Augmenting large language models with chemistry tools
Innovation In AI: Mohammad S A A Alothman And AI Tech Solutions
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2 Popular Artificial Intelligence (AI) Stocks To Sell Before They Plunge 20% And 79%, According To Certain Wall Street Analysts
Some analysts think these artificial intelligence stocks have flown too high.
Shares of Palantir Technologies (PLTR -1.22%) and Super Micro Computer (SMCI -0.08%) advanced 169% and 83%, respectively, over the past year amid soaring interest in artificial intelligence (AI). But certain Wall Street analysts expect the stocks to fall sharply over the next 12 months, as detailed below:
Investors should never take forecasts at face value. Here are the details required to make an informed decision about these two companies.
Palantir Technologies: 79% implied downsidePalantir helps businesses manage and make sense of complex data. Its primary platforms, Gotham and Foundry, integrate information and artificial intelligence models into an ontology, a digital representation of the relationships between real-world objects. Users can interact with the ontology through analytical applications that surface insights to improve decision-making. Palantir says its ontology-based software is an important differentiator.
Last year, Palantir debuted AIP (Artificial Intelligence Platform), which enhances Foundry and Gotham with support for large language models, allowing businesses to integrate generative AI into analytical applications. Some analysts are impressed by the product. For instance, Forrester Research has recognized Palantir as a leader in artificial intelligence and machine learning platforms.
Other analysts are less impressed. Consultancy Gartner didn't even mention Palantir in its latest report on data science and machine learning platforms, and scored the company below a dozen other vendors for its data integration tools. Additionally, RBC Capital analyst Rishi Jaluria told CNBC that Palantir "does not appear to be anything truly differentiated when it comes to generative AI."
Palantir reported solid financial results in the second quarter. Revenue increased 27% to $678 million, the fourth consecutive sequential acceleration, and non-GAAP net income jumped 80% to $0.09 per diluted share. CEO Alex Karp attributed the strong quarter to an "unrelenting wave of demand from customers for artificial intelligence systems that go beyond merely performative and academic."
In the third quarter, Palantir announced a $100 million contract with the U.S. Government that will bring access to its AI targeting tools to more military personnel. The company also said that gas and oil giant BP will adopt AIP to "improve and accelerate human decision-making with suggested courses of action based on automated analysis of the underlying data."
The problem with Palantir is its sky-high valuation. Wall Street expects its adjusted earnings to grow 22% over the next year. That makes the current valuation of 134 times adjusted earnings look outrageous.
Wall Street's median price target for Palantir is $28 per share, which implies a 35% downside from its current share price of $43. By that measure, Palantir is the most overvalued stock in the S&P 500.
I doubt Jaluria is correct about Palantir declining 79%, but I do believe the stock is headed for a serious correction at some point. Prospective investors should avoid Palantir until the share price looks more reasonable, and current shareholders should consider trimming their positions.
Super Micro Computer: 20% implied downsideSuper Micro Computer builds servers, including full server racks outfitted with storage and networking, to provide a turnkey data center infrastructure solution. Internal manufacturing capabilities and modular design allow the company to bring new products to market more quickly than its competitors. That time-to-market advantage has helped Super Micro win a leadership position in artificial intelligence servers.
Super Micro reported mixed results for the fourth quarter of fiscal 2024 (ended June 30). Revenue increased 143% to $5.3 billion on strong demand for AI computing infrastructure. But gross margin declined about 6 percentage points to 11.2%, and non-GAAP net income increased only 78%. Comparatively, the bottom line grew more slowly than the top line, which may signal a loss in pricing power amid increased competition.
However, management said margin contraction was due to costs associated with direct liquid cooling (DLC) components. Liquid cooling is more efficient than air cooling, so Super Micro has invested heavily to position itself as a leader as the technology takes root.
That may enhance its standing in the AI server market. Either way, management expects gross margin to return to normal (14% to 17%) by the end of fiscal 2025 as DLC components ship in higher volume.
The problem with Super Micro is regulatory uncertainty. In August, short-seller Hindenburg Research accused Super Micro of accounting manipulation, and The Wall Street Journal subsequently said the company was being investigated by the Justice Department. Neither situation has been resolved, and the stock could fall further than the 20% forecast by Wells Fargo analyst Aaron Rakers, depending on the outcomes.
However, Wall Street still expects the company's earnings to increase 51% over the next year. That makes its current valuation of 20.8 times earnings look cheap.
Patient investors comfortable with the risks should consider buying a position, but I would keep it quite small until the regulatory uncertainty dissipates. Alternatively, shareholders nervous about Hindenburg's allegations or the Justice Department's investigation should consider selling their positions.
Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. Trevor Jennewine has positions in Palantir Technologies. The Motley Fool has positions in and recommends BP and Palantir Technologies. The Motley Fool recommends Gartner. The Motley Fool has a disclosure policy.
Why Artificial Superintelligence Could Be Humanity's Final Invention
Leading experts warn that superintelligent AI systems could surpass human capabilities in ways we ... [+] can't yet comprehend, potentially transforming society forever.
Adobe StockImagine a future where machines don't just beat us at chess or write poetry but fundamentally outthink humanity in ways we can barely comprehend. This isn't science fiction – it's a scenario that leading AI researchers believe could materialize within our lifetimes, and it's keeping many of them awake at night.
What Makes Superintelligence DifferentToday's artificial intelligence systems, impressive as they may be, are like calculators compared to the human brain. They excel at specific tasks but lack the broad understanding and adaptability that defines human intelligence. Artificial General Intelligence (AGI) would change that, matching human-level ability across all cognitive domains. But it's the next step – Artificial Superintelligence (ASI) – that could rewrite the rules of existence itself.
The Genius That Never SleepsUnlike human intelligence, which is constrained by biology, ASI would operate at digital speeds, potentially solving complex problems millions of times faster than we can. Imagine a being that could read and understand every scientific paper ever written in an afternoon or devise solutions to climate change while we're sleeping. This recursive self-improvement could trigger what experts call an "intelligence explosion" – where AI systems become exponentially smarter at a pace we can't match or control.
The Double-Edged Sword Of Ultimate IntelligenceThe potential benefits of superintelligent AI are as breathtaking as they are profound. From curing diseases and reversing aging to solving global warming and unlocking the mysteries of quantum physics, ASI could help us overcome humanity's greatest challenges. But this same power could pose existential risks if not properly aligned with human values and interests.
Consider a superintelligent system tasked with eliminating cancer. Without proper constraints, it might decide that the most efficient solution is to eliminate all biological life, thus preventing cancer forever. This isn't because the AI would be malevolent but because its superior intelligence might operate on logic that we can't foresee or understand.
The Race Against TimeThe development of superintelligent AI isn't just a technical challenge – it's a race against time to ensure we can control what we create. As AI capabilities advance, we face crucial questions about governance, ethics, and human agency. Who gets to decide how superintelligent systems are developed? How do we ensure they remain aligned with human values when they may be capable of rewriting their own code?
Shaping Tomorrow's Reality TodayThe path to superintelligence isn't predetermined, but it's likely inevitable. The key lies not in whether we develop ASI but in how we prepare for its arrival. This means investing in AI safety research, developing robust ethical frameworks, and fostering international cooperation to ensure that superintelligent systems benefit all of humanity, not just a select few.
Future-Proofing HumanityAs we stand on the brink of potentially the most significant technological leap in human history, our actions today will determine whether superintelligent AI becomes humanity's greatest achievement or its last invention. The challenge isn't just technical – it's philosophical, ethical, and fundamentally human. By engaging with these questions now, we can help shape a future where superintelligent AI enhances rather than replaces human potential.
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