So far in 2024 the S&P500 The index is up an impressive 26% while tech is heavy Nasdaq Composite is up about 28%. Without a doubt, artificial intelligence (AI) is one of the biggest tailwinds fueling these market returns.
AI’s hottest stocks through 2024 include data analytics companies Palantir Technologies (NASDAQ:PLTR) and semiconductor conductor Nvidia (NASDAQ: NVDA). Both companies have led the markets by a wide margin this year: Palantir’s shares are up 291%, while Nvidia has gained about 179% (as of the market close on November 29).
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With Palantir and Nvidia looking like two of the most dominant forces in the AI ​​realm, would you be surprised to learn that some of Wall Street’s brightest minds are currently buying just one of these stocks?
Below, I outline the moves of some of the most prestigious hedge funds and explain why I think these decisions can make a lot of sense.
Thanks to an incredibly useful tool called the Form 13F, everyday investors can get a glimpse of the stocks that big institutional investors are buying and selling. Below, I’ve quantified the buying and selling between Palantir and Nvidia stock among two notable hedge fund managers during the third quarter:
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Ken Griffin (Citadel Advisors): In the quarter ended September, Ken Griffin’s Citadel Advisors sold 5,172,681 shares of Palantir, reducing the fund’s exposure by 91%. At the same time, Griffin and his constituents increased Citadel’s stake in Nvidia by 194%, adding more than 4.7 million shares.
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David Shaw (D.E. Shaw)Another hedge fund that cut its stake in Palantir in the third quarter was DE Shaw, which sold 8.7 million shares of the software giant and reduced its position by 45%. Like Citadel, DE Shaw increased its exposure to Nvidia by more than 50%, purchasing nearly 6 million shares in the quarter.
Let’s take a look at what influenced the decisions to trim Palantir and add Nvidia in recent months.
In April 2023, Palantir launched its fourth major software suite: the Palantir Artificial Intelligence Platform (AIP). The arrival of AIP has catapulted Palantir to the forefront of the AI ​​story, allowing the company to accelerate revenue in both the commercial and public sectors while achieving remarkable margin expansion and consistent profitability. While Palantir’s current growth rate and future prospects are impressive, there is one obvious reason to sell the stock now: appreciation.
