According to data from VandaTrack, retail investors have poured nearly $8 billion into Palantir Technologies Inc. (PLTR.US) stock from the start of the year through December 8th. This figure represents an increase of over 80% compared to the previous year and a staggering surge of more than 400% since 2023. The astonishing gains driven by the artificial intelligence (AI) boom in recent years have made this stock an undisputed star in the world of retail investing, even as Wall Street consistently harbors doubts about its valuation. Vanda's data indicates that Palantir is on track to become the fifth most net-bought security this year, trailing only mega-cap stocks like Tesla (TSLA.US) and NVIDIA (NVDA.US), as well as popular exchange-traded funds like the SPDR S&P 500 ETF (SPY) that tracks the broader U.S. market benchmark. Viraj Patel, Deputy Head of Research at Vanda responsible for tracking retail fund flows, stated, "The performance has been exceptionally bright. Palantir has, to some extent, been included in that cohort of AI tech 'flagship representatives'."
As its stock price soared, Palantir's "crazy" business model won the favor of a vast number of retail investors. Its share price has accumulated a rise of over 150% so far in 2025, positioning it for a third consecutive year of triple-digit gains. Over the past three years, the stock has skyrocketed nearly 3000%, vastly outperforming the S&P 500 index, which rose about 80% over the same period, and the tech-heavy Nasdaq Composite Index, which gained over 120%. Since its public debut in 2020, Palantir has been viewed as a rather mysterious enterprise due to its simultaneous service to both public sector and private institutions. On the surface, Palantir helps governments and large corporations organize and manage data. Beyond 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 enhancing federal government efficiency and strengthening national defense. Paxton Earl, an investment banker focused on the software sector, remarked, "For a while, everyone loved to joke, 'What does Palantir actually do?'." To better understand the company, he began studying regulatory filings. After gaining deeper insight, he recalled thinking, "This is actually a very crazy business, and it's really great." Through his research, Paxton Earl discovered that Palantir's revenue structure was more diversified than he initially expected, not solely reliant on military contracts. Furthermore, this 23-year-old investor also found that Palantir's clientele included consumer-facing brands he recognized, such as Ferrari (RACE.US) and Wendy's (WEN.US). Paxton Earl stated that he bought more shares after the company released its third-quarter earnings in early November. That month, as investors sold off AI-concept stocks amid valuation concerns, Palantir's stock plummeted 16%, marking its worst monthly performance in over two years. Wall Street widely attributed this decline to profit-taking and broader concerns about the health of AI-related trades. Vanda's data shows that retail buying momentum for Palantir was concentrated primarily in the first nine months of the year, subsequently cooling as worries about an AI bubble grew and investors began questioning the trade.
Palantir has deliberately courted individual traders like Paxton Earl. While other well-known companies typically reserve the Q&A segment of earnings calls for Wall Street analysts or journalists, Palantir also accepts questions from retail investors. In an annual video shared late last year, the company's CEO, Alex Karp, even publicly thanked these small shareholders while on a ski slope. He said at the time, "I am incredibly grateful to all individual investors willing to invest their time and opportunity, and who have the courage to break away from those stale, old, rigid talking points." The stock has also become a focal point on the popular Reddit forum WallStreetBets. According to data from meme-stock tracker Breakout Point, Palantir was the most-mentioned stock on the forum on multiple trading days in 2025. Ivan Ćosović, Managing Director of Breakout Point, noted, "Palantir has been a long-term 'romantic interest' for WallStreetBets; they really love it." Of course, the discussion on social media is not entirely positive. Some investment-focused content creators have questioned whether it is ethically appropriate to hold the stock, given Palantir's association with warfare technology and its partnership with U.S. Immigration and Customs Enforcement (ICE).
In contrast to the enthusiasm of ordinary retail investors, Wall Street has not followed suit with the same vigor. According to LSEG statistics, the average analyst rating is "Hold," with many citing concerns about valuation levels. Gil Luria, Head of Technology Research at D.A. Davidson, stated that Palantir's valuation makes its stock "simply untouchable" for institutional clients. The stock currently trades at a price-to-earnings ratio of approximately 450 times its trailing twelve-month earnings, while the average for the S&P 500 index is only near 28 times. On the other hand, Gil Luria believes retail investors are likely impressed by Palantir's "ambitious" mission to play a role in U.S. defense. Furthermore, these ordinary investors are also probably attracted to Alex Karp himself. Gil Luria said that Karp's ability to sell the company's vision is quite similar to that of Tesla CEO Elon Musk, but with significantly less controversy. Gil Luria also pointed out that Palantir evokes memories of Tesla a decade ago, when the automaker was painting a future centered on electric vehicles. Over the past ten years, Tesla's stock has risen about 3000%, compared to a gain of over 230% for the S&P 500 index during the same period. The question is whether the retail investors who correctly bet on Tesla back then will once again be proven right with Palantir. Gil Luria noted that Palantir's profit performance over the past few years has been quite strong overall. In its second-quarter earnings report released in August, the company not only exceeded Wall Street's expectations but also raised its full-year guidance, fueled by the AI boom. This has led him to reconsider whether the stock is still worth buying despite its high valuation. Gil Luria stated, "Even the most cynical, old-school, stodgy Wall Street analysts among us are shocked by its level of success. The success is so astonishing that I have to re-examine everything I thought I knew."
Scion Asset Management, helmed by "The Big Short" protagonist Michael Burry and now deregistered, disclosed short positions against Palantir and another AI star stock, NVIDIA, in the third quarter. Alex Karp called Michael Burry's move "just insanely crazy."
Retail investors have not been deterred by the caution exhibited by institutional investors. As Breakout Point's Ivan Ćosović put it, what Michael Burry sees as "overvalued," WallStreetBets views as "destined." This year, Palantir's stock price has experienced significant volatility, falling more than 10% on several individual trading days. However, for retail investors holding the stock, these fluctuations instead present opportunities to buy more of the company they believe in at lower prices. One investor expressed, "You become a bit numb to the price swings," and plans to buy thousands of dollars more worth of stock during the next significant pullback, adding, "I just have that belief that it will ultimately perform very well."
