When a billionaire shifts his investments, Wall Street will definitely react. Recently, Ken Griffin, the founder of Citadel Advisors and one of the most consistently victorious hedge fund managers, made a turn.
He cut back his stake in Amazon and bought shares of a company whose stock has risen 1,030%, since the start of 2024. Guess what? It wasn’t Nvidia this time, and this twist alone was enough to get the investors interested.
Ken Griffin’s Trades Are Important
The Citadel Advisors has had a considerable advantage over the S&P 500 in terms of performance, and has granted Griffin a reputation as a smart and data-driven investor, not a trend follower.
In the third quarter, Citadel sold 1.6 million shares of Amazon, while acquiring 388,000 shares of Palantir Technologies, which is a company that has become one of the most frequently talked about in AI investing.
Why did Griffin Sell Amazon?
Despite the sale, Amazon still remains one of the most influential corporations in areas like e-commerce, advertising, and cloud computing. The company’s AI strategy is very strong in all three sectors, from efficient logistics and customer service through generative AI tools to creating AI shopping assistant, Rufus, which is likely to bring in billions in sales.
In an advertisement, Amazon has silently built one of the fastest-growing digital ad businesses, which is backed by AI-automated creative and campaign tools. On the other hand, AWS keeps on being the leader in cloud computing, and at the same time is moving towards AI platforms, custom chips, and automation agents that are in direct competition with the traditional GPU-heavy models.
Financially, these investments are quite rewarding. Amazon’s impressive performance in Q3 included double-digit revenue growth, wider profit margins, and a significant increase in operating income.
Analysts predict that Amazon’s profits will gradually increase over the next several years, which would justify its valuation today being far from stressed.
Griffin’s decision to sell part of the stake seems to be more of a profit-taking move than a sign of loss of trust, specifically since Amazon is still included among the top holdings of Citadel.
Palantir Caught Griffin’s Eye
The transformation of Palantir has been incredible. The firm offers specialized services in the field of data analytics and AI driven decision-making that is used by both government and corporate sectors. Its ontology-based platform facilitates companies to model a complex system and makes improvements in decision-making over time through machine learning.
From supply chains and catching financial fraud to providing defense and intelligence, Palantir has made itself the ally that comes with AI that is less focused on hype and more focused on operational depth.
The company has been gaining recognition in the industry. Forrester Research has recently granted Palantir the title of the most competent AI and machine learning platform, beating the likes of Google, Amazon, and Microsoft in this particular category.
This stamp of approval is further supported by exceptionally strong financial performance with its revenue increase turning out to be the fastest, along with a doubling of profits in the last quarter, which points towards AI demand being the main driver.
Valuation Can’t be Ignored
Palantir’s valuation is the point where excitement meets reality. The shares are trading at an unbelievably high multiple of sales, which puts the company at the very top of the S&P 500 members.
Its stock price has increased at a much faster rate than its sales, which means that the shareholders are willing to pay more and more for the future growth. History indicates that such expansion hardly goes on forever.
Even the way Griffin positions himself indicates that he is taking a realistic approach. Although the deal has attracted the attention of the media, and Palantir does not appear among Citadel’s long-term investments, it does imply that this move could be tactical instead of being a major and high-conviction bet.
Bottom Line
Ken Griffin’s portfolio transformation does not imply a denial of Amazon or acceptance of Palantir, it rather shows how modern investment works. It shows how trimming the winners and selectively riding on the momentum can also coexist.
Amazon is still a giant company doing business the right way for long-term growth, while Palantir is playing a risky but possibly rewarding AI game with a powerful narrative behind it.
When such actions are taken by billionaire investors, the lesson for ordinary investors is not to follow them blindly, but to decipher the message.
Griffin’s move unveils both sides, where innovative technology meets overvalued stocks. In a market that is constantly looking for the next big winner, patience, fundamentals, and context outweighs the headlines.
