2 Incredibly Popular Stocks to Sell Before They Plummet 54% to 74% in 2026, According to Select Wall Street Analysts

Analysts are warning of significant downside for two AI-exposed names after rapid share-price gains: RBC Capital assigns Palantir (PLTR) a $50 target (≈74% downside) despite 63% revenue growth last quarter, 121% U.S. commercial growth, a 51% adjusted operating margin and an elevated forward P/E (~268) and P/S (>100). DA Davidson highlights extreme leverage at CoreWeave (CRWV) — $14bn debt, $55.6bn backlog, revenue +134% last quarter — while adjusted operating income was $217m versus interest expense >$310m and operating margin compressing to 16%, creating material execution and refinancing risk that could force a sharp repricing if growth or capacity delivery falters.

Analysis

Market structure: The AI-capex cycle benefits GPU/IP owners and hyperscalers (NVDA, MSFT, META) while punishing high-valuation pure‑plays (PLTR) and heavily levered capacity providers (CRWV). Expect pricing power at the infra layer (GPUs, colo) to stay elevated near-term; edge/data‑center services face volatile utilization and large single‑customer exposure. Cross-assets: CRWV’s leveraged profile should widen HY spreads and lift CDS/implied bond yields; equity vols for PLTR/CRWV will remain elevated into earnings and capacity updates.

Risk assessment: Tail risks include covenant breaches at CRWV if rates rise and backlog fails to convert, and regulatory/data‑use constraints that could dent PLTR’s government/commercial pipeline. Immediate (days) — event risk around quarterlies and developer updates; short (weeks–months) — conversion of backlog and margin trajectory; long (quarters–years) — secular enterprise AI adoption remains positive but at lower CAGR than current multiples price. Hidden dependencies: backlog is cancellable, top‑customer concentration (>30%) and energy/capex inflation are second‑order margin drivers. Key catalysts: Q1 guidance, backlog conversion rates, interest coverage >1.5 or deterioration.

Trade implications: Tactical shorts on CRWV (size 1–2% portfolio) via 3–6 month put spreads are preferred; short PLTR only if next two quarters’ revenue growth guidance falls <30% or forward P/E stays >150. Long selective infra exposure (NVDA 2–4%, MSFT 1–2%) via call spreads to capture durable GPU demand while selling covered calls after a +25% move. Rotate away from small‑cap AI services into large‑cap infra leaders; hedge credit exposure to leveraged names with 1–3y CDS or buying HY protection.

Contrarian angles: Consensus understates how sticky enterprise contracts can be for PLTR — if conversion rates exceed 70% and operating margins hold, current sell‑off could be overdone. Conversely, CRWV’s strategic GPU inventory could make it an acquisition target by hyperscalers; short positions should cap risk with stop‑losses given squeeze/bailout risk. Watch three metrics over next 90 days: backlog conversion %, interest coverage ratio (target >1.5 to de‑risk), and quarterly adjusted op‑margin change (>+200 bps as positive sign).

Key Decisions for Investors

• Establish a 1–2% portfolio short in CRWV via a 3–6 month put spread (buy 25–35% OTM put, sell 10–15% OTM put) sized to risk <2% NAV; close if interest coverage rises above 1.5 or backlog conversion >60% over two consecutive quarters.
• Initiate a tactical 1% short on PLTR (or buy 6–9 month deep‑ITM puts) if next two quarters' revenue guidance <30% y/y or forward P/E remains >150; set stop‑loss at +20% against position and cover if Rule of 40 drops below 60 or top‑line deceleration stabilizes.
• Deploy 2–4% long exposure to NVDA via 3–6 month call spreads (buy near‑OTM, sell +20% OTM) and 1–2% in MSFT long calls or stock; take profits if NVDA rallies +25% or implied vol >90th percentile.
• Reduce small‑cap AI services exposure by 30% vs current weight and reallocate proceeds to large‑cap infra and buy 1–3 year CDS protection or equivalent HY protection on the most leveraged names; monitor backlog conversion rate and interest expense/adj op income monthly.