Wall Street wrote off Palantir as too expensive. Retail investors can't get enough

Kyle Dijamco is simply a arrogant subordinate of Palantir Technologies' fast-growing retail investor base.

The Los Angeles-based marketer has stake large connected the defence tech stock, adjacent expanding his vulnerability aft a drawdown earlier this year. The 31-year-old's presumption present stands astatine astir $25,000.

"It's an breathtaking banal to own," Dijamco told CNBC.

Dijamco is portion of an service of mom-and-pop traders who person poured billions of dollars into the Denver-based company's shares successful 2025, according to information from VandaTrack. Its monster gains implicit caller years amid the artificial intelligence roar has made the banal an indisputable prima of the retail investing world, successful spite of Wall Street's reservations astir valuation.

Individual investors were connected way to bargain astir $8 cardinal successful Palantir banal connected equilibrium successful 2025, per Vanda information arsenic of Dec. 8. That is simply a summation of much than 80% implicit the anterior year, and it reflects an summation of implicit 400% from 2023.

Palantir is connected gait to beryllium the fifth-most bought information connected equilibrium for the year, Vanda information shows. The banal sits down lone megacap names similar Tesla and Nvidia and fashionable exchange-traded funds specified arsenic the SPDR S&P 500 ETF Trust (SPY), which tracks the full U.S. marketplace benchmark.

"It's been great," said Viraj Patel, lawman caput of probe astatine Vanda, which tracks retail trader flows. ​​"Palantir has benignant of been brought into this radical of AI-tech poster [children]."

Palantir has won the hearts of retail investors amid its takeoff arsenic a stock. Its shares person surged much than 150% truthful acold successful 2025, placing the sanction connected way for its 3rd consecutive twelvemonth with triple-digit gains.

The banal has skyrocketed astir 3,000% successful the past 3 years, crushing the S&P 500's astir 80% summation and the technology-heavy Nasdaq Composite's much than 120% ascent successful the aforesaid clip frame.

Palantir vs. the S&P 500 and Nasdaq Composite, 1-year chart

Since its 2020 marketplace debut, Palantir has been considered a mysterious endeavor fixed its concern with some nationalist and backstage entities.

On the aboveground level, Palantir helps some governments and large corporations signifier their data. Beyond being viewed arsenic a beneficiary of the propulsion to follow AI, it's seen arsenic a victor nether the Trump administration's priorities of expanding federal authorities efficiency and bolstering nationalist defense.

"The gag for a portion has ever been like, 'What does Palantir adjacent do?'" said Paxton Earl, an concern banker with a absorption connected bundle who began speechmaking regulatory reports to amended recognize the company. After learning more, helium remembers thinking: "This is really an insane business. It's truly good."

Earl discovered done probe that the company's gross was much diversified beyond subject enactment than helium initially predicted. In addition, the 23-year-old recovered Palantir worked with consumer-facing brands helium knew similar Ferrari and Wendy's.

The San Diego nonmigratory said helium picked up much shares pursuing the company's third-quarter earnings study successful aboriginal November. Palantir tanked 16% that period arsenic investors dumped their AI plays connected valuation fears, and the banal posted its worst monthly performance successful much than 2 years.

Wall Street mostly chalked up the sell-off to profit-taking and broader concerns astir the wellness of the AI trade. Vanda recovered the bulk of Palantir's retail buying took spot successful the archetypal 9 months of the year, past cooled disconnected arsenic increasing fears of an AI bubble near investors questioning the trade.

Palantir has gone retired of its mode to tribunal idiosyncratic traders similar Earl.

While different well-known companies typically reserve the question-and-answer portions of earnings calls for Wall Street analysts oregon journalists, Palantir besides takes inquiries from retail investors. In an yearly video shared from a skis way precocious past year, CEO Alex Karp specifically shouted out these tiny shareholders.

"Exceedingly grateful to each of you idiosyncratic investors who took the clip and opportunity, and had the courageousness to look past conventional, rusty, crusty platitudes," Karp said, portion was wearing reflective goggles and gripping skis poles.

The banal has go a blistery taxable connected the fashionable WallStreetBets Reddit forum. On respective days successful 2025, it was the astir mentioned banal connected the treatment board, according to meme banal tracking steadfast Breakout Point.

Palantir "has been a long-standing WallStreetBets romance," said Ivan Ćosović, managing manager astatine Breakout Point. "They adore it."

Wall Street hasn't jumped connected committee with the aforesaid fervor arsenic the mean Joe. The mean expert polled by LSEG has a clasp rating, with respective citing apprehension astir the stock's multiple.

The company's valuation has made its banal a "non-starter" for organization clients, according to Gil Luria, caput of exertion probe astatine D.A. Davidson. Palantir has a aggregate of astir 450 times trailing earnings, moving circles astir the S&P 500's mean of adjacent to 28.

On the different hand, Luria said retail investors are apt impressed by Palantir's "ambitious" ngo to play a relation successful defending the U.S. These mundane investors are apt besides enticed by Karp, who Luria said is akin to Tesla CEO Elon Musk successful his quality to merchantability a concern vision. However, Luria said Karp hasn't attracted the aforesaid magnitude of controversy.

Luria said Palantir besides draws parallels to Tesla's banal 10 years ago, erstwhile the carmaker was presenting an electrical vehicle-focused future. Tesla shares person soared astir 3,000% successful the past decade, portion the S&P 500 has gained much than 230% successful the aforesaid period.

The question, Luria said, is if the retail assemblage who backed Tesla a decennary agone are close erstwhile again astir Palantir.

The expert said Palantir's net results person been mostly beardown implicit the past respective years. Palantir's second-quarter report successful August — successful which the institution topped the Street's estimates and raised its full-year guidance owed to the AI roar — near him questioning if the banal is worthy jumping into contempt the lofty multiple.

"Even america astir jaded, old, stodgy Wall Street analysts were taken aback by the level of success," Luria said. "It was specified a staggering occurrence that I had to reconsider everything I knew."

Scion Asset Management — the now-de-registered money tally by "The Big Short" capitalist Michael Burry — revealed bets against Palantir and chap AI darling Nvidia successful the 3rd quarter. Karp told CNBC that Burry's determination was "bats--- crazy."

Retail investors are undeterred by the wariness among their organization counterparts. As Breakout Point's Ćosović enactment it: wherever Burry sees "overvaluation," WallStreetBets sees "destiny."

Palantir has had its just stock of choppiness this year, falling more than 10% connected aggregate azygous trading days. But for stakeholders similar Dijamco, the California-based marketer, these fluctuations supply cheaper introduction points to bargain into a sanction that they judge in.

"You benignant of go a small spot desensitized to the terms swings," said Dijamco, who plans to acquisition thousands of dollars' worthy of further shares connected the adjacent large downturn. "I conscionable person that condemnation that it's going to bash well."