The Popular AI Stock That Is Predicted To Fall In 2025 (And Why People Are Selling)

Artificial Intelligence has been hailed as the next great leap forward for the global economy. This groundbreaking invention is such a big deal that Amazon founder Jeff Bezos has stunned investors by calling it the one emerging technology that holds the keys to his company's future. According to Motley Fool, Bezos argues that "it's hard to overstate the impact" of this game-changing technology.

Bezos and analysts PwC and McKinsey agree on the fact that AI has the potential to become a multi-trillion dollar industry. Optimistic valuations run as high as $80 trillion. This is because they see it as an unprecedented advancement in human technology. Getting in on the right AI stocks could mean making millions of dollars.

One of the popular AI stocks that has enjoyed tremendous stock performance from this impending future already is Palantir Technologies (NASDAQ: PLTR). While the company has realized gains of more than 1,100% in only the last two years, potential investors should proceed with caution. The majority of Wall Street analysts today view the stock as wildly overvalued, per Yahoo Finance.

Palantir Technologies is an American software and services company founded in 2003 that today has over 3,700 employees. The firm develops software for data analytics that enables companies and government agencies to turn complex information into actionable intelligence, per Yahoo Finance. In 2024, the company unveiled AI platform AIP as part of its holdings.

AIP offers support of large language models for the company's core data platforms. These include Foundry and Gotham. This suite of programs allows corporate clients to integrate generative artificial intelligence into their operations.

Palantir's AIP has earned great acclaim from experts in the industry. Analysts at Forrester Research named Palantir Technologies as one of the leaders in machine learning and artificial intelligence platforms. According to the Forrester analysts, "Palantir is quietly becoming one of the largest players in this market," per Yahoo Finance. Besides this, Palantir stood out as one of the two top-ranking vendors as part of the 2024 Dresner Advisory Services market study on data science, artificial intelligence, and machine learning software.

Palantir Technologies stock price has risen by 1,110% in 2023 and 2024 as the firm soared on growing demand for the company's artificial intelligence platform. Despite these incredible results, the old warning about past performance being no guarantee of future success specifically may apply to this stock. Wall Street has turned incredibly bearish about the valuation of Palantir. It could lead to a market correction in the stock price.

In January of 2025, a mere six corporations on the S&P 500 index have more sell ratings than Palantir does, per FactSet Research. This is true even though Wall Street estimates that the company earnings will rise by 31% over the next four quarters. Analysts feel that the current price to earnings ratio is extremely high at 225.

The analysts' median price target of $39 per share suggests that there is potentially 52% downside from the share price of $80. Deutsche Bank's Brad Zelnick is even more bearish on the company's stock. In a recent note, he kept a sell rating on the shares with a 12 month target of $26 per share. This is 68% less than the current stock price. Thanks to these analyst estimates, Motley Fool is recommending that investors steer clear of Palantir's stock at today's share prices. Instead you can maximize your retirement fund contributions to boost your net worth.