Ken Griffin has proven his ability to pick stock market winners. The billionaire founded Citadel in 1990, and Citadel has since become the most profitable hedge fund manager ever. Today, the $64 billion fund invests in a variety of stocks, including some of the tech giants that have led the S&P 500 to record levels this year.
Given Griffin’s stock picking successes, it’s no surprise that investors are watching Griffin’s every move in search of new and potentially profitable investment ideas. Recently, Griffin has taken a position that goes against the average view of Wall Street analysts. He increased his investment by 1,000% in an artificial intelligence (AI) stock that has soared this year, but analysts now predict it will fall by double digits. Does Griffin know something that Wall Street doesn’t? Let’s find out.
As mentioned, Griffin invests in a wide range of technology powerhouses, including top names like Microsoft, NvidiaAnd Amazonand this has given him access to one of the fastest growing fields today: AI. The AI market is predicted to grow from its current value of $200 billion to $1 trillion by the end of this decade. If this happens, these early AI players and their investors could have a big win.
In a move that further raises his AI stakes, Griffin has increased his holdings Palantir Technologies (NYSE:PLTR) by more than 1,100% to 5,680,767 shares in the second quarter. This is how the average analyst opinion recommends holding the stock – and analysts predict that Palantir shares will fall 32% over the next twelve months. Palantir shares are up 150% this year.
It is true that Palantir, trading at 120x future earnings estimateshas become pricey, even for a growth stock. For example, the stock’s valuation far exceeds that of Microsoft, Nvidia and Amazon. This is an element that has caused some analysts and investors to curb their optimism about the stock.
PLTR PE ratio (forward) data Ygraphs
But it’s important to look at the long-term picturewhich extends over twelve months. The trends we see show that Palantir’s long-term earnings potential could be significant thanks to a key new growth driver: the commercial customer.
Palantir helps customers unify and use their data to make better business decisions or increase efficiency – often leading to massive cost savings and even game-changing steps. The company historically generated most of its revenue and growth from government contracts, but recently and along with its focus on AI, the commercial customer has emerged as key to growth.