The artificial intelligence (AI) decision-making company Palantir (PLTR +1.91%) and the large cloud provider Oracle (ORCL 2.02%) have been two of the more closely followed stocks in the artificial intelligence sector, easily the hottest sector of the market in 2025. Both have endured ups and downs as AI surged and then struggled when investors began to question valuations and AI capital expenditure (capex) plans.
Both will undoubtedly be watched closely in 2026, as the AI trade continues to unfold. As far as Wall Street analysts stand, the group is neutral on one of these stocks, but thinks the other will surge.
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Palantir: A spectacular company that may be fully valued
Palantir has delivered incredible returns for investors. At the time of this writing, the stock is up over 147% over the past year and more than 1,920% since it went public in October 2020. The company utilizes AI to gather and analyze data in ways never before possible.
Palantir's solutions can supposedly gather data from any source and leverage AI to identify trends that the human eye might not have been able to detect on its own. Palantir's technology can also recommend specific actions based on data and provide potential impact scenarios as well. Furthermore, the platform is very easy to use for people without experience working with large language models. The company's solutions have resonated greatly with governments and businesses of all kinds.
NASDAQ: PLTR
Key Data Points
While most investors and analysts are impressed by Palantir, every asset has a price. Palantir trades at 256 times forward earnings. This is one reason Wall Street analysts have pulled back, largely saying the stock is overvalued. Of the 16 analysts who have issued research reports on Palantir over the past three months, three have a buy rating on the company, 11 recommend holding, and two suggest selling, according to TipRanks. The average 12-month price target implies that the stock is fairly valued today.
Most analysts do not question Palantir's strong use case, resonance with customers, or execution; however, the valuation simply makes it difficult for most institutional investors to grasp. I largely agree with Wall Street on this one, but so far, the stock has proven all the naysayers wrong.
Oracle: From AI darling to overhyped back to darling?
Oracle was on a wild ride last year. In its first-quarter fiscal 2026 earnings results, Oracle reported an astonishing $455 billion in remaining performance obligations (RPOs), representing revenue under contract but not delivered or recognized. All of this came from AI data center demand from the hyperscalers. The blowout numbers and guidance left Wall Street floored. The stock shot up nearly 40% overnight, and Oracle suddenly found itself an AI darling.
However, the hype would not last long, as reports about the amount of debt Oracle would need to issue to finish building out its data centers along with thin margins in this business spooked investors. Additionally, investors eventually found out that $300 billion of the RPOs reportedly came from a multiyear contract with OpenAI.
The problem is that OpenAI has been signing AI infrastructure deals with everyone and now has $1.4 trillion of obligations, leading investors to wonder how the company will fund all of these commitments. Oracle's latest quarterly results showed negative free cash flow, and the company has also seen yields on credit default swaps tied to its debt surge, indicating investors are concerned about the company. The stock is now up close to 18% over the past year, which isn't bad but also a far cry from what it rose to in September 2025.
NYSE: ORCL
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Still, Wall Street analysts are optimistic about the company. Over the last three months, 34 Wall Street analysts have issued research reports on Oracle, with 24 assigning a buy rating and 10 recommending hold. The average 12-month price target implies 60% upside, according to TipRanks. Now, it is possible that some of these ratings date back to late September or early October and are therefore outdated.
However, recent reports have also been bullish. Mizuho analyst Siti Panigrahi recently named the company a top pick for enterprise software in 2026. While Panigrahi acknowledged investor concerns, Oracle's tech stack will still be a big beneficiary of AI, the analyst notes. Furthermore, Panigrahi still views AI capacity as constrained and notes that Oracle intends to maintain an investment-grade rating on its debt.
Panigrahi assigns an outperform rating and a $400 price target on the stock, implying over 100% upside. I'm not sure I would get quite that bullish yet, given broader concerns about OpenAI's outstanding commitments and some of the deteriorating financials at Oracle. However, the stock can certainly be a long-term winner, especially if it can overcome these challenges.
