Palantir and Sandisk Stocks Are Soaring: Wall Street Says to Buy 1 and Avoid the Other

Both Palantir (NASDAQ: PLTR) and Sandisk (NASDAQ: SNDK) have had a great few weeks. Since the calendar flipped to August, Palantir's stock has risen more than 40%, and Sandisk's is up 35%. That's a great return in just a few weeks, but what investors need to know is if this rally is worth buying into or if a near-term top has been reached.

Let's take a look at what these two have going on and why Wall Street is more bullish on one than the other.

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What does Wall Street say?

Wall Street analysts offer one-year price targets for stocks to indicate the direction they expect the stock to go. While investors shouldn't treat these estimates as gospel, they should consider them, as the targets can help form a consensus about whether the analyst community believes a stock is overvalued or undervalued.

For Sandisk, its current price target is just over $2,100, a fair bit above today's current $1,600 stock price. If Sandisk suddenly rose to that level, it would provide investors with just over a 30% gain.

Palantir's outlook isn't rosy. The average price target is $192, about 10% higher than today's price. While a 10% gain in one year isn't nothing, that's about the average performance of the market over any given one-year period. You're not buying individual stocks to match the market; you're buying them to beat the market. As a result, a mere 10% gain in Palantir's stock over the next year would be disappointing to the average investor.

Clearly, the analyst community prefers Sandisk to Palantir. But why?

Sandisk's stock looks cheap compared to Palantir's

These two companies may be associated with the AI race, but they're pretty much unrelated. Sandisk makes NAND memory, which is utilized for long-term data storage. There is a major imbalance in memory chip supply and demand right now, which has caused prices to skyrocket. This has led to incredible growth for Sandisk and its peers, and with AI demand not letting up and new capacity still a ways out, market conditions will likely stay tight for a while.

Palantir is on the application side of AI, and its data analytics software has found widespread use in government and commercial applications. This led to strong growth, but Palantir faces several potent competitors, as companies are building their own solutions that integrate large language models like Claude or ChatGPT into internal systems rather than paying for expensive software like Palantir's.

Each of these is a smart AI investment, but only one has a premium price tag. At 109 times forward earnings versus 7.6 times forward earnings, there's a stark contrast between these two.

PLTR PE Ratio (Forward) data by YCharts

Sandisk's price is artificially low because the market is worried about the cyclical nature of the memory chip business eventually turning on the stock and destroying all of the business gains the company made throughout 2026. Palantir is expensive because it's one of the only ways to invest in the application of AI technologies right now.

If Sandisk traded at the same premium as Palantir, it would be one of the world's largest companies, valued at $3.4 trillion instead of $240 billion. That's a huge difference, and it all comes down to the market's confidence in long-term growth.

With Palantir, there's little margin for error; it must continue to grow rapidly to justify its valuation. Right now, that seems a pretty safe bet as it continues to exceed expectations quarter after quarter. For Sandisk, the market is skeptical about future growth, even though many in the industry don't expect conditions to improve until 2028.

There's a greater margin of safety with Sandisk versus Palantir, which is why I think Wall Street prefers it. I'm in the same boat and would much rather own Sandisk than Palantir.

Keithen Drury has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool has a disclosure policy.