2 Premier Artificial Intelligence (AI) Stocks That Can Plunge Up to 63%, According to Select Wall Street Analysts

Wall Street caution is mounting on AI-linked mega-growth names: Jefferies flags Palantir’s implied downside at 54% (sell, $80 target) as P/S stays elevated (72x TTM, >100x at the start of 2026). Wells Fargo similarly targets Tesla with a 63% implied downside to $130, citing shrinking vehicle margins from price cuts and a 198x 2026 EPS multiple versus only 12% expected sales growth. Overall, the article frames both stocks as priced aggressively despite optimism around the broader AI-driven S&P 500 rally.

Analysis

This reads less like a fundamental inflection and more like a positioning warning: both names are still “story stocks,” so the first-order risk is multiple compression, not an immediate earnings cliff. For PLTR, the moat may be real, but the market is paying venture-style duration for cash flows that are still tied to a handful of long-cycle contracts; that leaves the stock exposed to even modest deceleration or any hint of slower commercial seat expansion.

TSLA is the cleaner short on fundamentals because the core business is no longer a monopoly-like growth engine; it’s an auto manufacturer with software optionality attached. If pricing pressure persists for another 1-2 quarters, the market will have to re-underwrite earnings quality rather than just growth, and that tends to hit the multiple before the P&L. The bigger second-order effect is de-risking across high-beta AI/EV baskets, with systematic flows likely to punish momentum names more than the underlying fundamentals justify.

Contrarianly, consensus is underestimating reflexivity: these stocks can ignore bearish targets until one earnings print confirms that growth is slowing and the narrative has no immediate monetization path. That makes outright shorting expensive unless you have timing discipline. The cleaner expression is relative value or defined-risk options, because the downside is real over 1-3 months, but both names can stay detached from fundamentals for much longer if retail and thematic flows keep bidding them up.

Falsifiers: for PLTR, another quarter of sustained commercial growth and expanding FCF margins would delay multiple compression; for TSLA, stabilization in auto gross margin ex-credits and evidence that price cuts have stopped would weaken the bearish case.

Key Decisions for Investors

• Short TSLA on strength or via 3-6 month put spreads; target catalyst window is the next delivery/gross-margin print. Risk/reward favors defined downside if margin commentary worsens, but cover if auto gross margin ex-credits stabilizes for two consecutive quarters.
• Relative-value: long NVDA / short PLTR, 1:1 dollar-neutral. Thesis is that NVDA’s valuation is still anchored by realized earnings power, while PLTR is priced on a terminal story; this should outperform if AI multiples compress over the next 1-3 months.
• Avoid naked shorting PLTR unless you can tolerate squeeze risk; if expressing a bearish view, use put spreads into any post-earnings rally. The short thesis only works if the market starts demanding a lower software multiple on slower commercial growth.
• Watch ARKK / high-beta growth as the spillover vehicle. If PLTR or TSLA break on volume, expect a 2-5 day de-risking move across momentum tech; that is the better tactical short than the single names on the first reaction.
• Set a thesis checkpoint after the next earnings cycle: if PLTR remains above an extremely elevated sales multiple despite slowing growth, fade rallies harder; if TSLA guidance stops relying on future autonomy monetization, the stock likely rerates lower over 6-18 months.