Ken Griffin is not your typical Wall Street billionaire. As the founder and CEO of Citadel, he leads one of the most sophisticated and consistently profitable hedge funds in history. He has more than earned his reputation for being a rare blend of macro strategist and quantitative mastermind.
Citadel's second-quarter 13F form, which was filed in August, revealed a pair of notable moves: The hedge fund trimmed its position in data mining specialist Palantir Technologies (PLTR -5.41%) by 48% -- selling roughly 640,000 shares. That left Citadel with a stake that's today worth about $130 million. At the same time, the firm boosted its position in semiconductor powerhouse Nvidia (NVDA -4.84%) by a staggering 414% -- adding more than 6.5 million shares, and bringing its stake in it to around $1.5 billion at current share prices.
These moves speak volumes about Griffin's evolving view of the artificial intelligence (AI) landscape. Below, I'll unpack what might have influenced Citadel's decision-making, and what investors can conclude from this reshuffle.
Why Griffin trimmed Palantir: A rational hedge fund rebalance
On the surface, Citadel's decision to offload nearly half of its stake in Palantir may appear bearish. But in the world of hedge funds, selling doesn't always signal lost conviction -- it's often about managing risk.
Palantir's meteoric rise -- shares have soared by more than 2,000% over the past three years -- has left even its sincerest believers aware that the stock is priced for perfection. Trading at a price-to-sales ratio of 135, Palantir is flirting with valuations reminiscent of the dot-com era.
For disciplined managers like Griffin, emotion cannot override basic math. Hedge funds thrive by constantly reallocating their capital, which includes trimming their positions in their winners once they've run too far, too fast. Notably, famous investors like Stanley Druckenmiller and Cathie Wood have played this same hand with Palantir positions before.
In the grand scheme of things, taking some chips off the table from a high-flying stock is simply about risk-adjusted returns. Palantir's long-term fundamentals remain impressive, but hedge funds cannot afford to be sentimental. Locking in some profits gives them more financial flexibility to invest in opportunities that offer a better balance between upside and valuation.
Image source: Getty Images.
Why Citadel keeps buying Nvidia: The backbone of AI infrastructure
In my view, Citadel's growing position in Nvidia signals Griffin's conviction that the next decade of computing will be defined not by those who write algorithms, but by those who control the infrastructure that runs them.
Over the past few years, Nvidia has evolved into the world's preeminent supplier of accelerated computing hardware. Its GPUs now power everything from large language models (LLMs) and autonomous systems to next-generation humanoid robots.
But Nvidia's dominance isn't just about hardware -- it's about the ecosystem. The company's CUDA software platform has become a moat of its own, locking developers into a computing standard that few rivals can match.
Citadel's accumulation of Nvidia stock reflects several reinforcing trends:
- Hyperscaler spending: Cloud infrastructure giants like Microsoft, Amazon, and Alphabet are collectively investing hundreds of billions of dollars annually to expand data center capacity.
- Strategic integrations: Nvidia's partnerships with OpenAI, Intel, and Oracle are only beginning to realize their potential.
- Relentless innovation: The company's forthcoming GPU architectures -- Blackwell Ultra and Rubin -- extend its technological lead and will keep its growth runway secure.
While Nvidia also trades at a premium valuation, its structural growth story remains unrivaled. As corporations and governments race to build AI infrastructure, Nvidia stands as the most reliable -- and arguably indispensable -- foundation for the AI era.
A masterclass in portfolio evolution
Griffin's moves signal a calculated rotation within the AI megatrend -- not a retreat from it. By trimming his stake in Palantir and doubling down on Nvidia, Citadel is effectively betting on where the next wave of outsize profits in AI will emerge.
The takeaway for investors is clear: Don't chase hype narratives or follow momentum. Instead, try to anticipate capital flows. Griffin isn't abandoning AI; he's rebalancing his bets on the trend toward the pick-and-shovel plays that are supporting it.
My take is that Griffin thinks Palantir's story is maturing, while Nvidia's machine is still poised to add muscle.
