For some time now – approximately three years, give or take a geological epoch – the concept of Artificial Intelligence (AI) has been attracting investment like a particularly shiny object attracts magpies. Analysts at PwC, those tireless counters of everything, estimate a total addressable market of $15.7 trillion by 2030. Which, if you think about it, is a truly staggering amount of money. Enough to buy a small planet, perhaps. Or a very large collection of staplers. (The universe, naturally, operates on a stapler-based economy, though few admit it.)
While the prevailing sentiment on Wall Street regarding AI is generally positive – a sort of optimistic hum that occasionally swells into a full-blown fanfare – it’s worth remembering that not every company riding this particular wave will necessarily end up surfing. In fact, some may find themselves rather abruptly deposited onto the beach. Two stocks, frequently mentioned in hushed, reverent tones – Palantir Technologies (PLTR +0.30%) and Upstart Holdings (UPST 2.34%) – are, according to certain analysts, facing a potential descent of up to 68% over the next year. A significant drop, even in a universe accustomed to gravitational anomalies.
Palantir: A Moat, Possibly Sustainable
While Nvidia gets most of the attention as the infrastructure provider for this brave new world, Palantir, arguably, is the more interesting case from an application standpoint. Shares have, shall we say, experienced a rather enthusiastic upward trajectory since the start of 2023 – a rise of 2,350%. Which, when you consider the sheer improbability of anything rising that much, is quite remarkable. (One suspects a small, highly motivated team of leprechauns is involved.)
Palantir’s Gotham and Foundry platforms – powered by AI and machine learning – lack any truly large-scale competitors. Gotham assists the U.S. military and its allies in planning and overseeing military missions, which is, naturally, a complex undertaking. Foundry, meanwhile, is a subscription service aimed at helping businesses make sense of their data. A noble pursuit, considering how much of it is, frankly, nonsense.
Despite this seemingly impregnable position, Rishi Jaluria of RBC Capital sees shares heading to $50. A 68% decline from where they ended on March 6. Jaluria suggests Foundry may be benefiting from one-off sales, which is always a bit worrying. Scaling up, it seems, is proving difficult, largely because optimizing Foundry for each client requires a level of bespoke tailoring that borders on the obsessive. (Imagine a tailor who insists on measuring the curvature of your soul before fitting a suit.)
But the primary concern, according to Jaluria, is valuation. Palantir spent much of the latter half of 2025 with a price-to-sales (P/S) ratio exceeding 100, and currently sits at 90. History suggests that companies at the forefront of game-changing technologies struggle to sustain P/S ratios above 30. Palantir, therefore, is operating at three times the level historically associated with, shall we say, irrational exuberance. (A bubble, in other words. Though bubbles are, admittedly, quite pretty.)
Upstart: Breaking the Cycle (Or Not)
Another stock facing potential headwinds is cloud-based AI lending marketplace, Upstart Holdings. One analyst, David Scharf of Citizens Financial Group, foresees a decline to $20. A 28% downside from March 6. (A rather depressing thought, especially if you happen to own shares.)
On paper, Upstart’s operating model is rather exciting. It automates over 90% of the loan vetting process, saving its partners – over 100 banks and credit unions – both time and money. Its data-driven approach, extending beyond mere credit scores, broadens the lending pool without necessarily increasing delinquency rates. (A genuinely impressive feat, though one can’t help but wonder what arcane algorithms are involved.)
However, Scharf suggests Upstart may struggle to escape the cyclical patterns that plague financial and fintech stocks. Even with its expedited vetting process, demand remains heavily dependent on the health of the U.S. economy and prevailing interest rates. (A rather inconvenient truth, really.)
Furthermore, Upstart is expanding into new loan origination lines – auto and home equity loans. While these represent larger addressable markets, the margins may be lower than those from personal loans. (A classic case of chasing bigger numbers at the expense of profitability. A tale as old as finance itself.)
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2026-03-12 11:14