Nvidia is not one of them)

What is the modern equivalent of King Midas turning everything he touched into gold? Artificial intelligence (AI) is a prime candidate. Many stocks in the AI ​​sector have seen meteoric gains over the past 18 months. Nvidia (NASDAQ:NVDA) is the most famous example, with demand for its AI chips helping to push the company’s market capitalization above $3 trillion.

But all good things must end. While analysts still think Nvidia has some room to run, they aren’t as bullish on all AI stocks. Here are three high-flying AI stocks that Wall Street says are falling.

1. Arm holds

Actions of Fire arms (NASDAQ: ARM) have skyrocketed more than 120% since the start of the year. This gain isn’t as big as Nvidia’s, but it’s in the same range.

Arm designs semiconductors and software widely used in central processing units (CPUs). The company’s revenue jumped 47% year over year in its most recent quarter to $928 million, an all-time high. More than half of that revenue comes from royalties paid by customers using its chip architecture.

AI is a key growth driver for Arm. The company believes that demand for energy-efficient AI capabilities in data centers and edge devices will drive increased sales of its technology. He is particularly optimistic about the prospects of Nvidia’s Grace Blackwell Superchip which uses Nvidia’s Blackwell. graphics processing unit (GPU) architecture combined with Arm’s Grace processor.

However, Wall Street is not optimistic about Arm’s near-term prospects. The average 12-month price target for the stock is 29% below the current share price. The most pessimistic analyst predicts that Arm’s share price could fall by 65%.

2. Palantir

Palantir Technologies (NYSE:PLTR) is another big AI winner. Shares of the data analytics software developer are up nearly 50% in 2024 thanks mainly to a big jump in February.

The company’s flagship product is its Artificial Intelligence Platform (AIP). Palantir’s revenue jumped 21% year over year in the first quarter of 2024 to $634 million, largely fueled by momentum from AIP.

Ryan Taylor, Palantir’s chief revenue officer and general counsel, said during the company’s first-quarter earnings conference call that “the applications of AIP seem endless.” He said: “We have shared our plans to capture the market with AIP. And our results show that our strategy is not only succeeding, but accelerating.

Despite AIP’s outlook, analysts believe Palantir’s momentum will soon come to a halt. The average 12-month price target for the stock is about 15% below the current share price.

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3. Arista Networks

Arista Networks (NYSE: ANET) has taken investors on a meteoric rise this year. However, it’s been an overall pleasant ride for investors, with Arista shares up 50%.

The company provides cloud networking technology. AI has played a significant role in the rapid migration of organizations to the cloud to train and deploy large language models (LLM)Arista benefited directly from this trend, with revenue increasing more than 16% year over year…