AI Stock Soars 1,030% This Year — Here's Why Hedge Fund Titan Ken Griffin Is Taking Partial Profits

The artificial intelligence boom continues to captivate investors, with one surprising winner posting gains that dwarf even Nvidia’s impressive run. Palantir Technologies has surged 1,030% since the start of 2024, while Nvidia climbed 281% over the same period. This divergence has caught the attention of major market players, including Ken Griffin’s Citadel Advisors, which has been actively reshuffling its portfolio in response.

The Palantir Phenomenon: How an AI Analytics Platform Became 2024’s Biggest Winner

Palantir’s explosive growth stems from its data analytics and AI decisioning platforms, which serve both government and commercial clients. The company’s competitive edge lies in its ontology-based software architecture — a system that becomes increasingly effective as machine learning models learn from user behavior over time.

Industry validation has followed the strong performance. Forrester Research crowned Palantir the most capable AI/ML platform globally, outranking technology giants like Alphabet’s Google, Amazon Web Services, and Microsoft Azure. The research firm noted that Palantir is “quietly becoming one of the largest players in this market,” with applications spanning supply chain optimization, fraud detection, retail inventory management, and battlefield intelligence.

The financial results justify the enthusiasm. In Q3, Palantir’s revenue accelerated 63% to $1.1 billion — marking the ninth consecutive quarter of accelerating growth. Non-GAAP earnings nearly doubled to $0.21 per diluted share, demonstrating that the company is not just growing revenue but also proving its path to profitability. Management attributed this surge directly to exploding demand for its AI platform.

Ken Griffin’s Hedging Act: Why Citadel Divested Amazon While Adding Palantir

Citadel Advisors, which has outperformed the S&P 500 by 8 percentage points over three years, made notable portfolio adjustments in the third quarter. The fund divested 1.6 million Amazon shares while acquiring 388,000 Palantir shares. This move reflects Griffin’s conviction in the AI opportunity, though the Palantir position remains relatively modest in Citadel’s overall holdings.

Amazon, which Griffin reduced exposure to, has not lost investor appeal. The e-commerce and cloud computing giant is itself aggressively deploying AI across operations — from its Rufus shopping assistant (on track for $10 billion in sales this year) to custom AI chips powering AWS infrastructure. Amazon’s Q3 revenue climbed 13% to $180 billion, with operating income up 23% to $21.7 billion. Wall Street projects 18% annual earnings growth over the next three years, valuing the stock at 33 times earnings — a reasonable multiple given its trajectory.

The Valuation Trap Nobody Wants to Discuss

Here’s the catch: Palantir’s incredible price appreciation masks a dangerous valuation reality. The stock currently trades at 119 times sales — by far the most expensive stock in the S&P 500. The next priciest, AppLovin, sits at just 45 times sales. That gap is enormous.

The math tells a troubling story. Since January 2024, Palantir’s stock price has multiplied 11x, yet revenue has barely doubled. This disconnect means investors are progressively paying higher multiples for each dollar of revenue. In January 2024, the stock traded at 18 times sales. The multiple has now expanded more than 6x in less than a year — a trajectory that cannot persist forever.

When valuation discipline eventually returns to markets, Palantir faces material downside risk. A 60%+ correction from current levels would still leave it the most expensive stock in the entire index.

What This Means for Your Portfolio

Ken Griffin’s cautious approach to Palantir — taking a position while keeping it outside his top 300 holdings — suggests conviction tempered by caution. The AI opportunity is real, but Palantir’s valuation has detached from fundamental reality.

For retail investors, the lesson is clear: Exceptional business growth does not automatically justify exceptional stock prices. Palantir may ultimately justify its valuation, but that depends entirely on whether it can maintain growth rates that few companies in history have sustained. Until then, Griffin’s measured stance offers a useful reminder that even the brightest opportunities can become dangerous investments at the wrong price.