Top AI stocks Palantir and Nvidia see hedge funds selling Palantir and buying Nvidia.

From Nasdaq: 2024-12-02 18:00:00

In 2024, the S&P 500 has surged 26% and the Nasdaq Composite has jumped 28%, driven by the growth of artificial intelligence (AI). Top AI stocks this year include Palantir Technologies (PLTR) and Nvidia (NVDA), with Palantir up 291% and Nvidia up 179% as of Nov. 29.

Despite Palantir and Nvidia’s success, some hedge funds are buying only Nvidia. Citadel Advisors reduced its Palantir exposure by 91% and increased its Nvidia stake by 194%, while D.E. Shaw cut its Palantir position by 45% and raised its Nvidia holding by over 50% in the third quarter.

Palantir’s valuation, with a price-to-sales ratio of 61, has led to concerns of the stock being overbought, prompting some hedge funds to reduce their exposure. In contrast, Nvidia’s importance in the AI ecosystem, upcoming product launches, and relatively stable valuation compared to historical averages make it an attractive investment.

Investors may find Nvidia undervalued, with its price-to-earnings and price-to-free-cash-flow multiples in line with 10-year averages. While competition in the GPU space is a concern, Nvidia’s strong position in the AI market and potential for future growth make it an appealing buy for some investors.

While the decision to sell Palantir and buy Nvidia makes sense for some, concerns about Nvidia’s valuation and competition in the GPU space may impact future growth. The Motley Fool Stock Advisor team recommends considering other investment opportunities alongside Nvidia for potential high returns.



Read more at Nasdaq: Palantir Stock vs. Nvidia Stock: Billionaires Are Buying One and Selling the Other