last four quarters, and the company recently slashed its revenue guidance to $33 billion (down from $40 billion) for the fiscal year ending in June 2026. Supermicro's current valuation is 23 times adjusted earnings.
Supermicro, a leading player in the AI server market, uses electronic "building blocks" across product lines to quickly assemble a broad range of servers. The company often brings new AI chips to market two to six months before its competitors, providing a competitive edge. However, the main competitors, such as Dell, Hewlett Packard Enterprise (HPE), and Lenovo, exert significant margin pressure through aggressive pricing strategies.
Palantir Technologies
On the other hand, Palantir Technologies, currently trading at 133 times sales, holds the title of the most expensive stock in the S&P 500. Despite this lofty valuation, the company reported exceptional second-quarter financial results, with revenue climbing 48% to $1 billion. Palantir's non-GAAP earnings increased 77% to $0.16 per diluted share in the second quarter.
Forrester Research recognises Palantir as a technology leader in AI and machine learning platforms, and the company is ranked as the market leader in decision intelligence software by the International Data Corporation. Palantir's software helps clients turn complex data into actionable insights and train machine learning models.
RBC Capital has set a target price for Palantir at $45 per share, implying a 75% downside from its current share price. Palantir's current valuation, while high, reflects the company's potential in the rapidly growing data analytics software market, which is forecast to grow at 28% annually through 2030, according to Grand View Research.
In conclusion, both Super Micro Computer and Palantir Technologies have shown strong performances in their respective sectors. Investors should consider these companies' future prospects, competitive landscapes, and valuations when making investment decisions.
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