Nvidia Shares versus Palantir Shares: Wealthy Wall Street Investors Purchase One and Dismantle the Other
In the recent Wall Street frenzy, two tech giants, Nvidia (NVDA) and Palantir Technologies (PLTR), have been making headlines for their significant roles in the artificial intelligence (AI) economy. However, some prominent hedge fund billionaires, including Ken Griffin of Citadel and David Shaw of D.E. Shaw, made some intriguing moves in Q3.
Citadel upped its investment in Nvidia by acquiring 4.7 million shares, resulting in a 194% increase in its position, making Nvidia the third-largest holding. On the other hand, it sold off 5.1 million shares of Palantir, reducing its stake by 91%. Meanwhile, D.E. Shaw followed suit, buying 5.9 million shares of Nvidia, boosting its position by 53%, making Nvidia its largest holding. Conversely, it shed 8.7 million shares of Palantir, trimming its stake by an astounding 45%.
These influential hedge funds have proven to be two of the most profitable in history. As of 2023, they topped the list in terms of net gains since inception. While these trades took place in the third quarter, let's take a closer look at where both companies stand currently.
Nvidia: The In-Demand Stock
In a triumphant third quarter announcement, Nvidia reported impressive financial figures, posting record-breaking sales in October, topping estimates by a substantial margin. With sales rocketing by 94% to an astounding $35 billion, non-GAAP earnings more than doubled, reaching $0.81 per diluted share. This marked the sixth consecutive quarter of triple-digit earnings growth for the tech giant.
Wall Street analysts are optimistic about Nvidia's prospects, projecting annual earnings growth by 39% through 2027. With the current valuation pegged at 52 times adjusted earnings, the consensus might be underestimating the company's potential earnings surge. This is largely due to underappreciated opportunities in cutting-edge technology like the Blackwell GPUs, which enable four times more rapid AI training and 30 times faster AI inference compared to the Hopper architecture.
Nvidia's production ramp of its highly-anticipated Blackwell GPUs has commenced during the fourth quarter of 2025, extending into 2026. Analyst Beth Kindig of I/O Fund believes that Blackwell sales alone could surpass the consensus sales estimates of $197 billion in 2026. With additional revenues from networking equipment and software services, Nvidia may impress the market with its improved earnings growth.
Palantir Technologies: The Sold Stock
Palantir rounded off its third-quarter results with a victory, exceeding expectations on both revenue and non-GAAP net income. The company saw an impressive 26% jump in revenue, reaching $725 million, while customer count zoomed by 39% to 629 businesses. These developments paired with its new AI Platform, AIP, have driven the business to new heights.
Palantir's robust financial performance has led to an uptick in its guidance, predicting sales growth by 26% in the fourth quarter. The company's success is largely attributed to the surging demand for AIP, with the U.S. government and commercial clients among its most enthusiastic supporters.
Although Palantir's revenue growth is robust, the stock currently trades at an eye-watering 205 times adjusted earnings. Given the company's annual earnings growth projections of 25% through 2027, this valuation seems overblown. Investors should consider holding off on this stock, and even existing shareholders could potentially lighten their load unless the price sees a substantial drop.
In light of the hedge fund activities, it can be inferred that there might be significant interest in investing in Nvidia's financial growth due to its impressive earnings and anticipated Blackwell GPU sales, which could potentially surpass the consensus estimates.
In contrast, Palantir's high valuation compared to its adjusted earnings may discourage some investors from additional investing or even prompt current shareholders to consider selling off their shares, given the high price and projected earnings growth of 25% through 2027.
