Billionaire Ken Griffin runs Citadel Advisors, the most profitable hedge fund in history as measured by net gains, according to LCH Investments. He purchased shares of two hot artificial intelligence (AI) stocks in the third quarter.
- Citadel bought 388,000 shares of Palantir Technologies (PLTR +1.25%), a stock that has advanced 2,200% since January 2023.
- Citadel bought 128,100 shares of Robinhood Markets (HOOD 3.25%), a stock that has advanced 1,100% since January 2023.
Importantly, while both positions are small, investors can still learn an important lesson: Stocks that have appreciated significantly in the past can still make smart investments in the present. Read on to learn more about Palantir and Robinhood.
Image source: Getty Images.
1. Palantir Technologies
Palantir provides analytics software to commercial enterprises and government agencies. Its core products, Gotham and Foundry, integrate data and machine learning models into a decisioning framework called an ontology. It also provides an adjacent artificial intelligence (AI) platform that lets clients build generative AI into applications and business processes.
Morgan Stanley analysts says Palantir is emerging as the standard in enterprise AI. Indeed, Forrester Research recently ranked the company as a leader in AI decisioning platforms, and the International Data Corp. (IDC) recognized its leadership in AI-enabled source-to-pay software, a technology that helps enterprises optimize supply chain management.
Palantir reported strong third-quarter financial results that beat estimates on the top and bottom lines. Revenue increased 63% to $1.1 billion, the ninth straight acceleration, and non-GAAP (adjusted) net income increased 110% to $0.21 per diluted share. Management also raised its full-year guidance, such that revenue is projected to increase 53% in 2025.
However, Palantir trades at an absurdly expensive valuation of 96 times sales. While down from its peak of 137 times sales in August 2025, the current price-to-sales ratio still makes Palantir the most expensive stock in the S&P 500 by nearly threefold. AppLovin is second at 33 times sales. That means Palantir could decline 65% and still be the most expensive stock in the index.
Here is the big picture: Palantir is an excellent company with compelling growth prospects. Spending on AI platforms is projected to increase at 38% annually through 2033, per Grand View Research. But the risk-reward profile is heavily skewed toward risk because the current valuation is unsustainable. Investors should limit their exposure to this stock.
NASDAQ: HOOD
Key Data Points
2. Robinhood Markets
Robinhood runs an online trading platform designed for younger investors. With 19 million accounts funded by millennials and Gen Z, nearly twice as many as the next closest competitor, the company is particularly well positioned to benefit as members of those generations inherit more than $120 trillion in assets from baby boomers in the next few decades.
It has been called the greatest wealth transfer in history, and its impact is already evident to some extent. While Robinhood remains a small player in the brokerage market, it is gaining share across equities, fixed income, options, and margin trading. Furthermore, its recent entrance into the prediction markets has been wildly successful, with Robinhood grabbing about 30% market share in little over a year.
Robinhood is also leaning into artificial intelligence with Cortex, a conversational assistant that helps investors make sense of financial markets. It uses generative AI to summarize breaking news, analyst reports, and technical information. Robinhood recently introduced more personalized insights that connect real-time data to users' portfolios. Cortex is only available to Gold subscribers, who pay either $5 per month or $50 per year.
Robinhood reported strong third-quarter financial results, as funded accounts, platform assets, and net deposits reached record highs. Revenue doubled to $1.2 billion and GAAP net income more than tripled to $0.61 per diluted share. "Prediction markets are really on fire," said CEO Vladimir Tenev, mentioning that trading volume has doubled in every quarter since the company added the feature in late 2024.
Here is the big picture: Robinhood provides access to a broad range of trading products through a mobile-first platform engineered to engage younger users. As millennials and Gen Z mature, Robinhood is likely to gain market share in brokerage services. And shares look attractive at 42 times earnings when Wall Street expects earnings to increase at 22% annually over the next three years.
