For nearly two years, artificial intelligence (AI) has been a dominant topic on Wall Street, and for good reason. The ability of AI-driven software and systems to learn and evolve without human intervention has made this technology valuable across various sectors and industries globally. Analysts at PwC predict a $15.7 trillion boost to the global economy by 2030 due to the rise of AI.
Despite the positive outlook, not all companies in the AI sector will be winners in the long run. Some may see significant declines, as suggested by select Wall Street analysts. Three AI-dependent companies could see their stocks drop by up to 78% based on these analysts’ price targets.
Nvidia: Implied downside of 28%
Nvidia, a semiconductor giant, is the first AI stock facing a potential significant decline. Analyst Gil Luria of D.A. Davidson predicts a 28% drop in Nvidia’s stock price. The company’s success in AI is evident through its H100 graphics processing unit, which has become crucial for high-compute data centers. However, increasing competition and a lack of insider buying signal potential challenges ahead for Nvidia.
Despite being a leader in AI innovation, Nvidia may face headwinds in the future, with competition and lack of significant innovations posing risks to its stock price.
Upstart Holdings: Implied downside of 76%
Another AI stock facing a potential decline is Upstart Holdings, a cloud-based lending platform. Analyst David Chiaverini of Wedbush predicts a 76% drop in Upstart’s stock price. Despite its innovative loan-vetting process, Upstart’s model is highly dependent on favorable lending rates, which could pose challenges in a changing economic environment.
With uncertainties surrounding its operating model and the impact of economic conditions on lending activity, Upstart may face significant hurdles in the future.
Palantir Technologies: Implied downside of 78%
Palantir Technologies, a data-mining specialist, is the third AI stock that could see a substantial decline. Analyst Rishi Jaluria of RBC Capital maintains a $9 price target for Palantir, implying a 78% downside. While Palantir’s unique operating model has driven its growth, challenges such as limited market access and high valuation multiples could hinder its future performance.
Despite its unique offerings, Palantir faces obstacles like market restrictions and high valuation multiples, which could impact its stock price in the long run.