This is one of the most exciting times of the year -- and it has nothing to do with earnings season (the six-week period where a majority of S&P 500 companies report their operating results).
No later than 45 calendar days following the end of a quarter, institutional investors overseeing at least $100 million in assets under management (AUM) are required to file Form 13F with the Securities and Exchange Commission. This filing provides professional and everyday investors with a concise snapshot of the stocks, exchange-traded funds (ETFs), and select options that Wall Street's top-tier money managers purchased and sold in the latest quarter.
Nov. 14 marked the deadline to file 13Fs for trading activity in the September-ended quarter, meaning investors just received a deluge of valuable information regarding which stocks and trends have piqued the interest of successful asset managers.
Image source: Getty Images.
Although Warren Buffett is the most-followed and revered of all billionaire investors, he's not the only one with a knack for spotting a bargain. Duquesne Family Office's Stanley Druckenmiller, who oversees in excess of $4 billion in AUM, has consistently outpaced the S&P 500's returns.
What's particularly noteworthy about Druckenmiller's investments at Duquesne has been his activity in the artificial intelligence (AI) arena. This year, he's completely sold out of what's arguably Wall Street's hottest AI stock, data mining specialist Palantir Technologies (PLTR 1.59%), and is absolutely loading up on three of the cheapest members of the "Magnificent Seven."
Palantir stock was sent to the chopping block
As of the midpoint of 2024, Duquesne Family Office held nearly 770,000 shares of Palantir. The allure was simple: two unique, AI-driven, software-as-a-service platforms growing at a breakneck pace that have no one-for-one replacement. Sustainable moats are rare on Wall Street, and investors have demonstrated a willingness to pay a premium for public companies that can maintain their competitive advantages.
Palantir's shining star is Gotham, which assists the U.S. and its allies with military mission planning and execution, as well as data collection and analytics. The company's other core segment, Foundry, is relatively new and is geared toward helping businesses make sense of their data to streamline their operations.
Palantir hasn't had any trouble blowing past Wall Street's consensus sales and profit forecasts this year. Since 2023 began, the company's shares have rallied by more than 2,600%!
NASDAQ: PLTR
Key Data Points
Despite this outperformance, billionaire Stanley Druckenmiller sold every share of Palantir his fund had held between July 1, 2024, and March 31, 2025.
The most logical explanation for this selling activity is that Duquesne's billionaire chief was locking in gains. The average hold time for the 65 positions in Duquesne's portfolio, as of the end of September, was just 2.12 quarters, or a little over six months, according to 13F aggregating service WhaleWisdom.com. This figure illustrates Druckenmiller's willingness to ring the register when the opportunity presents itself.
But there may be more to Druckenmiller's exit from Palantir than just profit-taking.
In May 2024, Duquesne's investment chief noted in an interview with CNBC that "AI may be a little overhyped now, but underhyped long term." Although he was justifying the sale of his fund's stake in Nvidia with this statement, it also holds true for Palantir.
There hasn't been a next-big-thing technology or hyped innovation in three decades that's avoided an early innings bubble-bursting event. Investors regularly overestimate the early adoption, utility, and optimization of new technologies, which leads to bubbles bursting. If history repeats itself, yet again, an AI bubble-bursting event would likely drag down Palantir stock.
The other glaring issue with Palantir is its valuation. History also tells us that no companies on the leading edge of a hyped technology or trend have been able to sustain price-to-sales (P/S) ratios above 30 for an extended period. Palantir ended the Nov. 14 trading session at a nosebleed P/S ratio of 114. Even with a sustained growth rate of 30% or more, Palantir's current valuation can't be justified.
Image source: Getty Images.
Duquesne's billionaire boss is piling into three Magnificent Seven stocks (no, not Nvidia!)
However, Stanley Druckenmiller isn't avoiding the AI space. Rather, he's just being selective about which AI companies he's adding to his fund. According to Duquesne's 13F detailing third-quarter trading activity, Druckenmiller loaded up on three Magnificent Seven stocks:
- Alphabet (GOOGL +3.12%)(GOOG +3.11%): 102,200 Class A shares (GOOGL) purchased
- Amazon (AMZN 0.74%): 437,070 shares purchased
- Meta Platforms (META 1.22%): 76,100 shares purchased
All three of these Magnificent Seven stocks are leveraging AI as an application to enhance their highly profitable platforms, which possess well-defined competitive advantages. Amazon and Alphabet operate the world's No. 1 and No. 3 cloud infrastructure service platforms, respectively, by total spend. Amazon Web Services and Google Cloud are both incorporating generative AI and large language model capabilities into their platforms to boost their long-term growth rate.
NASDAQ: META
Key Data Points
Meanwhile, Meta Platforms has leaned into AI as a tool for businesses advertising on its family of social media apps, which include Facebook, Instagram, WhatsApp, and Threads. Generative AI tools can craft personalized static and video messages, which can improve click-through rates and enhance Meta's ad-pricing power.
The important aspect for all three companies is that AI is enhancing their existing platforms and isn't directly responsible for their revenue, unlike Nvidia. Although poor investor sentiment would likely weigh on all Magnificent Seven stocks if an AI bubble were to form and burst, sales for Alphabet, Amazon, and Meta wouldn't be directly impacted.
Another factor to consider with this trio is their respective valuation. Alphabet, Amazon, and Meta are cash flow machines that reinvest aggressively in high-growth initiatives. Based on forward-year cash flow per share estimates from Wall Street analysts, Alphabet is valued at 18 times forecast cash flow in 2026, while Amazon and Meta are both trading at estimated forward-year cash flow multiples of 12, respectively.
Palantir, on the other hand, has an otherworldly P/S ratio and is commanding a forward-year multiple to cash flow of almost 153!
Value is tough to come by in a historically pricey stock market, but billionaire Stanley Druckenmiller appears to have found a few bargains within the AI space.
