Just caught something interesting about Peter Thiel's recent moves. The Palantir chairman and his hedge fund (Thiel Macro) quietly exited positions in Apple and Microsoft in Q4, which is kind of wild because Wall Street analysts are saying both stocks are undervalued right now.

Let me break down what happened, because there's actually a solid reason Thiel might be ahead of the curve here.

Apple just posted strong earnings - 16% revenue growth, iPhone sales crushing it especially in China. The company's sitting on 2.5 billion active devices and has huge potential to monetize AI features going forward. On paper, it looks solid. Analysts have a median target of $303/share, implying 11% upside from current levels around $273.

But here's where Thiel saw the issue: Apple's trading at 34x earnings, which is expensive. And there's a real headwind nobody's talking about enough - memory chip prices are climbing, which will squeeze margins in coming quarters. That's probably why Thiel decided to pass, despite the positive narrative.

Microsoft's situation is more nuanced. The company reported 17% revenue growth, their Copilot adoption jumped 160%, and Azure keeps gaining cloud market share. Morgan Stanley's latest survey even ranks Microsoft as the most likely company to gain share in cloud and AI over the next three years. The analyst consensus target is $600/share - that's 49% upside from $402.

Yet Thiel sold anyway. The market's been spooked by fears that AI code generation will disrupt software companies. Investors worry Microsoft's massive AI spending won't generate decent returns. Microsoft's trading at 26x earnings, which is fair but not cheap.

Here's my take though: I think the market's missing something. AI is going to be the most transformative tech of the next decades, and Microsoft's already wired into thousands of enterprises. Their software and cloud services are basically infrastructure at this point. The upside case is actually pretty compelling if you look past the near-term noise.

So yeah, Peter Thiel exited both positions, and while his concerns about Apple's valuation and margin pressure are legit, I'd actually be watching Microsoft more closely. The sell-off might be creating an opportunity for patient investors. That's the kind of contrarian trade that tends to pay off when the dust settles.