So far this year, analysts have significantly increased first-quarter earnings forecasts for technology stocks, with the most notable revisions occurring in Palantir Technologies (PLTR +1.45%) and Micron Technology (MU 0.18%).
While upward adjustments in future earnings estimates usually lead to increases in share prices, both Palantir and Micron have experienced slight declines over the past month. This paradox presents a compelling buying opportunity, a sentiment shared by many analysts on Wall Street:
- Palantir has a median target price of $200 per share, suggesting a 35% increase from its current price of $148.
- Micron’s median target price stands at $550 per share, implying a potential 50% rise from its current price of $365.
Investors should take note of these developments in artificial intelligence stocks.
1. Palantir Technologies
Palantir specializes in creating data integration and analytics platforms for government and commercial sectors, heavily focused on defense and intelligence. Additionally, their artificial intelligence platform, AIP, enables developers to incorporate large language models into various business processes.
What sets Palantir apart is its unique software approach. Unlike typical analytics tools that emphasize reporting and visualization, Palantir’s offerings revolve around a decision-making framework known as ontology. This focus allows AIP to effectively transform raw data into actionable insights rather than mere data presentations.
2. Recent Performance and Expectations
In the fourth quarter, Palantir posted impressive financials, with revenue escalating 70% to reach $1.4 billion, marking its tenth consecutive period of growth. Non-GAAP net income surged 79% to $0.25 per diluted share. Furthermore, the company achieved an unprecedented Rule of 40 score of 127%, a remarkable feat in the software industry.
Despite being down 28% from its peak, Palantir’s stock may recover as macroeconomic uncertainties settle. Over the last three months, revisions to projected earnings have raised predictions for the current year by 30% to $1.31 per diluted share, indicating a significant growth forecast of 75% from the previous year. Although its current valuation stands at 197 times adjusted earnings—still considered high—historical performance indicates that Palantir often exceeds earnings expectations by an average of 15% over recent quarters, which could help it align with its valuation.
3. Micron Technology
Micron focuses on developing memory and storage solutions for various technologies, including personal computers, mobile devices, and automotive systems. They specialize in DRAM, high-bandwidth memory (HBM), and NAND flash products, all essential for powering AI systems. Demand for these products has dramatically increased due to a supply shortage.
During the second quarter of fiscal 2026 (ending in February), Micron reported extraordinary financial results, with revenue climbing 196% to $23.8 billion, largely driven by booming sales in its DRAM, HBM, and NAND categories. Non-GAAP earnings skyrocketed by 682% to $12.20 per diluted share, with CEO Sanjay Mehrotra predicting even more impressive results in the upcoming quarter.
Although Micron’s stock is down 21% from its peak, like Palantir, it may rise as the economic landscape stabilizes and investors shift back to growth stocks. Recent upward adjustments to earnings estimates forecasted a 70% increase for the current fiscal year to $57.11 per diluted share, suggesting substantial growth potential of 588% year-over-year. However, it’s essential to keep in mind that memory chip sales are prone to cyclical fluctuations. Although Micron is currently benefitting from a unique supply shortage, historical trends indicate that such shortages may eventually lead to an oversupply, causing prices to drop. Despite this, Micron’s current valuation at 16 times adjusted earnings appears attractive in the long run.
