Billionaire Ken Griffin, the founder and CEO of Citadel Advisors, is making significant changes to his investment portfolio. Griffin added 5.2 million shares of Palantir Technologies, increasing his stake by 1140%. Palantir, a data analytics company, is considered a leader in artificial intelligence platforms.
In the second quarter, the company saw impressive financial results. Clientele increased by 41%, average customer spending grew by 14%, and revenue rose by 27% to $678 million. Earnings also increased by 80% to $0.09 per diluted share.
Palantir has rerouted its strategy to focus on its Artificial Intelligence Platform (AIP). The AIP supports large language models and has been integrated into its primary platforms, Foundry and Gotham. These platforms help businesses collect data, develop machine learning models, and incorporate these assets into applications that enhance decision-making.
Griffin shifts focus to AI investments
However, Palantir’s stock comes at a high price. Wall Street expects adjusted earnings to increase by 22% over the next year, yet the current valuation is 130 times adjusted earnings.
This makes Palantir’s stock expensive, even if earnings grow twice as fast as anticipated. Despite Griffin’s substantial purchase of Palantir stock, Citadel still had twice as much capital invested in Nvidia as of June 30. Nvidia’s adjusted earnings are expected to increase by 53% over the next year, making its current valuation of 60 times adjusted earnings appear more reasonable.
Given the valuation concerns, it wouldn’t be surprising if Griffin adjusted his Palantir position in the future. For investors, the recommendation is to avoid Palantir until its price drops significantly. In conclusion, Ken Griffin’s investment moves reflect a nuanced strategy, balancing the growth potential of AI-driven companies like Palantir with the more established performance of Nvidia.
Investors should approach Palantir with caution considering its high valuation and consider Nvidia as a more stable investment in the AI sector.
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