So far in 2024, the S&P 500 index has gained an impressive 26% while the tech-heavy Nasdaq Composite has soared roughly 28%. Without a doubt, one of the biggest tailwinds fueling these market returns is artificial intelligence (AI).
Among AI’s hottest stocks through 2024 are data analytics company Palantir Technologies (NASDAQ: PLTR) and semiconductor leader Nvidia (NASDAQ: NVDA). Both companies have handily topped the markets this year — with shares of Palantir rocketing by 291% while Nvidia has gained about 179% (as of market close Nov. 29).
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With Palantir and Nvidia looking like two of the AI realm’s most dominant forces, would you be surprised to learn that some of Wall Street’s brightest minds are only buying one of these stocks right now?
Below, I’ll outline moves made by some of the most prestigious hedge funds and detail why I think these decisions could make a lot of sense.
Thanks to an incredibly helpful tool called the form 13F, everyday investors can get a glimpse into what stocks large institutional investors are buying and selling. Below, I’ve quantified the buys and sells between Palantir and Nvidia stock among two notable hedge fund managers during the third quarter:
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Ken Griffin (Citadel Advisors): In the September-ended quarter, Ken Griffin’s Citadel Advisors sold 5,172,681 shares of Palantir — reducing the fund’s exposure by 91% in the process. At the same time, Griffin and his constituents increased Citadel’s stake in Nvidia by 194% — adding over 4.7 million shares.
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David Shaw (D.E. Shaw): Another hedge fund that trimmed its stake in Palantir during the third quarter was D.E. Shaw, which sold 8.7 million shares of the software giant and reduced its position by 45%. Similar to Citadel, D.E. Shaw increased its exposure in Nvidia by more than 50%, buying nearly 6 million shares in the quarter.
Let’s dig into what may have influenced the decisions to trim Palantir while adding Nvidia over the last few months.
In April 2023, Palantir launched its fourth major software suite — the Palantir Artificial Intelligence Platform (AIP). The advent of AIP has catapulted Palantir into the forefront of the AI narrative, helping the company accelerate revenue across both the commercial and public sectors, all while achieving notable margin expansion and consistent profitability. While Palantir’s current rate of growth and future outlook are impressive, there is one obvious reason to sell the stock right now: valuation.