Palantir Technologies Inc. was downgraded at Morgan Stanley, the latest indication of how Wall Street is skeptical of the software company, which has touted itself as a major player within artificial intelligence.
(Bloomberg) — Palantir Technologies Inc. was downgraded at Morgan Stanley, the latest indication of how Wall Street is skeptical of the software company, which has touted itself as a major player within artificial intelligence.
Shares fell 8.3% on Thursday. While Palantir remains up more than 130% this year, a beneficiary of investor enthusiasm for AI, it is 25% below a peak hit earlier this month, and down more than 60% off a 2021 high.
Analyst Keith Weiss wrote the stock’s valuation reflects “AI euphoria,” but that any tailwind from this trend will take time to materialize.
“While bringing product to market was enough to inspire investor optimism in the past six months, we see the focus shifting to investors parsing out the companies that can drive revenue from these offerings in the most timely and effective ways,” he wrote to clients. “To that end, Palantir still appears very early as the company has clearly communicated that it has yet to determine a monetization strategy for its solution.”
Earlier this month, Palantir gave a sales forecast that was seen as disappointing, especially after it said that demand for a new AI tool was “without precedent.”
Morgan Stanley cut its rating from equal weight to underweight, leaving fully half of analysts with the equivalent of a sell on Palantir, a high ratio. Compared with the nine bearish analysts, there are four with buy ratings and five with a neutral view.
Overall, the recommendation consensus on the stock — a proxy for its ratio of buy, hold, and sell ratings — is 2.44 out of 5, the lowest among the 117 components of a software index.
–With assistance from Subrat Patnaik and Taryana Odayar.
(Updates to market close.)
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