Why Ken Griffin's $10 Billion AI Gamble Reveals a Deeper Split in Tech Investment Strategy

When billionaire hedge fund manager Ken Griffin made his portfolio moves in the third quarter, he sent a signal that caught many investors off guard. The founder of Citadel Advisors—widely regarded as the most profitable hedge fund in history and a consistent outperformer of the S&P 500 by significant margins—simultaneously trimmed his position in Amazon while building a stake in Palantir Technologies. The move raises a critical question: Is Griffin abandoning a fundamentals-driven blue-chip strategy for frothy growth exposure?

The Numbers Tell Different Stories

Palantir’s trajectory has been nothing short of spectacular. The data analytics platform’s shares have surged 1,030% since the start of 2024, dwarfing Nvidia’s impressive 281% gain over the same window. In the third quarter alone, Palantir’s revenue accelerated 63% year-over-year to $1.1 billion—marking its ninth consecutive quarter of acceleration—while non-GAAP earnings more than doubled to $0.21 per share.

But there’s a catch worth examining closely.

The company trades at 119 times sales, making it the single most expensive stock in the S&P 500 by a striking margin. The next-closest comparable, AppLovin, sits at 45 times sales. Put another way: Palantir could collapse 60% tomorrow and still hold the title of most expensive stock in the index. This raises an uncomfortable observation: since January 2024, Palantir’s stock price has climbed 11-fold, yet its revenue hasn’t even doubled. Investors are essentially paying exponentially higher multiples for incremental revenue growth—a dynamic that cannot persist indefinitely.

Amazon’s Quiet AI Advantage

Meanwhile, the company Griffin sold from shows a fundamentally different profile. Amazon’s third-quarter revenue climbed 13% to $180 billion, with particularly brisk acceleration in advertising and cloud computing. More importantly, its operating margin expanded 60 basis points while operating income jumped 23% to $21.7 billion.

What’s driving these results? Systematic AI integration across three business segments. In e-commerce, Amazon deployed generative AI for customer service, inventory optimization, and last-mile delivery, plus an AI shopping assistant called Rufus that’s tracking toward $10 billion in annual sales. Its advertising division—the third-largest ad-tech player globally—has built AI tools for creative generation and campaign automation. Amazon Web Services, the leading public cloud provider, now offers custom AI chips, new foundational models via Bedrock, and AI agents for software development and security operations.

Wall Street forecasts Amazon’s earnings will expand at an 18% annual clip over the next three years. At 33 times current earnings, the valuation looks defensible against that growth trajectory.

The Griffin Thesis: Conviction vs. Positioning

In the third quarter, Citadel divested 1.6 million Amazon shares while acquiring 388,000 shares of Palantir. Yet here’s what investors often overlook: Palantir doesn’t rank in Griffin’s top 300 holdings. Amazon, by contrast, remains a core position within the fund’s portfolio.

The likely explanation? Tactical positioning rather than conviction shift. Griffin may have simply taken profits on a stellar performer while taking a measured bet on Palantir’s AI momentum. But the size and nature of the Palantir stake—meaningful but not dominant—suggests measured skepticism.

The Uncomfortable Valuation Reality

Palantir’s AI platform undeniably impresses. Forrester Research ranked it as the most capable AI/ML offering in the market, ahead of offerings from Alphabet, Microsoft Azure, and Amazon Web Services. Its ontology-based architecture and decisioning frameworks have clear use cases spanning supply chain, fraud detection, and defense analytics.

Yet capability doesn’t justify valuation extremes. When a stock’s price multiplier expands 11 times in one year while revenue barely doubles, the gap between price discovery and fundamental value creation widens dangerously. Growth stocks don’t always crash, but historically, when valuation disconnects this severely from underlying business growth, mean reversion arrives with force.

What This Means for Your Portfolio

The divergence in Griffin’s moves illuminates a choice facing growth-focused investors: chase companies with momentum-driven valuations, or pursue those where AI capabilities are compounding profits at the operational level. Amazon’s measured AI integration is driving both topline acceleration and margin expansion simultaneously. Palantir’s stunning growth is accompanied by valuation multiples that assume perfection.

Griffin’s hedge fund has consistently outperformed by thinking independently. His third-quarter trades suggest he’s buying the most capable AI platform while holding his conviction in a company that’s proving AI pays at scale. That positioning speaks volumes about which thesis he believes will survive the next market inflection.