Palantir’s AI Surge Hardens Resolve of Stock’s Bears

Few stocks have better embodied Wall Street’s frenzy around artificial intelligence lately than Palantir Technologies Inc.

After a rough couple of years, the shares more than doubled over a six-week period from the beginning of May, reaching their highest since January 2022, as investors latched onto comments that demand the company’s new AI tool was “without precedent.” Chief Executive Officer Alex Karp subsequently said AI tools represent “an infinite market.”

Yet while optimism about the data-analysis software company’s position in this field has caught the eye of retail investors, the stock’s gains have only hardened the resolve of skeptical analysts and fund managers.

The consensus recommendation — a proxy for its ratio of buy, hold, and sell ratings — stands at 2.41 out of five, by far the lowest among the 62 components of the Russell 1000 Software Subsector Index. Nearly half the analysts who track the stock have the equivalent of a sell rating, compared with fewer than 20% who recommend buying.

Palantir's Recent Gains Follow Steep Declines

Hendi Susanto, portfolio manager at Gabelli Funds, said skepticism is warranted for AI plays more broadly, especially ones that have seen sharp rallies.