According to Zhitong Finance APP, the stock price of Palantir Technologies (PLTR.US) may further decline. Analyst Sanjit Singh from Morgan Stanley assigned a "Shareholding" rating to the stock on Monday and set the Target Price at $60, indicating a potential drop of about 20%.

After the announcement, the stock price of this data analytics and AI company dropped by 5.2%, to $75.74. Morgan Stanley had previously given the stock a "Shareholding" rating but canceled it in November 2023 to reassess its investment logic. Notably, Palantir became one of the best-performing stocks in the S&P 500 Index in 2024, with an increase of over 340%.

"In the early stages of the AI era, Palantir has achieved many successes," Singh acknowledged, noting that they underestimated several key factors when downgrading its rating from "Hold" (Equal Weight) to "Shareholding" in August 2023. He pointed out that Palantir's AI Platform (AIP) and successful market promotion strategy have driven accelerated growth.

Data shows that the company’s USA business segment is projected to grow at about 50% in the fiscal year 2024, significantly higher than the 36% growth in fiscal year 2023. Moreover, Morgan Stanley failed to foresee Palantir's significant achievements in government contracts, such as the renewal of the Army Vantage contract with the USA military, with a transaction value of up to $0.619 billion.

Although acknowledging that Palantir's positioning in the generative AI field has seen a "positive adjustment," Singh believes these positive factors have been fully reflected in the current stock price. "Despite recognizing the company's excellent execution and growth momentum, we believe that these successes are fully priced in at the current high valuation, and the business momentum seems to be stabilizing."

As a major beneficiary of the AI boom, Palantir has attracted widespread attention with its AIP technology. When the company launched AIP for the first time in 2023, market demand was strong, reflecting the "Institutions' unmet demand for smart and efficient enterprise Software."

Despite Morgan Stanley's bearish outlook, other Analysts remain optimistic about the stock. For instance, Wedbush Analyst Dan Ives raised Palantir's Target Price to $75 at the end of December and pointed out in a report on Monday that Palantir is still "one of the best Software investment choices for the AI revolution by 2025."

Government contracts are also one of the important factors driving up Palantir's stock price. Since 2008, Palantir has been collaborating with the USA Army and has received most of its revenue from federal agencies. In December 2024, the company announced it had obtained FedRAMP High Authorization, allowing its complete product suite to handle sensitive federal workloads, which led to a 7% increase in its stock price.

In addition, Palantir has also established a new collaboration with the military contractor Booz Allen Hamilton Holding Corp (BAH.US) and has been selected as the chief Software integrator for the U.S. Special Operations Command's mission command system, paving the way for future AI pilot projects.