Palantir Technologies (PLTR +1.40%) CEO Alex Karp described his company's revenue growth as "otherworldly" in a recent letter to shareholders. Even if you think that's an exaggeration, the sentiment is on point.
Unsurprisingly, Palantir's stock has been on a sizzling hot streak. Shares of the artificial intelligence (AI) software company skyrocketed 135% last year. However, Wall Street expects Palantir's stock to stall in 2026 but has great expectations for another AI stock.
NASDAQ: PLTR
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Why Wall Street isn't all aboard the Palantir train
The consensus 12-month price target for Palantir reflects a potential upside of a low single-digit percentage. Of the 25 analysts who cover the stock that S&P Global surveyed (SPGI 1.48%) in January, only four recommended buying Palantir.
Many retail investors remain all aboard the Palantir train. Why isn't Wall Street on board as well? The simplest (and, I'd argue, best) answer is concern about valuation.
Analyst reports that I've read don't knock Palantir's business. They have no reason to do so. There's little to complain about. Palantir's Rule of 40 score of 114% is in a league of its own. The company continues to win new customers, both in the government sector and the private sector, at an impressive rate.
However, Palantir's valuation is a different story. The AI software company's forward price-to-earnings ratio is slightly below 182. Only one member of the S&P 500 (^GSPC 1.11%) has a higher forward earnings multiple – Tesla (TSLA 2.76%).
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Another AI stock analysts predict will soar 40% this year.
On the other hand, Wall Street is decidedly bullish about German enterprise resource planning software company SAP (SAP +0.29%). The average 12-month price target for the stock is roughly 40% higher than the current share price. Of the 15 analysts surveyed by S&P Global who cover SAP, 12 rated the stock as a "buy" or a "strong buy."
SAP doesn't receive nearly as much AI hype as Palantir. However, the company is investing heavily in AI. For example, it has integrated agentic AI into its platform and operates a sovereign AI cloud for the European Union.
NYSE: SAP
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Why do analysts seem to like SAP so much more than Palantir? Again, the answer boils down mainly to valuation. Granted, the stock doesn't appear to be a bargain at first glance. SAP's forward earnings multiple is 28.5.
But analysts factor expected growth into the valuation calculations. SAP's price-to-earnings-to-growth (PEG) ratio is exactly 1.0 right now. This indicates a reasonably attractive valuation for a growth stock. In case you're wondering, Palantir's PEG ratio is nearly 2.9, which isn't attractive.
Is Wall Street right about Palantir and SAP?
Palantir's Karp believes that analysts and other Palantir skeptics are mistaken. He wrote in his November 2025 letter to shareholders:
Some of our detractors have been left in a kind of deranged and self-destructive befuddlement. It has indeed been difficult for outsiders to appraise our business, either its significance in shaping our current geopolitics or its value in the vulgar, financial sense.
I wouldn't characterize any Wall Street analyst who has express reservations about Palantir as being in a "deranged and self-destructive befuddlement." However, Karp is probably correct that his company's robust growth has made it difficult to assess its intrinsic value. That said, I suspect that the majority of analysts who expect Palantir's momentum will stall in 2026 are right.
Are the analysts who are bullish about SAP also right? I have no idea if the stock will soar 40% over the next 12 months. But I predict that SAP's shareholders will enjoy a better year in 2026 than they did in 2025.
