The Overvalued Mirage of AI Giants

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Many years later, as the market analysts would compile their reports on the collapse of AI darlings, the investors would remember the heady days of 2023 when the digital gold rush began, and the air was thick with the scent of prosperity and the distant rumble of an impending storm. Palantir Technologies, with its shares bloated to 126 times sales, had become a monument to hubris, while Arm Holdings, cloaked in the illusion of inevitability, danced on the edge of a precipice. Both had been anointed by the alchemists of Wall Street, only to find themselves ensnared in the labyrinth of their own overvaluation.

  • Rishi Jaluria at RBC Capital, a man who had once predicted the fall of empires, now whispered of Palantir’s $45 target price, a number that hung in the air like a curse, 73% below its feverish current price.
  • Javier Correonero at Morningstar, whose reports were said to have the weight of scripture, had marked Arm’s $80 target price in red ink, a 46% descent that seemed less a prediction than a premonition.

Here, then, is the tale of two companies, their fates intertwined with the caprices of a market that confuses momentum for mastery.

Palantir Technologies: The Ontology of Collapse

In the spring of 2023, Palantir Technologies unveiled its Artificial Intelligence Platform, a labyrinthine architecture of code and ambition that promised to bind the chaos of data into a coherent tapestry. The ontology-its crown jewel-was no mere software but a digital twin of the universe, where every decision echoed like a whisper in a cathedral, feeding back into the system with the patience of a glacier. For eight quarters, the numbers climbed, a crescendo of growth that made even the most jaded investors giddy.

Yet beneath the sheen of progress, the company’s valuation had become a parable of excess. At 126 times sales, it was a stock that defied gravity, a house of cards built on the sand of speculative frenzy. The S&P 500, a place of modesty and restraint, now watched in quiet horror as Palantir’s price tag outstripped even the most ludicrous of its peers. To hold such a stock was to court the specter of ruin, a slow-motion crash that would leave portfolios in tatters.

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And so, the activist investor’s counsel is clear: trim your positions, or abandon them altogether. The market, like a jealous lover, will not forgive those who cling to a mirage.

Arm Holdings: The Desert Wind of Data Centers

Arm Holdings, once the quiet king of mobile processors, had long ruled with the efficiency of a desert wind. Its blueprints, etched into the silicon bones of 99% of smartphones, were a testament to a philosophy of power and precision. But the tides had shifted. In the data centers, where the hunger for compute was insatiable, Arm’s licensing model-flexible as the dunes-had begun to carve new empires. Alphabet, Amazon, Apple, and Microsoft, those titans of the digital age, had all bent the knee, crafting their own Arm-powered servers in a silent rebellion against the old guard.

Yet for all its gains, Arm’s valuation was a house on fire. At 94 times earnings, it was a stock priced not for the present but for a future that might never arrive. Its PEG ratio, a grotesque 4.3, was a warning etched in neon. And as the CEO, Rene Hass, proclaimed Arm the chosen vessel for AI’s energy-efficient salvation, the activist investor could not help but laugh-a dry, brittle sound like the crackle of a dying flame.

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Forty-six percent down was not a prediction but a probability, a debt the market would eventually demand. For now, patience is the virtue. Wait for the price to descend to $120, a number that still smells of hubris, but at least carries the scent of reason.

The sands of the AI boom shift with the seasons. To hold these stocks is to dance with the devil, clad in the armor of optimism. Sell while you still can. Or, better yet, let the market’s fever break on its own. 📉

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2025-09-14 11:37