Both Tesla (TSLA 2.28%) and Palantir (PLTR +1.91%) have gotten off to rough starts this year, but some analysts think more pain could be in store for their shareholders.
- GLJ Research reiterated its sell rating on Tesla with a 12-month price target of $25.28 in late February. That implies a 94% downside from its current share price of about $409.
- RBC Capital's Rishi Jaluria reiterated his sell rating on Palantir with a price target of $50 ahead of its fourth-quarter earnings report. That implies a 63% downside from its current share price of about $135.
While these analysts' bear cases might represent extreme outcomes, they point out key risks investors should consider.
Image source: Getty Images.
Tesla: 94% implied downside
Tesla's current stock price reflects the optimism shareholders have about its future with artificial intelligence and robotics rather than the ongoing operations of its core electric vehicle (EV) business. The market brushed off a decline in automobile deliveries in 2025 after CEO Elon Musk shared plans to expand its autonomous taxi service to "dozens of major cities" by the end of 2026 during Tesla's fourth-quarter earnings call. Additionally, Musk shared plans to retool some automobile factories to produce 1 million Optimus robots annually.
But the analysts at GLJ think investors are overly optimistic about how quickly and to what extent consumers will adopt Tesla's humanoid robots. The researchers say commercial viability for the robot is far from guaranteed. What's more, it believes the value of successfully commercializing Optimus is only a fraction of what the market is currently pricing into the stock. About Optimus, GLJ estimates the market is pricing in with near certainty what GLJ believes to have a 15% to 20% chance of occurring.
The market also expects Tesla to become one of the largest ride-hailing providers in the world. However, that would require it to attract ridership from leading platforms to its own platform, which hasn't been easy for existing competitors in the self-driving car space. Many have partnered with Uber or Lyft to meet customers where they already are and increase their capital efficiency.
NASDAQ: TSLA
Key Data Points
Analysts expect Tesla's EV deliveries to pick back up in 2026, although perhaps not to 2024 levels. The current consensus is for 1.75 million units, which may be lower due to the shift in production capacity toward Optimus robots. Meanwhile, the shift from offering EV buyers the ability to purchase Tesla's Full Self-Driving (FSD) capabilities upfront to making them a subscription-only offering will cut into the company's gross margins in the near term but could provide it with a source of strong and predictable free cash flow down the line, especially if Optimus subscriptions start to have a meaningful impact on Tesla's financial results.
Tesla's share price doesn't reflect its current business situation. That's evident in its forward P/E ratio of about 200 and its forward price-to-sales ratio of about 15, based on analysts' 2026 revenue estimates. In order to invest in Tesla now, you have to believe it will become a market leader in robotaxis and that there will be strong commercial adoption of its Optimus robots. Otherwise, it doesn't make sense to buy shares at this price.
Palantir: 63% implied downside
Palantir has been one of the best-performing AI stocks over the last few years, producing stellar revenue growth and improved profitability. That performance was fueled by its artificial intelligence platform (AIP), which enables users to plug in a large language model and harness the power of its data analytics software using natural language. It has significantly expanded the use cases for Palantir's software while reducing the learning curve for clients to get useful insights out of it.
Management expects its momentum to continue. After delivering revenue growth of 56% in 2025, it sees top-line growth accelerating to 61% this year. That premise is supported by the $4.38 billion in U.S. commercial remaining deal value it had at the end of 2025, up 145% year over year. What's more, its operational leverage should produce further margin expansion and excellent bottom-line results. Management's guidance suggests adjusted operating margin will expand from 50% in 2025 to 57% in 2026, in line with what it achieved in the fourth quarter.
NASDAQ: PLTR
Key Data Points
However, RBC's Rishi Jaluria foresees a few challenges for the business. First, its government contract value, which still accounts for the majority of its U.S. revenue, appears to have fallen, based on data checks. That said, he says geopolitical uncertainty could fuel long-term demand for Palantir's services from government agencies. Second, he's not confident in the outlook for sustained growth of the commercial segment, noting that there are indications of customers shifting away from the company.
Despite its impressive results and the continued momentum of both government and commercial contracts, it's Palantir's stock price that makes it risky. Shares trade for over 100 times forward earnings estimates and more than 44 times sales expectations for 2026. Investing in Palantir at this price requires an expectation that it will continue to grow at a breakneck pace for many more years. Some investors may be encouraged by the excellent fourth-quarter results and management's positive outlook. But Jaluria feels the risk/reward profile is "skewed to the downside" at Palantir's current stock price.
