Investors Believe Overvaluation Is One of the Biggest Risks to the AI Story. Here Are 2 AI Stocks With the Frothiest Valuations.

In The Motley Fool's 2026 AI Investor Outlook Report, 90% of investors surveyed planned to buy or hold artificial intelligence (AI) stocks in 2026. However, in the survey, one of the top concerns from investors regarding AI stocks was valuation.

Many leading AI stocks are actually trading at very reasonable valuations, but that's not the case with all of them. Let's look at two AI stocks with the highest price tags.

1. Palantir

The poster child for AI stocks being overvalued is no doubt Palantir Technologies (NASDAQ: PLTR). The stock trades at a whopping forward price-to-sales (P/S) ratio of 67 times 2025 analyst estimates and 49 times the 2026 consensus. At the height of software-as-a-service (SaaS) valuations, the median enterprise value (EV)-to-sales multiple (EV takes in account a company's net cash or debt) for software stocks was around 20 times in 2021 and 2022, so Palantir has far exceeded those levels.

SaaS stocks can offer a cautionary tale for Palantir investors. With growth in the mid-30% range, valuations soared for the group at the start of this decade, but they have since plummeted as revenue growth has slowed, and EV/S multiples for the group are now closer to 6 times.

Now working in Palantir's favor is that its revenue growth has been accelerating every quarter for the past two years, and came in at 63% last quarter. The growth is being led by U.S. commercial customers, who are increasing adoption of its Artificial Intelligence Platform (AIP). The company's AI bootcamp strategy has helped remove friction from the sales process by quickly demonstrating value to potential clients, which is enabling it to quickly add new customers. This could be seen by the 45% increase in its customer count in Q3 2025.

At the same time, existing customers are quickly expanding with Palantir once they become customers. Its net dollar retention has been 134% over the past 12 months (any number over 100% is growth), and its total U.S. commercial contract value surged 342%. Meanwhile, its largest customer, the U.S. government, is also growing quickly, as the U.S. looks to modernize its defense and intelligence capabilities.

Given the breadth of use cases for AIP, Palantir could eventually become one of the biggest companies on the planet. However, right now the stock is ahead of itself, and it's not uncommon for even great growth stocks to see their stock prices cut in half or more before rallying later to new heights. In fact, Nvidia, Apple, and Amazon have all seen their stocks drop 80% or more at one point, and they are now among the largest companies in the world.

Image source: Getty Images.

2. CrowdStrike

Trading at a forward P/S multiple of nearly 25 times the fiscal 2026 consensus and 20 times fiscal 2027 forecasts, cybersecurity company CrowdStrike (NASDAQ: CRWD) is another pricey stock. What makes its valuation even more notable is that until last quarter, the company's annual recurring revenue (ARR) growth had been steadily decelerating over the past two years. ARR is the annualized value of its high-gross-margin subscription contracts and doesn't include professional services revenue.

Last quarter, the company's fiscal Q3 year 2026 ARR growth accelerated to 23% growth from 20% the prior quarter, while its total revenue rose 22% compared to 21% in fiscal Q2. With that type of revenue growth, it is difficult to justify CrowdStrike's current valuation. However, the company is seeing strong traction with its next-generation AI solutions.

A lot of the strength CrowdStrike is seeing with its next-gen AI products can be credited to the introduction of its Falcon Flex licensing model. This solution gives clients access to its entire cybersecurity product portfolio but lets customers use and pay for modules only when they need to deploy them. ARR for customers that have adopted Falcon Flex more than tripled in Q3, and CrowdStrike said that many of these customers are greatly increasing their Flex credits when they renew. As a result, the company upped its new ARR forecast for the year.

That said, CrowdStrike's revenue growth really needs to accelerate into the 30% range and stay there to justify its current valuation. It's a great company benefiting from increasing adoption of its next-gen AI solutions, but there just doesn't seem to be a lot of upside for the stock at current levels.

Geoffrey Seiler has positions in Amazon. The Motley Fool has positions in and recommends Amazon, Apple, CrowdStrike, Nvidia, and Palantir Technologies. The Motley Fool has a disclosure policy.