Palantir Stock vs. Sandisk Stock: Wall Street Says Buy One and Sell the Other

The S&P 500 (SNPINDEX: ^GSPC) increased 16% last year as the artificial intelligence trade continued to drive the market. Palantir Technologies (NASDAQ: PLTR) returned 135%, the ninth-best performance in the index. And Sandisk (NASDAQ: SNDK) returned 559%, the best performance in the index.

Interestingly, while artificial intelligence will undoubtedly be a major investment theme in 2026, Wall Street expects Palantir and Sandisk shares to move in opposite directions, with one rising and the other falling.

• Among 29 analysts, Palantir has a median target price of $200 per share. That implies 17% upside from its current share price of $171.
• Among 24 analysts, Sandisk has a median target price of $317 per share. That implies 23% downside from its current share price of $414.

The consensus estimates listed above imply investors should buy Palantir and sell Sandisk. Here are the important details.

Image source: Getty Images.

Palantir Technologies: 17% upside implied by the median target price

Palantir builds data analytics and artificial intelligence (AI) platforms for customers in the public and private sectors. Its key differentiator is ontology-based software, meaning its products are built around a decisioning framework made more effective over time by machine learning (ML) models. Use cases range from retail demand forecasting and supply chain management to hospital resource allocation and battlefield analytics.

In 2024, Forrester Research ranked Palantir as the best AI/ML platform in terms of current capabilities and growth strategy, scoring it above similar products from Alphabet, Amazon, and Microsoft. The analysts commented, "Palantir is quietly becoming one of the largest players in this market." And in 2025, Forrester recognized Palantir as a leader in AI decisioning platforms.

The problem with Palantir is valuation. Shares currently trade at 117 times sales, which makes it the most expensive S&P 500 company several times over. In fact, Palantir could decline 65%, and it would still be the most expensive stock in the index. Very few software companies have ever achieved a price-to-sales ratio above 100, and none have maintained such a rich valuation indefinitely.

What does that mean for investors? Palantir shares may continue increasing in the months ahead as Wall Street expects, but the risk-reward profile is skewed toward risk. That means the stock could drop sharply for any number of reasons, including reasons not specific to the company, such as concerning economic data. I think investors should avoid the stock, or at least keep any positions very small.

Sandisk: 23% downside implied by the median target price

Sandisk designs and manufactures data storage solutions based on NAND flash technology. The company realizes cost efficiencies and supply chain security through a joint venture with Kioxia, a Japanese flash manufacturer with which it shares research and development (R&D) expenses and capital expenditures related to process technology development and memory wafer production.

Sandisk is the fifth-largest supplier of NAND flash technologies, but the company gained a percentage point of market share during the first half of 2025, and that momentum is likely to continue. Two hyperscalers recently started testing its solid-state drives (SSDs), while a third hyperscaler and major storage original equipment manufacturers (OEMs) plan to start testing its SSDs this year.

Sandisk reported financial results for the first quarter of fiscal 2026 (ended October 2025) that beat estimates on the top and bottom lines. Revenue increased 23% to $2.3 billion, driven by strong sales growth in the data center and edge (personal computers and mobile devices) segments. Yet, non-GAAP (generally accepted accounting principles) earnings dropped 33% to $1.22 per diluted share.

Importantly, management expects non-GAAP earnings to nearly triple sequentially in the second quarter. The construction of artificial intelligence data centers -- which need fast and power-efficient flash storage -- has led to an unprecedented memory supply shortage (including but not limited to NAND flash), causing prices to increase substantially.

Wall Street expects Sandisk's adjusted earnings to increase at 79% annually through fiscal 2029. That makes the present valuation of 170 times earnings look very expensive, particularly because Wall Street might be overestimating future earnings. Demand for memory chips is notoriously cyclical, and JPMorgan analysts see the supply-constrained environment as a sign that the current cycle is nearing its peak.

Indeed, the NAND flash memory sales are projected to increase at 14% annually through 2030, according to Grand View Research. That hints at much slower earnings growth than what Wall Street forecasts, in which case, the market would probably afford Sandisk a lower price-to-earnings ratio. I think the stock is too hot to touch -- it's already up 74% in January after gaining 559% in 2025. Shareholders with large positions should consider trimming.

JPMorgan Chase is an advertising partner of Motley Fool Money. Trevor Jennewine has positions in Amazon and Palantir Technologies. The Motley Fool has positions in and recommends Alphabet, Amazon, JPMorgan Chase, Microsoft, and Palantir Technologies. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.