Nvidia (NVDA 3.10%) and Palantir Technologies (PLTR 3.65%) Both companies have become two of the hottest stocks on Wall Street lately because of their important roles in the artificial intelligence economy. However, the following hedge fund billionaires bought Nvidia and sold Palantir in the third quarter.
Ken Griffin’s Citadel bought 4.7 million shares of Nvidia stock, increasing its position by 194%. Nvidia is currently the third-largest stock holding, excluding option contracts. Meanwhile, Citadel sold 5.1 million shares of Palantir stock, reducing its stake by 91%. David Shaw’s DE Shaw bought 5.9 million shares of Nvidia stock, increasing his position by 53%. Nvidia is currently the largest holding. Meanwhile, DE Shaw sold 8.7 million Palantir shares, reducing its stake by 45%.
As of December 2023, Citadel and DE Shaw were the two most profitable hedge funds in history, as measured by net income since inception. Therefore, both hedge funds are a good source of inspiration. However, the transactions mentioned above took place during the third quarter ended September.
Here we take a look at the latest developments from Nvidia and Palantir.
Nvidia: Stocks Citadel and DE Shaw were buying in Q3
Nvidia reported solid financial results for its fiscal third quarter of 2025 (ending October), beating revenue and bottom line expectations. Revenue increased 94% to $35 billion, and non-GAAP earnings more than doubled to $0.81 per diluted share. This was the sixth consecutive quarter in which NVIDIA reported triple-digit profit growth.
Going forward, Wall Street expects Nvidia’s adjusted earnings to grow 39% annually through fiscal 2027 (ending in January 2027). As such, its current valuation of 52 times adjusted earnings looks reasonable. Additionally, that consensus likely underestimates the company’s earnings growth in the coming years, as Blackwell’s opportunities in GPUs and autonomous robotics are undervalued.
More specifically, Nvidia GPUs are an industry standard for accelerating complex datacenter tasks such as running artificial intelligence (AI) applications. Blackwell GPUs deliver up to 4x faster AI training and 30x faster AI inference compared to previous Hopper architectures. Blackwell’s production ramp-up will begin in the fourth quarter of fiscal 2025 and continue through fiscal 2026.
Wall Street consensus expects revenue to reach $197 billion in 2026, representing 52% growth over 2025. But I/O Fund’s Beth Kindig believes Blackwell’s sales alone could exceed $200 billion in 2026. That means NVIDIA could crush sales. Consensus sales and profit forecasts when including adjacent products such as network equipment and software services.
Dan Ives of Wedbush Securities agrees. In fact, he believes Wall Street is underestimating Nvidia’s earnings growth by as much as 30% over the next few years. Ives believes part of the discrepancy is because Blackwell’s revenue forecasts are too low, but he also sees an overlooked $1 trillion opportunity in self-driving and robotics.
The conclusion is: NVIDIA stock currently trades at an attractive price, but if earnings grow faster than Wall Street expected, the stock could look downright cheap in hindsight. Therefore, investors looking at a horizon of at least three to five years should feel confident buying a small position today.
Palantir Technologies: Stocks sold by Citadel and DE Shaw in Q3
Palantir announced third-quarter financial results that exceeded expectations. Customer count grew 39% to 629, and average existing customer spend increased 18% over the past year. As a result, revenue increased 30% to $725 million, the fifth consecutive year of acceleration, and non-GAAP net income increased 42% to $0.10 per diluted share.
The company also raised its full-year outlook, expecting sales to rise 26% in the fourth quarter. Wall Street had expected 22% growth. Management attributed the company’s beat-and-raise performance to strong demand for its artificial intelligence platform, called AIP, which has accelerated the business since its launch in April 2023.
“The world is in the midst of a U.S.-led AI revolution that is reshaping industries and economies, and we are at the center of it,” CEO Alex Karp said in a recent letter to shareholders. “Our business growth is accelerating and our financial performance has exceeded expectations as we meet the unwavering demand for cutting-edge artificial intelligence technology from the U.S. government and commercial customers.”
Importantly, Palantir ranks second behind Microsoft in AI platform software market share, according to the International Data Corporation. This will position the company for strong growth, as spending on AI platforms is expected to grow at 41% annually through 2028. However, the stock trades at 205 times adjusted earnings. This multiple is unreasonable for a company expected to grow profits by 25% annually through 2027.
The conclusion is: Palantir is a great company, but investors should avoid the stock until the price drops significantly, and current shareholders should consider reducing their significant positions. The 23 analysts who follow Palantir have a median 12-month price target of $39 per share. This represents a 45% decline from the current share price of $71. I’m comfortable buying stocks around the consensus target.
Trevor Jennewine has held positions at Nvidia and Palantir Technologies. The Motley Fool has positions in and recommends Microsoft, Nvidia, and Palantir Technologies. The Motley Fool recommends the following options: A long January 2026 $395 call on Microsoft and a short January 2026 $405 call on Microsoft. The Motley Fool has a disclosure policy.
