AI Darlings Arm and Palantir Face Risk of 20% Drop Despite Recent Surge, Analysts Warn
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Arm Holdings and Palantir Technologies AI stocks have soared recently but could plunge 20% or more in the next 12 months due to lofty valuations.
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Arm powers AI chips used by companies like Nvidia, Google, Samsung, and Vivo, but its P/E ratio of 78x is concerning analysts.
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Palantir's AI platform sees surging demand, but its expected P/E of 72x and potential 80% downside alarm analysts.
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Though AI hype could continue driving these stocks higher short-term, their fundamentals don't seem to justify current premium prices.
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Better AI investments can be found elsewhere for investors looking for stocks with strong growth outlooks combined with reasonable valuations.