Shares of Palantir, an American provider of artificial intelligence solutions for working with data arrays, nearly quadrupled in value over the past year, but collapsed by 8% on November 4. They became one of the main outsiders of the S&P 500 index. Wall Street analysts didn't understand what triggered the selloff: Palantir's quarterly revenue, which the company reported a day earlier, was again a record, and earnings were well ahead of consensus estimates. The reason could have been that the company's quotes already had an ideal scenario built into them, The Wall Street Journal suggested.

What Wall Street is advised to do with stocks after the report

- Bank of America raised its target price on Palantir shares by 19% from $215 to $255 (up one-third from the current price) and reiterated a Buy recommendation. BofA analyst Mariana Perez Mora described Palantir's approach as "red pill" - developing complex and labor-intensive solutions with a focus on ROI that truly solve customer problems, as opposed to competitors' "blue pill" - "generic and formulaic" ChatGPT-based AI tools.

- Jefferies analyst Brent Till raised his price target on Palantir's shares from $60 to $70 after Palantir's earnings release (which, by contrast, is 63% less than the current price target), but maintained an Underperform rating on them (consistent with a sell recommendation). "We view the risk/return ratio as unfavorable as the current valuation is vulnerable to any weakening of the hype cycle around AI," Till wrote to clients. For investments in the AI sector, Jefferies favors Microsoft and Snowflake securities.

- Wedbush analyst Dan Ives called Palantir's quarterly report "another confirmation of the demand for AI" and dubbed the company "Messi in the world of artificial intelligence." Ives reiterated his "Outperform" rating (Outperform, consistent with a buy recommendation) and a $230 target price, suggesting a 20% upside potential. "While investors will continue to worry about the [inflated] valuation, we believe the company will reach a $1 trillion capitalization over the next two to three years - as Palantir transforms its commercial business into a multi-billion dollar case monetization machine as part of the AI revolution," the analyst said with confidence.

- RBC raised its target on Palantir shares from $45 to $50 (still assuming a nearly fourfold decline), but left the rating "below market" (Underperform). The investment bank noted that Palantir's business remains heavily dependent on customers in the U.S., with revenue growth from commercial customers outside the country being very modest in the quarter, up just 10% year-over-year.

Context

According to FactSet, analysts on average advise to hold securities - not to buy new ones, but also not to sell existing shares of Palantir, one of the most expensive on the market. Over the past month, the number of Hold recommendations increased from 17 to 18, while the total number of Buy/Overweight recommendations decreased from eight to seven.

Scion Asset Management founder Michael Burry, who rose to fame for predicting the collapse of the U.S. mortgage bubble and capitalizing on it, made a big bet on Palantir stock falling in the third quarter. Before disclosing that bet in the filing, Burry appeared on social media after a two-year hiatus and pointed to the market bubble, noting that "sometimes the only winning move is not to get in the game." Palantir CEO and founder Alex Karp responded by calling betting against AI "complete insanity" and promised to "dance for joy" when shorts lose.

This article was AI-translated and verified by a human editor

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