Key Points

• Palantir and SpaceX are two of the most popular AI stocks, but certain Wall Street analysts think they are wildly overvalued.

• Palantir is emerging as the standard in enterprise AI, but the company may be underinvesting in growth and it’s the most expensive stock in the S&P 500.

• SpaceX has a competitive advantage in reusable rockets, but the company is burning cash quickly and the stock is outrageously expensive at 94 times sales.

• 10 stocks we like better than Palantir Technologies ›

Shares of Palantir Technologies (NASDAQ:PLTR) and Space Exploration Technologies (NASDAQ:SPCX) are up 40% and 38%, respectively, since August. Both rank among the 10 most widely held stocks on Robinhood, but the Wall Street analysts below anticipate significant losses for shareholders.

• Brent Thill at Jefferies has a sell rating on Palantir. His target price of $80 per share implies 53% downside from the current share price of $172.
• Nicolas Owens at Morningstar has a sell rating on SpaceX. His target price of $62 per share implies 58% downside from the current share price of $150.

Here's what investors should know about these popular artificial intelligence stocks.

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Palantir Technologies: 53% downside implied by Jefferies' target price

Palantir develops data integration and analytics platforms (Foundry and Gotham) that help customers across the public and private sectors make sense of complex information. The company also designs an adjacent artificial intelligence platform (AIP) that serves as an agnostic large language model (LLM) orchestration tool.

To elaborate, AIP is an application layer that links AI models to company data, systems, and workflows. Its agnostic architecture means customers can select the model best suited to their needs and switch between models as those needs evolve. In addition, AIP lets clients enforce strict governance controls, ensuring AI model providers cannot access sensitive data.

Palantir's financial results have been nothing short of exceptional for the last three years as its software has emerged as the standard in enterprise AI. The company’s fundamentals were once again strong in the second quarter. Revenue increased 93% to $1.9 billion, the 12th straight acceleration, and non-GAAP earnings increased 156% to $0.41 per diluted share. Palantir also reported a mind-blowing Rule of 40 score of 155%.

Despite exceptional fundamentals, Brent Thill at Jefferies is concerned the company is not investing enough in its business. Palantir claims it has no real competition, but Anthropic is growing much faster. Anthropic's annual revenue run rate climbed from $1 billion in January 2025 to $65 billion in July 2026. Palantir's annual revenue run rate increased from $3 billion to $7 billion over the same period.

Additionally, Thill says Palantir has an unfavorable risk-reward profile due to its valuation. "The stock requires a heroic durability assumption to justify the current multiple," he wrote in a note to clients. Palantir trades at 68 times sales, which makes it the most expensive stock in the S&P 500 by a wide margin. CrowdStrike ranks second at 44 times sales.

Space Exploration Technologies: 58% downside implied by Morningstar's target price

SpaceX is a vertically integrated business that designs hardware and software across three operating segments: space, connectivity, and artificial intelligence. The company has a key competitive advantage in reusable rockets, which dramatically reduce launch costs. That advantage has helped SpaceX build the Starlink constellation, the largest satellite internet service in the world.

SpaceX runs two large AI computing facilities, Colossus I and Colossus II, which form one of the world's largest AI training clusters. The company recently agreed to rent AI compute capacity from those facilities to Alphabet's Google and Anthropic. In the future, SpaceX plans to use low-cost launch capabilities and an extensive satellite network to deliver AI cloud services from space.

Why? Orbital (space-based) data centers could solve the power and cooling constraints that limit terrestrial data centers by harnessing abundant solar energy and radiating heat directly into the cold vacuum of space. SpaceX attributes the vast majority of its addressable market to AI, so whether the company succeeds will have a substantial impact on its future growth trajectory.

In the second quarter, SpaceX's revenue increased 92% to $7.8 billion, up from 15% in the first quarter, driven by particularly strong sales growth in the AI segment. But the company reported negative free cash flow of $25 billion in the first half of 2026, meaning it will burn the $100 billion in cash on its balance sheet in two years even if AI investments remain constant.

Nicolas Owens at Morningstar thinks the market is too optimistic, in that the current share price suggests SpaceX will be successful in all endeavors, from perfecting the reusable Starship rocket to monetizing orbital (space-based) data centers. In other words, the stock is already priced for perfection, leaving no upside even in the best-case scenario.

"We think investors are still factoring more optimistic scenarios for Starship reusability and the commercial advantage of orbital data centers than are most probable at this point," he wrote in a note to clients. "The company's aggressively lofty valuation implies investors will have to wait decades for earnings to grow into SpaceX's multiples."

Indeed, SpaceX currently trades at 94 times sales. That makes it even more expensive than Palantir. In that context, it is entirely possible that SpaceX shares drop more than 50% in the next year. Regardless, investors should avoid the stock until the price is much more reasonable.

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Trevor Jennewine has positions in CrowdStrike and Palantir Technologies. The Motley Fool has positions in and recommends Alphabet, CrowdStrike, Jefferies Financial Group, and Palantir Technologies. The Motley Fool has a disclosure policy.