Ken Griffin’s Bold Investment in AI Raises Eyebrows on Wall Street

Ken Griffin has a track record of picking winning stocks. As the founder of Citadel, established in 1990, he has transformed the firm into the most profitable hedge fund manager ever. With a current fund size of $64 billion, Citadel invests in various stocks, particularly some technology giants that have driven the S&P 500 to record heights this year.

Given Griffin’s history of stock market successes, many investors closely monitor his investment strategies. Recently, he made a surprising move by increasing his investment in an artificial intelligence (AI) stock by 1,000%, despite Wall Street analysts predicting a decline in the stock’s price. Does Griffin possess insights that others on Wall Street may have missed? Let’s delve into the details.

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Ken Griffin’s Investment in Palantir Technologies

Griffin’s portfolio includes top technology names such as Microsoft, Nvidia, and Amazon, giving him a stake in one of today’s fastest-growing sectors: AI. The AI market is projected to grow from $200 billion to $1 trillion by the end of the decade, making early investments potentially rewarding.

In an impressive move, Griffin boosted his stake in Palantir Technologies (NYSE: PLTR) by over 1,100%, now holding 5,680,767 shares. This change comes at a time when analysts generally recommend holding the stock, though they anticipate a 32% decline in the next year. Notably, Palantir’s shares have surged by 150% this year.

While Palantir is currently trading at an estimated 120 times forward earnings, making it relatively expensive compared to Microsoft, Nvidia, and Amazon, some analysts are cautious about its future. This has led to tempered enthusiasm around the stock.

PLTR PE Ratio (Forward) data by YCharts

However, the focus should be on the long-term prospects for Palantir. A significant growth factor may come from an increasing number of commercial customers.

Palantir’s Expansion into Commercial Markets

Palantir assists organizations in aggregating data to enhance decision-making and operational efficiency, leading to cost savings and strategic advancements. Historically, Palantir’s revenue came largely from government contracts, but recently, commercial customers have emerged as a critical growth driver.

In the last quarter, Palantir reported an 83% increase in U.S. commercial customers, reaching nearly 300, compared to just 14 customers four years ago. Additionally, revenue from these clients grew by 55%, totaling $159 million in the last quarter alone. The company’s Artificial Intelligence Platform (AIP), launched last year, has generated strong demand.

This shift contributed to a historic high for Palantir, which reported $134 million in net income for the quarter, marking its most profitable quarter in 20 years. While Palantir has established itself over the years, its recent success in the commercial sector, combined with ongoing growth in government contracts, could reshape its revenue stream in the long run. While the stock may be expensive now, future growth could reward early investors.

Although Palantir’s stock may not see immediate gains, its recent earnings performance and the momentum in commercial expansion suggest a brighter long-term outlook. This could explain why Ken Griffin has increased his stake, possibly leading to significant rewards down the road.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Adria Cimino has positions in Amazon. The Motley Fool has positions in and recommends Amazon, Microsoft, Nvidia, and Palantir Technologies. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.