Generated Artificial Intelligence (AI) has been engaging Wall Street in a storm since Openai’s ChatGPT was launched in 2022. But more than two years later, this hype cycle has grown long in the teeth. Let’s discuss the reasons for this nvidia (NVDA) 0.34%)), Tesla (TSLA) -3.31%))and Palantir technology (pltr -1.41%)) As AI excitement could decline after 2025, it could face a downside risk.
1. nvidia
Over the past three years, Nvidia has become the standard player in the AI industry. Graphic Processing Unit (GPU) Train and run these advanced algorithms. Boom demand is permitted Increase revenue for the third quarter fiscal year 2025 94% to $35.1 billion. That said, there are some early indications that this level of spending is unsustainable.
According to MIT professor Daron Acemoglu, AI technology may not be able to solve complex problems that are complex enough to justify development costs. The emergence of low-cost open source Big language model (LLMS) Like Deepseek in China, it could make it even more difficult for Nvidia clients to make profits from astronomical GPU spending.
The good news is, despite Nvidia’s high growth rate, Profit from positive prices (P/E) A ratio of only 30 is relatively affordable NASDAQ-100 Average 33. This discount suggests that some of Nvidia’s long-term challenges may already be Pricing In addition to that valuation, stocks may not face the drawback risks as much as other companies on this list.
2. Tesla
Tesla is desperately trying to rebrand its automotive company as an AI company by injecting billions into Building Dojo, an AI supercomputer designed to support autonomous driving strategies. If successful, These efforts can transform the company by generating more margins Software service Revenue. But that’s a big “if”.
Image source: Getty Images.
Surprisingly, even Tesla CEO Elon Musk has called the “long shot” clumsy, with potentially high rewards but less likely to succeed. The problem is that the market treats AI pivots as transactions that have been completed otherwise. Tesla is clearly still a car company. The automotive business accounts for 77% of total sales. And we are struggling with stagnation in demand. Fourth quarter revenue fell 8% year-on-year ($19.8 billion).
Meanwhile, the 127 Tesla’s forward P/E is almost four times more NASDAQ-100 The average makes the stock appear to be extremely overvalued, given its glorious growth rate and uncertainty around its AI transition.
3. PalantirTechnologies
Like Nvidia, Palantir Technologies is another big winner, up 757% over the past three years. The company is exciting as it could introduce AI technology The world of Government and military contracts. However, Palantir’s growth is impressive, but its stock valuation does not seem to be completely in touch with reality.
Q4 revenue rose 36% year-on-year to $827.5 million, driven by the popularity of AI-enhanced data analytics tools with commercial U.S. clients. Palantir’s business is growing, but it’s far from the only game in town. The giant of cloud computing Microsoft It offers a similar platform called fabric. And it’s unclear what “secret sauce” there isn’t. We believe Palantir cannot replicate his deep pocket rival.
Palantir’s rating, which is a multiple of 200x, does not appear to reflect its modest growth and potential threats from competition. To be fair, Financial markets are not always rational. However, the enormous scale of Palantir overestimation is Serious You could be soaked. Investors may want to stay far from all the AI stocks on this list for the time being.
Will Ebiefung is not in a position with any of the stocks mentioned. Motley Fool has been working and recommending Microsoft, Nvidia, Palantir Technologies and Tesla. Motley Fool recommends the following options: A $395 phone at Microsoft for January 2026 length and a $405 phone to Microsoft for January 2026 short term. Motley Fools have a disclosure policy.
