3 Growth Stocks That Wall Street Analysts Think Are Overvalued

Many growth stocks have enjoyed strong gains over the past year, thanks in large part to growing enthusiasm for artificial intelligence, cryptocurrencies, and technology in general. But that means prices are high, and buying stocks near or at their peak could force investors to wait a long time for a good return — or worse, suffer significant losses.

According to Wall Street analysts, three stocks appear overvalued today: Palantir Technologies (NYSE: PLTR), Digital Marathon (NASDAQ: MARA)And Carvana (NYSE: CVNA)Here’s a look at how far they’ve fallen, according to analysts, and why they should be avoided right now.

Palantir Technologies: 26% downside risk

The analyst consensus price target for Palantir Technologies is $21.32 per share. Based on its current price of $28.81, the stock could fall 26% over the next 12 months.

Palantir is a big name in artificial intelligence (AI), and its analytics software uses the technology to create more efficiencies and opportunities for its customers. It has even used AI boot camps to help customers get excited about the potential of AI in their businesses. But as Palantir has grown its business, analysts seem to expect more from a company technology actions which trades at 87 times forward earnings estimates.

In the first quarter, the company’s revenue rose 21% year over year to $634 million. That’s only a slight acceleration from the 20% growth it posted late last year. While Palantir’s growth has accelerated, it hasn’t taken off like other AI stocks, and some worry that its results won’t live up to the hype. And in the meantime, investors may want to avoid paying the massive premium needed to own Palantir.

Marathon Digital: 9% drop risk

Bitcoin Mining company Marathon Digital has a price target of just $19.61, suggesting the stock could fall 9% based on its price at the time of writing (and that’s on top of its nearly 10% single-day loss on July 23). The Bitcoin halving event earlier this year cut the reward for mining Bitcoin in half, putting pressure on mining companies to increase production. This is especially important since the cryptocurrency hasn’t skyrocketed in value since the halving.

Impairment charges and earnings volatility are commonplace for crypto mining stocks, and Marathon is no exception. The company has performed well in recent quarters, posting a profit in three of the last four periods, but that’s largely due to gains on digital assets. The unpredictability of the company’s earnings numbers makes Marathon a risky buy.

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Unless you have a high risk tolerance and are extremely bullish on Bitcoin and its potential to rise significantly, the uncertainty surrounding Marathon’s activity is too great for most investors.

Carvana: 22% downside risk

Carvana stock could fall to as low as $100.93 per share, analysts say. That’s a 22 percent drop for the online used car market…