AI stocks are in focus today after CoreWeave raised $1.5 billion in what was the biggest tech IPO in the U.S. since 2021. The AI cloud infrastructure company now trades on the Nasdaq Exchange as CRWV. 

CoreWeave’s offering valued it at about $20 billion, highlighting continued interest in AI names. 

Still, Gabriela Borges – a Goldman Sachs analyst – remains “neutral” only on a high-flying artificial intelligence company, Palantir (PLTR). Her $80 price target on PLTR signals potential downside of more than 10% from its previous close. 

Palantir stock is currently up well over 30% versus its year-to-date low.   

Palantir Stock Is Egregiously Overvalued

Gabriela Borges continues to see Palantir as a distinguished name in the AI applications space. It’s just the valuation tied to the data analytics firm that doesn’t sit well with her.

Palantir stock is currently going for more than 280 times its estimated earnings for 2025 versus 30 times for Microsoft (MSFT). Even the AI darling itself, Nvidia (NVDA), is priced at about 28 times forward at the time of writing. 

PLTR’s high valuation is a significant concern particularly because experts are now projecting a tariffs-driven recession in the U.S. by the end of 2025.

Overvalued stocks are often more sensitive to economic slowdowns, as they make it incrementally more difficult for these companies to meet inflated expectations.    

Plus, the Federal Reserve may not be able to lower interest rates this year if it sees undeniable signs of a recession ahead, which could further make high-flying names like Palantir less attractive for investors.  

Wall Street Is Keeping Cautious on PLTR Shares

Goldman Sachs is cautious on Palantir stock also because President Donald Trump has recently hinted at a significant potential decline in defense spending over the next five years. 

If implemented, the defense budget cuts could prove a material headwind for PLTR, given defense contracts are a major source of revenue for the Denver-headquartered firm. 

In 2024, the Department of Defense contributed about 17% to Palantir’s overall revenue. 

Note that Gabriela Borges is not the only analyst that’s currently reserved on Palantir shares. Wall Street has a mean target of about $84 on PLTR, which is roughly in line with its current trading price.