<div id="readability-page-1">Roughly three decades ago, the advent and proliferation of the internet changed the growth arc for corporate America. Since this transformational event, investors have been waiting for the next true technological leap forward to emerge. The rise of artificial intelligence (AI) looks to be the answer. The capacity for software and systems empowered with AI solutions to make split-second decisions without human intervention is a potential game-changer for most industries around the globe. It's the reason PwC pegged the global addressable market for AI at a staggering $15.7 trillion by 2030 in Sizing the Prize. <div><img src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84Mjc4MjkvaW52ZXN0b3ItcHJlc3Npbmctc2VsbC1idXR0b24tZ2V0dHkuanBnJnc9NzAw?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="700" height="466" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84Mjc4MjkvaW52ZXN0b3ItcHJlc3Npbmctc2VsbC1idXR0b24tZ2V0dHkuanBnJnc9NzAw"/>Image source: Getty Images. </div> But as is the case with all next-big-thing innovations, this optimism isn't universal. Although an overwhelming percentage of Wall Street analysts have buy ratings and lofty price targets attached to the faces of the AI revolution -- Nvidia (NVDA -1.04%) and Palantir Technologies (PLTR 7.64%) -- there are exceptions. Based on reports and issued price targets from two select Wall Street analysts, these foundational pieces to the evolution of artificial intelligence can plummet 42% and 74%, respectively, over the coming year. <h2>Nvidia: Implied downside of 42%</h2> Arguably no AI stock is more loved by Wall Street than Nvidia. Its graphics processing units (GPUs) hold the bulk of AI-data center market share and act as the brains powering split-second decision-making, generative AI solutions, and the training of large language models. Out of the 66 analysts who've issued a buy-, hold-, or sell-equivalent rating on Nvidia, 59 rate its stock a buy. What keeps Nvidia stock from being universally loved is analyst Jay Goldberg of Seaport Global. Goldberg is the lone Wall Street analyst to have a sell rating on Nvidia, with a price target of $100. If Goldberg's pessimistic prognostication was to come to fruition, the largest publicly traded company would tumble 42%. One of Goldberg's top criticism's of Nvidia is something I've been beating the drum on for the last year: internal competition. Though external competitors are ramping up their production of AI-GPUs, Nvidia's top threat may very well come from its own top customers by net sales. Most members of the &#34;Magnificent Seven,&#34; which happen to be some of Nvidia's top clients, are developing AI chips to use in their data centers. Even though these chips can't stand up to Nvidia's GPUs on a compute basis, they're considerably cheaper and not backlogged. In other words, they're going to minimize the AI-GPU scarcity that's helped drive Nvidia's pricing power and gross margin higher. Goldberg is also skeptical of the sustainability of the AI spending cycle. Nvidia CEO Jensen Huang isn't sparing any expense when it comes to sustaining his company's competitive edge. He aims to bring a new advanced AI chip to market annually, with Blackwell Ultra being the next in line to reach clients. While newer and faster chips should, on paper, help Nvidia support its premium pricing, it could also quickly depreciate prior-generation AI chips, such as the Hopper (H100). If previous generation AI-GPUs rapidly depreciate, it may delay upgrade cycles and/or irritate key customers. The other consideration here is that every next-big-thing technology since (and including) the proliferation of the internet has endured a bubble-bursting event early in its existence. Though it's impossible to predict when the music will stop since bubbles are typically driven by emotions, historical precedent doesn't lie. Investors consistently overestimate the adoption and utility of game-changing technologies. If an artificial intelligence bubble was to form and burst, there's not an AI stock that would be more directly impacted than Nvidia. <div><img src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84Mjc4MjkvbWlsaXRhcnktYXJteS1zb2xkaWVycy1zYWFzLWFydGlmaWNpYWwtaW50ZWxsaWdlbmNlLWNvbXB1dGVyLW1pc3Npb24tcGxhbi1nZXR0eS5qcGcmdz03MDA?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="700" height="466" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84Mjc4MjkvbWlsaXRhcnktYXJteS1zb2xkaWVycy1zYWFzLWFydGlmaWNpYWwtaW50ZWxsaWdlbmNlLWNvbXB1dGVyLW1pc3Npb24tcGxhbi1nZXR0eS5qcGcmdz03MDA"/>Image source: Getty Images. </div> <h2>Palantir Technologies: Implied downside of 74%</h2> But on a comparative basis, the projected downside for AI-data mining specialist Palantir Technologies over the next year is even more pronounced. According to longtime Palantir bear Rishi Jaluria of RBC Capital Markets, Palantir stock is headed to $40, which would represent a 74% pullback from where shares of the company closed on August 1. It's worth noting that Jaluria previously had an $11 target on Palantir entering 2025. Palantir stock has rallied more than 2,300% since the start of 2023 due to its shift to recurring profitability, as well as its irreplaceability. Though Palantir's enterprise-focused Foundry platform has some small-scale competition, neither Foundry nor its government-driven Gotham platform, which assists with military mission planning and execution, have large-scale challengers. This has led to consistent operating cash flow and sales growth of 25% or greater on an annual basis. Jaluria's displeasure with Palantir boils down to two factors. First, RBC Capital's software analyst is skeptical of Foundry's sales momentum. In a note released prior to Palantir's first-quarter operating results being revealed, Jaluria expressed his concerns that Foundry's rapidly rising margins were the result of one-off deals. Given the level of personalization needed of Foundry to satisfy its clients needs, it's not yet clear if this is a rapidly scalable segment. But make no mistake about it, the biggest problem with Palantir, in the eyes of Rishi Jaluria, is its valuation. As of the closing bell on Aug. 1, Palantir was tipping the scales at a price-to-sales (P/S) ratio of 123. To offer some idea of how far outside of historical norms this is, industry-leading companies on the cutting-edge of the dot-com bubble topped out at P/S ratios of roughly 30 to 40. No megacap company has ever been able to sustain a P/S ratio above 30, let alone four times that amount. Something else that should be taken into consideration is Gotham's narrow pool of potential clients. An AI- and machine learning-driven platform that assists with data collection and military mission planning isn't something that China, Russia, or dozens of other countries will be granted access to. In fact, only America and its immediate allies are potential buyers of these solutions. This places a genuine ceiling on Gotham's growth potential, which isn't ideal for a stock trading at a nosebleed valuation. </div>

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Wall Street analysts express mixed views on AI stocks Nvidia and Palantir. Nvidia, a leader in AI GPUs, faces a potential 42% decline, according to analyst Jay Goldberg, due to internal competition and concerns over the sustainability of AI spending. Meanwhile, Palantir Technologies could see a staggering 74% drop, as analyst Rishi Jaluria projects its stock to fall to $40, citing skepticism about its sales momentum despite recent profitability gains. Both companies are pivotal in the AI revolution, but analysts warn of significant risks ahead.

- The rise of artificial intelligence (AI) is seen as a potential game-changer for industries, with PwC estimating a global market of $15.7 trillion by 2030.  
- However, analysts express skepticism, predicting significant declines for key AI stocks like Nvidia and Palantir Technologies, with potential drops of 42% and 74%, respectively.  
- Concerns include internal competition for Nvidia and valuation issues for Palantir, which trades at a price-to-sales ratio far exceeding historical norms, limiting its growth potential.  

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The Faces of the Artificial Intelligence (AI) Revolution -- Nvidia and Palantir -- Can Plunge 42% and 74%, According to Select Wall Street Analysts