After Selling Nvidia, Billionaire Stanley Druckenmiller Unloaded Another One of Wall Street's Hottest Artificial Intelligence (AI) Stocks. Is It Time For You to Do the Same?

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4 days ago

The billionaire fund manager turned heads when he dumped Nvidia even as peers couldn't stop buying it.
While he has since called that decision a "big mistake," he just sold yet another scorching hot AI darling.
This time Druckenmiller may be right, as valuation trends in the AI realm are becoming harder to justify.
10 stocks we like better than Palantir Technologies ›
Stanley Druckenmiller is a billionaire investor who manages capital at his fund, the Duquesne Family Office. Over the past few years, he has made some eyebrow-raising moves related to investing in artificial intelligence (AI) stocks. Perhaps the biggest head-scratcher was his selling Nvidia stock when everyone else seemed to be buying. In fairness, though, Druckenmiller has since expressed some regret about exiting his Nvidia position.
While Nvidia has been one of the largest beneficiaries of a bullish AI narrative, it's far from the only growth stock out there. Ironically, however, Druckenmiller just dumped his fund's entire stake in yet another scorching hot AI stock.
Will Druckenmiller come to regret this decision, too? I don't think so. Read on to find out which AI darling the Duquesne Family Office just exited, and learn why I think this was a savvy decision.
According to its most recent 13F filing, the Duquesne Family Office has completely exited its position in Palantir Technologies (NASDAQ: PLTR). In the table below, I've summarized Druckenmiller's exposure to Palantir stock over the last year.
Category
Q1 2024
Q2 2024
Q3 2024
Q4 2024
Q1 2025
Shares
769,965
769,965
41,710
41,710
0
Data source: 13f.info.
Per the data above, it appears that the majority of Duquesne's exposure to Palantir was trimmed in the middle of last year. Over the last six months, Druckenmiller's fund held a small position in Palantir stock -- enjoying record gains as the company remained one of the best-performing stocks across the S&P 500 and Nasdaq-100 indices. It begs the question: Why sell now?
Since going public in 2020, Palantir stock has gained well over 1,000%. That's an unusually high return in this short a time duration. However, looking at Palantir's parabolic rise through this lens is a bit misleading. The reason I say that is because the majority of gains in the stock have actually occurred over the last 18 months. When you look at it that way, it becomes even more questionable just how much further the stock can run right now.
In the graph above, I've benchmarked Palantir's valuation against a peer set of high-growth software stocks on a price-to-sales (P/S) basis. Not only is Palantir the obvious outlier here, but just look at how much expansion its valuation multiples have experienced over the last year relative to its peers.
As of the closing bell on May 23, Palantir boasted a market capitalization of $291 billion -- considerably more than Salesforce (which I predicted would happen), despite being a much smaller, less diversified, and less profitable business.
In my eyes, Druckenmiller isn't going to roll the dice on any more momentum fueling Palantir. I think he decided to take his gains and redeploy capital into more appropriately valued businesses.
One of the secrets to investing is that there is never really a perfect time to sell a stock. What I would point out about Palantir's valuation right now is that its P/S multiple is more than double the levels that Amazon and Cisco peaked at during the dot-com bubble, and considerably higher than where Nvidia reached throughout the AI revolution.
I bring this up because as sobering as it may be to realize, even the hottest growth stocks experience pullbacks from time to time. As Palantir stock continues to rocket higher, I suspect expectations will rise around its quarterly earnings results. This presents a risk in that Palantir could deliver a monster earnings report, but ultimately fail to live up to unjustifiably lofty expectations -- hence, the stock could drop off a cliff instantly.
While I remain a long-term bull, I wouldn't blame investors who trim their Palantir positions right now. One prudent approach could be to sell enough to at least recoup your initial investment. Another strategy could be to collect some gains if you're up by 15% or more on your position (essentially double the long-run average annual return of the S&P 500).
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Adam Spatacco has positions in Amazon, Nvidia, and Palantir Technologies. The Motley Fool has positions in and recommends Amazon, Cisco Systems, CrowdStrike, Datadog, MongoDB, Nvidia, Palantir Technologies, Salesforce, ServiceNow, and Snowflake. The Motley Fool has a disclosure policy.
After Selling Nvidia, Billionaire Stanley Druckenmiller Unloaded Another One of Wall Street's Hottest Artificial Intelligence (AI) Stocks. Is It Time For You to Do the Same? was originally published by The Motley Fool