Palantir Technologies stock just hit another record, but the lofty valuation of the defense-focused artificial-intelligence software company has analysts questioning whether it can go much higher. Palantir stock fell 1.

An impressive surge in the past few months has boosted Palantir stock to extremely expensive valuation levels. Palantir's potential to gain a bigger share of the AI software market could propel the stock higher despite the negative sentiment.

Palantir Technologies ( PLTR 1.72%) and Amazon ( AMZN -0.68%) are both heavily exposed to the artificial intelligence (AI) trend, and both are popular stocks. But forecasts from Wall Street suggest investors should sell the former and buy the latter.