Palantir Stock vs. Taiwan Semiconductor Stock: Wall Street Says Buy One and Sell the Other

Following the end of each calendar quarter, institutional investors are required by the Securities and Exchange Commission (SEC) to file a Form 13F. A 13F serves as a public ledger, breaking down which stocks the "smart money" on Wall Street bought and sold during the most recent quarter.

For the last few years, institutional investors haven't been able to stop buying artificial intelligence (AI) stocks. Chief among popular buys for most of the last two years are "Magnificent Seven" darling Nvidia and data mining specialist Palantir Technologies (NASDAQ: PLTR).

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

However, while combing through some recent filings and trading data, it would appear that some of Wall Street's most closely followed personalities are dumping Palantir stock and redeploying their gains into another AI semiconductor stock -- Taiwan Semiconductor Manufacturing (NYSE: TSM).

I'll detail some moves made by billionaire money manager Stanley Druckenmiller of the Duquesne Family Office and Ark Invest founder Cathie Wood as it relates to swapping Palantir for TSMC. Let's dig into why selling Palantir stock and buying shares of TSMC might make sense for growth investors right now.

Why sell Palantir stock right now?

It's no secret that 2025 has been a choppy year in the stock market. The S&P 500 and Nasdaq Composite have each exhibited pronounced volatility, thanks in large part to an overwhelming cloud of uncertainty -- from tariff negotiations, mixed economic data, and guessing what policies the Federal Reserve might institute next. Nevertheless, it seems as if nothing can stand in the way of Palantir stock's parabolic run.

PLTR data by YCharts

Let's start with Cathie Wood's recent trading activity. While Palantir remains the fifth-largest holding across Ark Invest's exchange-traded funds (ETFs), the firm has been trimming its exposure to Palantir over the last month.

Of note, some of these trades were required by specific regulations per the Internal Revenue Code. Essentially, the gains in Ark's Palantir position were so high that the stock had become an abnormally large position, and the rise in share price triggered a sale. What is unique, however, is that Ark continued reducing its exposure to Palantir -- even after the company delivered a monster earnings report earlier this month.

Druckenmiller's activity in Palantir stock differs slightly from Wood's. Per Duquesne Family Office's Q1 13F, the firm no longer has any exposure to Palantir -- having sold its remaining 41,710 shares during the quarter.

I went back and took a look at Duquesne's exposure to Palantir since the company went public back in 2020. It would appear that this is not the first time since Druckenmiller and his team owned the red-hot AI stock, only to dump it later on. Need I remind you, Wood has done this before, too.

PLTR PS Ratio data by YCharts

At a price-to-sales (P/S) ratio of nearly 100, Palantir has become a historically pricey stock among a cohort of software businesses that generally fetch premium valuations as it is.

The trading patterns from Wood and Druckenmiller lead me to think that each investor may be exercising a similar strategy: taking profits off the table during periods of pronounced momentum and being cognizant of an overstretched valuation.

Why buy Taiwan Semiconductor stock right now?

During the first quarter, the Duquesne Family Office purchased 491,265 shares of Taiwan Semi stock -- increasing its stake by 457%. In addition, Wood appears to be quietly carving out more exposure to semiconductor stocks across Ark's portfolio, too. Over the last few months, Ark has gone back to buying shares of Nvidia and Advanced Micro Devices, and more recently, just scooped up TSMC stock.

Image source: Getty Images.

From a macro standpoint, buying chip stocks looks like a savvy bet right now. Hyperscalers such as Amazon, Alphabet, and Microsoft, in combination with Meta Platforms and Apple, have collectively committed hundreds of billions of dollars for AI-related capital expenditures (capex) over the next several years. In addition, Oracle, OpenAI, and SoftBank are leading the charge for Project Stargate -- a $500 billion AI infrastructure initiative.

Secular tailwinds fueling AI infrastructure, particularly a rising need for GPUs and integrated network equipment, bode well for Taiwan Semi's long-term prospects.

TSM PE Ratio (Forward) data by YCharts

Even so, shares of Taiwan Semi have faced enormous pressure as of late -- likely due to ongoing tensions between the U.S. and China as it relates to trade. At a forward price-to-earnings (P/E) multiple of just 21.3, TSMC appears to have exhibited some pronounced valuation compression during the first quarter.

What's the verdict?

In all fairness, I personally remain bullish on both Palantir and Taiwan Semi -- as each have compelling long-run tailwinds underscored by the AI movement. But right now, I think Palantir's valuation is quite lofty and it's increasingly becoming difficult to justify. On the other hand, I think TSMC stock is reasonably valued and looks like a great buy right now.

My thinking is Druckenmiller and Wood redeployed their gains from high-flying growth stocks such as Palantir and bought the dip in Taiwan Semi stock.

With that in mind, I think investors might want to consider doing the same and reduce some exposure to Palantir and reinvest their gains elsewhere -- and Taiwan Semi looks like a great position for that.

Should you invest $1,000 in Palantir Technologies right now?

Before you buy stock in Palantir Technologies, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Palantir Technologies wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $651,049!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $828,224!*

Now, it’s worth noting Stock Advisor’s total average return is 979% — a market-crushing outperformance compared to 171% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 2, 2025

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Adam Spatacco has positions in Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Palantir Technologies. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Apple, Cloudflare, CrowdStrike, Datadog, Meta Platforms, Microsoft, MongoDB, Nvidia, Oracle, Palantir Technologies, ServiceNow, Snowflake, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.