Throughout history, investors have eagerly awaited the advent of groundbreaking innovations that could propel businesses to new heights akin to the internet’s transformative power. The emergence of artificial intelligence (AI) promises to be that game-changer.
AI encompasses software and systems capable of performing human-like tasks autonomously. The allure lies in its potential to evolve independently, augmenting efficiency and adapting to new tasks, thereby revolutionizing various sectors of the US and global economies.
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The potential magnitude of the impending AI transformation is left to speculation and imagination. PwC analysts have projected that by 2030, AI could inject a staggering $15.7 trillion into the global economy, with $6.6 trillion attributed to enhanced productivity and $9.1 trillion to consumption-side benefits.
Such astronomical figures have not gone unnoticed by Wall Street’s financial wizards. Most institutions and analysts have set ambitious growth projections and soaring price targets for leading AI stocks, painting a rosy picture of future prospects.
However, amid the optimism, a stark contrast emerges.
Based on conservative estimates from select Wall Street analysts, three prominent AI stocks stand to plunge by a substantial 91%.
The Palantir Predicament: Potential 65% Downswing
Flagging as a potential candidate for a severe downturn, data-mining maven Palantir Technologies (NYSE: PLTR) faces a looming 65% drop, as per prognostications by RBC Capital’s Rishi Jaluria.
While one analyst envisions a 35% upside from its July 3 close, Rishi Jaluria’s forecast of $9 per share rings alarm bells. Should this prediction materialize, one of the AI sector’s hottest players could see a catastrophic 65% plunge.
Palantir’s operational performance has received accolades, yet concerns linger, especially surrounding its commercial segment. Notably, revenue inflows from special purpose acquisition companies (SPACs) have raised sustainability doubts.
Despite legit apprehensions, Palantir boasts distinctive competitive advantages that merit premium valuation. Its Gotham platform, catering to governmental data management, has been the cornerstone of its double-digit growth trajectory and cash flow stability.
The company’s potential hinges on the success of its Foundry platform for commercial clients. Though its customer base has surged by 53%, Foundry’s growth trajectory is nascent, inviting uncertainties.
Nvidia’s Nemesis: Potential 22% Decline
Nvidia (NASDAQ: NVDA), the semiconductor colossus riding the AI boom, faces a looming 22% downfall, courtesy of Deutsche Bank’s Ross Seymour’s $100 price target (adjusted post a 10-for-1 stock split).
Renowned for its AI-accelerated data center GPUs, Nvidia has dominated the market, with its H100 GPU becoming the go-to chip. A TechInsights report from last year revealed that Nvidia’s GPUs comprised 98% of the 3.85 million AI-GPUs shipped.
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