Three years of skyrocketing 30 times! Palantir (PLTR.US) has become a "AI faith" for retail investors, with its high valuation not hindering retail investors from going crazy for it.

According to VandaTrack data, as of December 8th this year, retail investors have poured nearly $8 billion into Palantir Technologies (PLTR.US) stock. This figure represents an increase of over 80% from the previous year and a staggering increase of over 400% from 2023. The phenomenal gains driven by the artificial intelligence (AI) boom in recent years have made this stock undoubtedly a star in the world of retail investing, despite lingering valuation concerns on Wall Street. Vanda's data shows that Palantir is on track to become the fifth largest net buying security this year, following only mega-cap stocks like Tesla, Inc. (TSLA.US), NVIDIA Corporation (NVDA.US), and popular exchange-traded funds tracking the entire U.S. stock market benchmark such as the SPDR S&P 500 ETF (SPY). Viraj Patel, Deputy Research Director at Vanda responsible for tracking retail fund flows, said, "The performance is very impressive. Palantir has to some extent been included in that group of AI technology 'frontline players.'" "Mad" business model With the soaring stock price, Palantir has won the favor of a large number of retail investors. Its stock price has risen over 150% year-to-date in 2025, marking a potential third consecutive year of triple-digit gains. Over the past three years, the stock has surged nearly 3000%, significantly outperforming the S&P 500 index's approximately 80% rise during the same period, as well as the Nasdaq Composite Index's more than 120% increase. Since going public in 2020, Palantir has been seen as a somewhat mysterious company as it provides services to both the public and private sectors. On the surface, Palantir helps governments and large enterprises organize and manage data. Apart from being seen as a beneficiary of the AI adoption wave, the company is also considered a potential winner under the Trump administration's policy focus on improving federal efficiency and strengthening national defense. Paxton Earl, an investment banker focused on the software sector, said, "For a while, everyone kept joking, 'What exactly does Palantir do?'." To better understand the company, he started reading regulatory filings. After delving deeper, he recalled thinking, "This is actually a very crazy business, and it's really great." Through his research, Paxton Earl found that Palantir's revenue structure was more diverse than he initially expected, not solely reliant on military business. Additionally, the 23-year-old investor discovered that Palantir's clients include consumer-facing brands he is familiar with, such as Ferrari NV (RACE.US) and Wendy's (WEN.US). Paxton Earl said that after the company released its third-quarter earnings report in early November, he bought more shares. However, the stock price plummeted 16% that month as investors sold off AI concept stocks due to valuation concerns, marking its worst monthly performance in over two years. The Wall Street generally attributes this decline to profit-taking and concerns about the overall health of AI trading. Vanda's data shows that retail buying interest in Palantir was concentrated in the first nine months of this year, and then as worries about the AI bubble intensified, investors began to question the trade, leading to a cooling off in buying activity. Retail investors' "romance" Palantir has been deliberately attracting individual traders like Paxton Earl. While other well-known companies typically reserve Q&A sessions of earnings calls for Wall Street analysts or journalists, Palantir also accepts questions from retail investors. In a year-end video shared last year, CEO Alex Karp even publicly thanked these small shareholders while skiing. At the time, he said, "I am immensely grateful to all individual investors who are willing to invest time and opportunity, and have the courage to break away from those stale, old, ossified narratives." The stock has also become a focus on the Reddit popular forum WallStreetBets. According to data from the "meme stock" tracking company Breakout Point, Palantir was the most mentioned stock on this forum on multiple trading days in 2025. Ivan osovi, Managing Director of Breakout Point, said, "Palantir has long been a 'crush' for WallStreetBets; they really love it." Of course, not all discussions on social media are positive. Some investment content creators question whether it is morally appropriate to hold shares in the company given Palantir's association with war technology and its relationship with the U.S. Immigration and Customs Enforcement (ICE). Institutional hesitation Different from the enthusiasm of ordinary retail investors, Wall Street has not been as actively involved. According to LSEG statistics, analysts have given an average rating of "hold," with many expressing concerns about the valuation level. Gil Luria, Director of Technology Research at D.A. Davidson, said that Palantir's valuation makes it "virtually impossible to touch" for institutional clients. The stock currently has a price-to-earnings ratio of about 450 times the earnings of the past 12 months, while the average level for the S&P 500 index is close to 28 times. On the other hand, Gil Luria believes that retail investors may be impressed by the "ambitious" mission of Palantir, which is to play a role in U.S. defense. Additionally, these ordinary investors are likely attracted to Alex Karp himself. Gil Luria said that Alex Karp's ability to promote the company's vision is somewhat similar to Tesla, Inc. CEO Elon Musk, but with less controversy. Gil Luria also pointed out that Palantir reminds people of Tesla, Inc. ten years ago, when the automaker was envisioning a future centered around electric cars. Over the past decade, Tesla, Inc.'s stock price has risen by approximately 3000%, while the S&P 500 index has seen a cumulative increase of over 230% during the same period. The question now is whether the same group of retail investors who hit it right with Tesla, Inc. ten years ago will be proven right again with Palantir this time. Gil Luria said that Palantir's overall earnings performance over the past few years has been quite strong. In the second-quarter earnings report released in August this year, the company not only exceeded Wall Street's expectations but also revised its full-year guidance upwards under the wave of AI hype. This made him rethink whether to continue holding the stock despite the high valuation. Gil Luria said, "Even for us, the most cynical, conservative, and old-school Wall Street analysts, its success is astonishing. The success is so amazing that I have to re-examine everything I have known before." Scion Asset Management, steered by Michael Burry, the prototype character in "The Big Short", disclosed short bets against Palantir and another AI star stock, NVIDIA Corporation, in the third quarter. Alex Karp said that Michael Burry's move was "outrageously crazy". High valuation or predestined success? Retail investors have not been deterred by the cautious attitude of institutional investors. As Ivan osovi of Breakout Point said, what Michael Burry sees as "high valuation" is seen as "predestined success" on WallStreetBets. Palantir's stock price has fluctuated significantly this year, dropping more than 10% on multiple trading days. But for retail investors holding the stock, these fluctuations provide opportunities to buy more of the company they believe in at lower prices. Some investors have said they have become somewhat numb to price volatility and plan to buy thousands of dollars worth of stock the next time there is a significant pullback, saying, "I just have that conviction that it will eventually perform well."