3 Premier Artificial Intelligence (AI) Stocks That Can Plunge by Up to 86% in 2025, According to Select Wall Street Analysts
The year 2024 marked a significant milestone for the stock market, with the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite reaching multiple record-closing highs. While various factors contributed to this upward trend, one technology stood out as a key driver: Artificial Intelligence (AI).
The Rise of AI
Artificial intelligence has revolutionized numerous industries, from healthcare and finance to transportation and education. Its ability to process vast amounts of data, learn from experience, and make decisions without human intervention has made it an essential tool for businesses worldwide.
As the adoption of AI continues to grow, investors have been drawn to companies at the forefront of this technology. However, not all AI stocks are created equal. Select Wall Street analysts have forecasted significant declines in some of these premier AI companies, with potential drops of up to 86%.
1. SoundHound AI (SOUN)
Ladenburg Thalmann analyst Glenn Mattson has predicted a decline of 66% in shares of SoundHound AI, from north of $20 to just $7 in 2025.
SoundHound’s stock has experienced significant growth recently, driven by its position in the next stage of AI’s evolution: AI agents. The company envisions a world where AI voice integration and intuitive commands unify voice ecosystems.
However, SoundHound is not profitable and is burning through cash as it expands into new verticals. Its valuation is also concerning, with a price-to-sales (P/S) ratio of 94.
2. Palantir Technologies (PLTR)
Jaluria has forecasted an 86% decline in shares of Palantir Technologies, from its current value to just $1 in 2025.
Palantir’s stock has gone virtually parabolic in recent months due to its position on the leading edge of next-big-thing innovations. The company has a P/S ratio of nearly 73, which is unsustainable given its valuation.
While Palantir is growing at double-digit rates, its valuation is concerning. History has shown that companies on the leading edge of new technologies often top out with a P/S ratio of 30 to 40.
3. SoundHound AI (SOUN)
Ladenburg Thalmann analyst Glenn Mattson has predicted a decline of 66% in shares of SoundHound AI, from north of $20 to just $7 in 2025.
SoundHound’s stock has experienced significant growth recently, driven by its position in the next stage of AI’s evolution: AI agents. The company envisions a world where AI voice integration and intuitive commands unify voice ecosystems.
However, SoundHound is not profitable and is burning through cash as it expands into new verticals. Its valuation is also concerning, with a price-to-sales (P/S) ratio of 94.
The Risks Associated with AI Stocks
While the potential for AI to transform industries is vast, there are risks associated with investing in these stocks. Select Wall Street analysts have highlighted concerns regarding:
- Valuations: Many AI companies are trading at unsustainable valuations, making it difficult for them to maintain their current stock prices.
- Cash burn: Companies like SoundHound and Palantir are burning through cash as they expand into new verticals, which can be a significant concern for investors.
- History of overestimation: Investors have consistently overestimated the adoption rate and early-stage utility of new technologies, leading to bubble-bursting events.
In conclusion, while AI has tremendous potential, it’s essential for investors to carefully evaluate the risks associated with these stocks. A thorough understanding of each company’s financials, valuation, and growth prospects is crucial in making informed investment decisions.
Investors who missed out on previous opportunities may have a second chance at a potentially lucrative opportunity
On rare occasions, our expert team of analysts issues a "Double Down" stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late.
View 3 ‘Double Down’ stocks »
- Stock Advisor returns as of January 6, 2025
- Sean Williamshas no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia and Palantir Technologies. The Motley Fool has a disclosure policy.*
