Billionaire Ken Griffin runs Citadel Advisors, the most profitable hedge fund in history as measured by net gains, according to LCH Investments. He purchased shares of two hot artificial intelligence (AI) stocks in the third quarter.
Citadel bought 388,000 shares of Palantir Technologies (NASDAQ: PLTR), a stock that has advanced 2,200% since January 2023.
Citadel bought 128,100 shares of Robinhood Markets (NASDAQ: HOOD), a stock that has advanced 1,100% since January 2023.
Importantly, while both positions are small, investors can still learn an important lesson: Stocks that have appreciated significantly in the past can still make smart investments in the present. Read on to learn more about Palantir and Robinhood.
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Palantir provides analytics software to commercial enterprises and government agencies. Its core products, Gotham and Foundry, integrate data and machine learning models into a decisioning framework called an ontology. It also provides an adjacent artificial intelligence (AI) platform that lets clients build generative AI into applications and business processes.
Morgan Stanley analysts says Palantir is emerging as the standard in enterprise AI. Indeed, Forrester Research recently ranked the company as a leader in AI decisioning platforms, and the International Data Corp. (IDC) recognized its leadership in AI-enabled source-to-pay software, a technology that helps enterprises optimize supply chain management.
Palantir reported strong third-quarter financial results that beat estimates on the top and bottom lines. Revenue increased 63% to $1.1 billion, the ninth straight acceleration, and non-GAAP (adjusted) net income increased 110% to $0.21 per diluted share. Management also raised its full-year guidance, such that revenue is projected to increase 53% in 2025.
However, Palantir trades at an absurdly expensive valuation of 96 times sales. While down from its peak of 137 times sales in August 2025, the current price-to-sales ratio still makes Palantir the most expensive stock in the S&P 500 by nearly threefold. AppLovin is second at 33 times sales. That means Palantir could decline 65% and still be the most expensive stock in the index.
Here is the big picture: Palantir is an excellent company with compelling growth prospects. Spending on AI platforms is projected to increase at 38% annually through 2033, per Grand View Research. But the risk-reward profile is heavily skewed toward risk because the current valuation is unsustainable. Investors should limit their exposure to this stock.
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