Palantir Technologies (PLTR, Financial) is riding high after a jaw-dropping 340% gain in 2024, making it the S&P 500's top performer. But Morgan Stanley just hit the brakes, slapping the stock with an "underweight" rating and a $60 price target—27% below its current level. Analyst Sanjit Singh acknowledged Palantir's impressive strides in AI and commercial growth, including a 50% surge in its U.S. Commercial segment last year. Still, Singh argues the stock is priced for perfection, leaving little room for further upside without extraordinary results.
Morgan Stanley admitted it underestimated Palantir's ability to land massive government deals, like the $619 million Army Vantage contract, and control costs to boost free cash flow. But even with these wins, Singh sees the stock's valuation running way ahead of reality. Adding fuel to the fire, bullish investors point to Palantir's ties with the incoming Trump administration and high-profile endorsements, like Elon Musk sharing CEO Alex Karp's presentation on X. While these headlines may push the stock higher in the short term, Singh warns that fundamentals don't back up the hype.
Wall Street seems to agree. The broader consensus target is $46—40% lower than Palantir's current price. With business momentum stabilizing and the generative AI narrative cooling off, investors are left asking: Can Palantir deliver results that justify the sky-high expectations baked into its price? Or is this a case of too much, too soon? The clock is ticking, and the market's patience won't last forever.
