Investing

1 AI Software Star to Buy Before It Jumps 69%, According to Wall Street

Joey Frenette

Published: March 4, 2025 11:34 am

After such a brutal sell-off in the stock market, just a day before tariffs on Canada and Mexico come online, prospective dip-buyers may be wondering where the best deals lie. Undoubtedly, the tech trade still seems to be unravelling — I have a feeling that the DeepSeek overhang still ought to bear part of the blame. And though it’ll take another really bad down day for the tech-heavy Nasdaq 100 to plunge into correction territory, the fact of the matter is that there are already numerous battered high-growth tech names that are already deep into bear market territory.

With some previously red-hot AI software stocks now rolling over, patient investors may have the entry point they’ve been waiting for. But with so much fear, uncertainty, and negative momentum hitting the broad stock markets right now, many hopeful dip-buyers may be inclined to wait things out or postpone the buying.

Indeed, the circumstances may have shifted, but the long-term thesis and the AI trend, I believe, are still intact. Of course, it remains to be seen how much valuations stand to contract further on last year’s highest flyers.

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Palantir stock has now shed a third of its value — some pundits think it’s time to buy the dip

Most notably among them is Palantir (NASDAQ:PLTR), a 2024 winner that’s been on the retreat of late. Despite the painful 33% plunge in shares, they’re still up close to 11% year to date. Indeed, a 33% drop would have been more of a crash than correction for almost any other firm. But unless you were late to the party (a buyer in late-February), odds are the latest dip hasn’t been as horrifying.

Though buying the dip at times like this can feel terrifying — especially if you’ve grown more anxious about the “AI bubble” chatter in recent months — the pullback in the AI data analytics firm does seem like more of a buying opportunity for those who aren’t afraid to confront volatility head-on, at least according to Dan Ives of Webush Securities. He’s sticking by a name he views as “the Messi of AI” and many other fallen tech darlings on the latest dip.

While the AI software star could have plenty of room to the downside, given last year’s historic multi-bagger ascent, Ives thinks the federal defense budget cut overhang has already worked its way into the stock.

Analysts are standing by their high price targets

In any case, Dan Ives is sticking with his $120.00 price target on the stock, which suggests 44% upside potential from Monday’s closing price. Despite Ives’ bullishness, he doesn’t have the highest target on Wall Street. Loop Capital boasts a $141.00 price target on the name, which is about 69% higher than the stock settled at the time of writing.

Given Palantir’s AI edge, Ives views the company as capable of winning more government contracts moving forward. If anything, Palantir may gain even more business over the long run, given its AI-driven solutions stand to create value and save money for organizations that leverage its offerings. Even CEO Alex Karp is completely nonchalant with the Pentagon’s recent budget cuts — it’s likely because he’s playing the long game.

In any case, Karp is set to sell more shares through the year. For some, that’s rung some alarm bells.

The valuation is still tough to get behind, though

Despite the severity of the plunge, the stock still does not look cheap in the slightest. The stock trades at a whopping 72.6 times price-to-sales (P/S) and more than 147 times forward price-to-earnings (P/E). Depending on who you ask, that’s still ridiculously expensive. Furthermore, time will tell the full impact of the Pentagon’s planned budget cuts.

For a name with near-perfection priced in, perhaps the occasional 33% drop shouldn’t be viewed as out of the ordinary. In any case, dip-buyers hoping to get on a ride back up to the triple-digits had better fasten their seatbelts as the latest “correction” may not accompany as steep of a rebound.