Ken Griffin’s Citadel: Major AI Moves and Palantir’s Surprising Sell-off

Ken Griffin’s Citadel: Major AI Moves and Palantir’s Surprising Sell-off

November 27, 2024 Catherine Williams - Chief Editor Business

Griffin’s Citadel hedge fund made significant moves in artificial intelligence (AI) during the quarter ending in September. Investors are closely watching other major events like Election Day, earnings season, and the upcoming inflation report. Still, the most crucial date for investors is November 14. This is when institutional investors must file Form 13F with the Securities and Exchange Commission, revealing their trading activities.

A 13F filing is due 45 days after the end of each quarter for institutions managing at least $100 million. These filings provide a snapshot of which stocks are being bought and sold by top investors.

Ken Griffin’s Citadel consistently attracts attention for its impressive trading outcomes. In the latest quarter, two trades stand out.

Citadel Sells Most of Its Palantir Stake

Palantir Technologies, an AI stock, has seen its shares rise dramatically, increasing 791% over the past two years and reaching a market cap of $150 billion. Despite these gains, Griffin sold 91% of Citadel’s Palantir shares in the September quarter. Citadel also increased its options positions in Palantir, indicating a strategy to hedge against stock losses.

Palantir’s strong growth comes from its critical role in data analysis. Its AI tools are used by governments and businesses to manage vast amounts of data. The company is working toward consistent profitability, which attracts investors looking for steady returns.

However, Valuation concerns likely prompted Griffin’s decision to sell. As of November 22, Palantir’s shares were trading at over 42 times the expected sales for 2025 and 137 times forecast earnings per share. Such inflated valuations may not be sustainable, especially with limited long-term growth potential from its core government contracts.

Citadel Invests Heavily in Nvidia

In a surprising shift, Citadel increased its Nvidia holdings by 194% during the same quarter. Previously, Citadel had sold shares in Nvidia. Now, the hedge fund is betting on Nvidia’s strength in AI-driven data centers.

Nvidia dominates the GPU market, holding 98% of the data center shipments in recent years. The company is witnessing rising demand, leading to higher prices for its chips. Nvidia’s success lies in its ability to provide powerful hardware that enhances data processing speeds.

Yet, there are challenges ahead. Competitors are developing their own AI chips, which could threaten Nvidia’s position. Moreover, history shows that technological innovations often lead to overvaluation and eventual corrections.

In summary, Ken Griffin’s Citadel hedge fund made significant changes in its portfolio regarding AI stocks. The decision to sell Palantir while investing more in Nvidia reflects a strategic approach to current market conditions. Investors should stay alert to future developments and market shifts in the technology sector.