2 Popular AI Stocks to Sell Before They Drop 57% and 60%, According to Wall Street Analysts

Jefferies analyst Brent Thill’s $80 Palantir target implies 60% downside from $199, citing a 78x sales valuation despite 93% Q2 revenue growth; the article notes the broader analyst median target is $223. Susquehanna’s $15 Super Micro target implies about 57% downside from $35, amid gross-margin declines from 13.8% in fiscal 2024 to 10.8% in fiscal 2025 and governance and export-control concerns. Federal prosecutors charged three individuals associated with Super Micro over an alleged plan to divert $2.5B in AI servers to China; the article says earlier accounting-irregularity allegations have not been substantiated.

Analysis

The key distinction is between demand exposure and value capture. For PLTR, the bear case is multiple duration: even continued growth may not protect the stock if incremental growth slows or investors demand a lower sales multiple. Conversely, a sharp short risks being squeezed if adoption converts into durable, expanding customer use; analyst targets are not catalysts. Watch growth quality and forward guidance, not headline AI enthusiasm alone.

SMCI presents a different asymmetry: strong industry demand does not ensure attractive economics for a server assembler. If price competition keeps compressing margins, earnings estimates can fall even while shipments rise. Governance and export-control uncertainty add a discount that may persist independently of whether accounting allegations are substantiated. A further restriction or customer/supplier response could disrupt deliveries; alternatively, cleared controls and stable margins could trigger a sharp relief rally. Potential beneficiaries of redirected server orders include Dell Technologies and Hewlett Packard Enterprise, though any share transfer is conditional and should be verified.

Near term, analyst calls alone may have limited impact; over 1–3 months, earnings revisions, margin disclosures, and legal or regulatory updates matter more. Over 6–18 months, PLTR’s valuation depends on sustained monetization, while SMCI’s depends on retaining economics and restoring confidence. The contrarian risk is that investors may conflate SMCI-specific execution/governance issues with AI infrastructure demand, while underestimating how little demand guarantees supplier profitability.

Key Decisions for Investors

• PLTR: Avoid adding at current levels; for a bearish expression, consider a small, defined-risk put spread rather than an outright short, entered only if price/earnings momentum weakens or guidance fails to sustain growth expectations. Risk: strong adoption or another acceleration can overwhelm valuation concerns. Reassess if forward growth and customer monetization remain robust.
• SMCI: Keep exposure limited; consider a defined-risk bearish spread only after verifying the status and scope of the export-control case, company disclosures, and order/customer implications. Falling gross margins or estimate cuts would support the thesis; cleared controls, margin stabilization, or resilient guidance would invalidate it. Avoid treating the analyst target as a price catalyst.
• Relative-value watch: If evidence shows server orders shifting away from SMCI, evaluate a small long Dell Technologies or Hewlett Packard Enterprise versus short SMCI basket, sized for substantial AI-demand beta and short-squeeze risk. Do not initiate solely on the reported allegations; first confirm customer/order changes and relative margin trends.
• Catalyst dashboard: Track PLTR forward revenue guidance and growth deceleration; SMCI gross-margin trajectory, shipment mix, audit/governance disclosures, and regulatory developments. No trade is warranted if these indicators remain unchanged and the move is only analyst commentary.