Which AI Stock Should Win in 2026? Why Wall Street Is Taking Opposite Sides on Palantir and Sandisk

The artificial intelligence boom reshaped equity markets in 2024-2025. The S&P 500 climbed 16%, but two companies captured outsized attention: Palantir Technologies surged 135%, while Sandisk soared 559%. Yet despite both thriving in the same AI-driven environment, Wall Street has reached starkly different conclusions about their near-term prospects.

The Memory Chip Play: Sandisk’s Valuation Trap

Sandisk manufactures NAND flash memory storage solutions, a critical component for AI data center buildout. The company maintains a joint venture with Kioxia for R&D and manufacturing efficiencies, positioning it as the fifth-largest NAND flash supplier globally.

The numbers appear compelling at first glance. Sandisk gained market share during the first half of 2025, and new hyperscaler customers recently began testing its solid-state drives (SSDs). First-quarter fiscal 2026 results (ended October 2025) showed revenue jumping 23% to $2.3 billion, driven by strong data center and edge segment growth.

However, Wall Street’s earnings forecasts mask a critical risk. Analysts expect non-GAAP earnings to grow 79% annually through fiscal 2029, yet Sandisk currently trades at an astronomical 170 times earnings. This valuation assumes the memory shortage persists and demand remains elevated indefinitely — a dangerous assumption in a cyclical industry.

JPMorgan analysts suggest the supply-constrained cycle is already peaking. Industry research firm Grand View Research forecasts NAND flash sales will grow just 14% annually through 2030, significantly below Wall Street’s consensus projections. If actual earnings growth disappoints, investors will likely demand a much lower price-to-earnings multiple.

Adding to the concern: Sandisk’s non-GAAP earnings actually dropped 33% to $1.22 per diluted share in the most recent quarter, even as revenue surged. While management expects a sequential recovery, the underlying weakness hints at margin compression ahead. The stock, already up 74% in January alone after its 559% 2025 gain, has become dangerously overheated.

The AI Platform Play: Palantir’s Excellence Meets Valuation Excess

Palantir builds data analytics and AI platforms for government and commercial clients, with a technical edge built on ontology-based software architecture. Its decisioning frameworks improve through machine learning, supporting use cases from supply chain optimization to battlefield analytics.

In 2025, Forrester Research ranked Palantir as a leader in AI decisioning platforms, scoring it above comparable offerings from Alphabet, Amazon, and Microsoft. The company maintains genuine competitive advantages in its market segment and continues winning enterprise contracts.

The problem isn’t competitive position—it’s price. Palantir trades at 117 times sales, making it the most expensive company in the S&P 500 by a wide margin. The stock would need to collapse 65% just to reach the second-most expensive valuation in the index. Historically, virtually no software company has sustained a price-to-sales ratio above 100, let alone at Palantir’s current extreme.

This creates an asymmetric risk profile. While analysts maintain a median price target of $200 per share (implying 17% upside from $171), any trigger for profit-taking—disappointing quarterly results, macro headwinds, sector rotation—could spark a severe drawdown. The stock’s 135% appreciation in 2025 has already priced in enormous growth expectations.

Wall Street’s Divided Verdict

The analyst consensus from 29 firms on Palantir and 24 firms on Sandisk points to opposing trades: buy Palantir on valuation targets, sell Sandisk given downside risks. Yet both conclusions contain embedded assumptions about sustained AI infrastructure investment and uninterrupted business momentum.

Wall Street’s bullish Palantir thesis rests on the company’s technical superiority and expanding addressable market. The bearish Sandisk case emphasizes cyclical memory chip dynamics and elevated valuation multiples relative to normalized earnings.

For investors, the lesson is clear: neither stock offers an attractive risk-reward profile at current prices. Palantir’s competitive moat cannot justify a 117x sales multiple in perpetuity, while Sandisk’s memory cycle could reverse faster than consensus expects. Conviction positions in either name should be sized accordingly.