Goldman Says a 140% YTD Rally in This AI Stock Is "Overdone"

Goldman Sachs analysts weighed in on the massive run-up in Palantir amid Wall Street's building frenzy around artificial intelligence (AI).

While Nasdaq is up roughly 26% year-to-date, Palantir stock surged as much as 138% YTD, mostly due to the investor focus on increasing exposure to companies that offer AI products and services.

On the recent earnings call, the officials noted a bigger uptick in interest for its products in the last couple of weeks than all of last year.

Still, Goldman analysts believe the rally in PLTR stock is “overdone” despite believing that AI “will be a tailwind to Palantir’s business” after attending Palantir's AIPCon customer event earlier this month.

“We view AI as an extension of Palantir's existing work in the data analytics stack, rather than a step function change in product strategy or adoption,” the analysts said.

“Our illustrative scenario analysis suggests that AI would likely need to drive a ~15 pt acceleration in Palantir growth over the next 3 years (from 15% to 30%) to warrant current valuations.”

The price target on the Neutral-rated Palantir stock is raised to $10 per share, signaling a nearly 35% downside risk from current levels.