When Billionaire Investors Pivot: The Ken Griffin Move Away From Amazon to AI Platforms

What Just Happened in the Hedge Fund World

Citadel Advisors, helmed by Kenneth Griffin and renowned as one of history’s most successful hedge funds with consistent outperformance of the S&P 500, made a notable portfolio shift in Q3. The fund trimmed its Amazon position by selling 1.6 million shares while simultaneously establishing a stake in Palantir Technologies by purchasing 388,000 shares. The timing is intriguing: Palantir has delivered explosive returns of 1,030% since the start of 2024, dwarfing Nvidia’s 281% gain over the same period.

Palantir’s Meteoric Rise: Is It Justified?

Palantir Technologies has captured investor imagination with its AI-powered data analytics and decisioning platform. The company’s recent performance speaks for itself: Q3 revenue accelerated 63% to $1.1 billion (marking the ninth consecutive quarter of acceleration), while non-GAAP earnings more than doubled to $0.21 per diluted share. Industry recognition from Forrester Research dubbed Palantir the most capable AI/ML platform available, positioning it ahead of competitors like Alphabet’s Google, AWS, and Microsoft Azure.

However, beneath the impressive growth metrics lies a valuation concern that demands attention. Palantir currently trades at 119 times sales, making it the most expensive stock in the S&P 500 by an enormous margin—the next-closest competitor (AppLovin) sits at just 45 times sales. The mathematics reveal a troubling reality: since January 2024, Palantir’s stock price has surged 11x while revenue has increased less than 2x. This divergence suggests investors are paying premium multiples untethered to fundamental growth. The stock’s valuation has expanded from 18 times sales nine months ago, and such expansion cannot continue indefinitely without correction.

Why Kenneth Griffin Bought Palantir: A Measured Position

The hedge fund’s acquisition of Palantir shares merits cautious interpretation. While Palantir ranks among the holdings of one of the world’s most successful investors, it notably does not appear in Citadel’s top 300 positions. This suggests Griffin views it as an opportunity worth exploring rather than a core conviction play. The purchase likely reflects recognition of the AI platform’s genuine technological advantages and market demand, though perhaps with awareness of the valuation stretched.

Amazon: A Profit-Taking Moment, Not an Exit

Kenneth Griffin’s decision to trim Amazon requires context. The e-commerce and cloud computing giant remains a top 10 position for Citadel despite the Q3 share sale, indicating confidence in the company’s fundamental trajectory remains intact.

Amazon’s AI integration across its three core segments is delivering measurable results. The e-commerce division has deployed generative AI for customer service and inventory optimization, while its Rufus AI shopping assistant approaches $10 billion in projected annual sales. The advertising segment, the third-largest ad tech platform globally, now leverages AI to help brands create content and optimize campaigns. Most significantly, Amazon Web Services—the leading public cloud provider—has introduced custom AI chips that deliver cost advantages versus Nvidia GPUs, alongside new agentic AI tools for software development and security operations.

These AI investments are translating into financial momentum. Q3 revenue reached $180 billion (up 13%), while operating income surged 23% to $21.7 billion. Excluding one-time charges, operating margin expanded 60 basis points, indicating improving efficiency. Wall Street models Amazon’s earnings growing at 18% annually over the next three years, a trajectory that supports the current 33 times earnings valuation.

Griffin’s sale likely represents profit-taking on a strong performer rather than a loss of conviction. Retaining it as a top 10 holding underscores this interpretation.

The Larger Lesson for Investors

The divergent moves highlight a classic investment tension: Amazon represents sustainable, well-valued growth in a proven business model, while Palantir represents explosive potential undermined by an unsustainable valuation. Kenneth Griffin’s balanced approach—maintaining exposure to Amazon’s fundamentals while testing Palantir’s opportunity—reflects disciplined capital allocation. For retail investors considering either stock, the question isn’t which company has better technology; it’s which valuation provides a margin of safety for future returns.