2 of the Most Sought-After AI Stocks Can Plunge Up to 68%, According to Select Wall Street Analysts

For more than three years, the rise of artificial intelligence (AI) has captured the attention and capital of investors. Providing software and systems with the tools to make split-second decisions without human oversight is a global addressable opportunity that PwC analysts peg at $15.7 trillion by 2030.

While most Wall Street analysts view the evolution of AI as a positive, not every company will necessarily benefit or justify its current valuation. According to select Wall Street analysts, two of the most sought-after artificial intelligence stocks -- Palantir Technologies (NASDAQ: PLTR) and Upstart Holdings (NASDAQ: UPST) -- can plummet up to 68% over the next year.

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Palantir has a sustainable moat premium for the ages

Whereas Nvidia is the face of the AI revolution, in terms of infrastructure, Palantir is, arguably, the hottest AI stock from an application standpoint. Shares of Palantir have soared by 2,350% since the start of 2023.

Palantir's AI and machine-learning-driven Gotham and Foundry software-as-a-service platforms have no large-scale competitors. Gotham assists the U.S. military and its allies in planning and overseeing military missions, while Foundry is an enterprise-focused subscription service that helps businesses make sense of their data.

Despite Palantir's sustainable moat, longtime bear Rishi Jaluria of RBC Capital sees shares heading to $50. If accurate, this would represent a 68% decline from where shares ended on March 6.

Jaluria previously cautioned that Foundry may be benefiting from several one-off sales and could be difficult to scale, given the differentiation needed to optimize Foundry for each client.

But the biggest issue Rishi Jaluria has raised with Palantir is its valuation. Palantir spent the entire second half of 2025 at a price-to-sales (P/S) ratio above 100 and currently sports a trailing 12-month P/S ratio of 90. History shows that companies at the forefront of game-changing technologies haven't been able to sustain P/S ratios above 30. Palantir has a P/S ratio three times the level that's historically indicated the presence of a bubble.

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Upstart may struggle to break its cyclical ties

Another highly sought-after AI stock that can take it on the chin in 2026, based on the recent prognostication of one Wall Street analyst, is cloud-based AI lending marketplace Upstart Holdings.

On paper, Upstart's operating model is exciting. It's fully automating more than 90% of the loans being vetted on its platform, thereby saving its more than 100 bank and credit union partners time and money. Further, its data-driven vetting process, which goes well beyond credit scores, is broadening the consumer lending pool without worsening delinquency rates.

Nevertheless, David Scharf of Citizens Financial Group foresees Upstart stock heading to $20. This bottom-barrel price target implies 28% downside from where shares ended on March 6.

Scharf suggests that Upstart is going to struggle to break free of the cyclical ebbs and flows that often plague financial and fintech stocks. Even though Upstart can expedite the personal loan vetting process, demand is still highly dependent on the health of the U.S. economy and prevailing interest rates.

What's more, Upstart is pushing into new loan origination lines, including auto and home equity loans. While these are considerably larger addressable markets, the margins from these segments may weigh on Upstart, relative to its margins from personal loans.

Sean Williams has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia, Palantir Technologies, and Upstart. The Motley Fool has a disclosure policy.