Retail investors prop up Palantir as Wall Street balks at valuation

Palantir’s PLTR stock has managed to hold steady throughout the year, even as Wall Street kept warning that the price looks stretched, thanks to retail investors who continue their habit of doing the opposite of what smart money wants.

Kyle Dijamco, a 31-year-old marketer based in Los Angeles, sits right in the middle of that crowd. He holds about $25,000 worth of Palantir shares.

He added to that position earlier this year after the stock pulled back. “It’s an exciting stock to own,” Kyle said. His bet reflects a wider trend among small investors who kept buying even when the stock slipped.

Retail investors pour billions into Palantir despite valuation warnings

Retail investors are on track to buy literally $8 billion worth of Palantir’s stock on a net basis as of press time, which is an increase of over 80% in a year and more than 400% rally compared from 2 years ago in 2023.

This helped turn Palantir into the fifth most-bought security of the year, trailing only Tesla, Nvidia, and the SPY itself.

“It’s been great,” said Viraj Patel, deputy head of research at Vanda, which tracks retail trading flows. “Palantir has kind of been brought into this group of AI-tech poster children.” Retail interest followed strong gains.

The stock rose more than 150% in 2025, setting up a third straight year of triple-digit growth. Over three years, the shares climbed nearly 3,000%, far ahead of the S&P 500’s roughly 80% gain and the Nasdaq Composite’s more than 120% rise.

Since its 2020 market debut, Palantir has often confused investors. The company works with governments and private firms, helping them organize large data sets. The stock also drew attention as artificial intelligence spending grew and as the Trump administration pushed policies focused on federal efficiency and national defense.

“The joke for a while has always been like, ‘What does Palantir even do?’” said Paxton Earl, a software-focused investment banker. After reading filings, Paxton said his view changed. “This is actually an insane business. It’s really good.” He learned the company earns revenue beyond military contracts and works with consumer brands such as Ferrari and Wendy’s.

Wall Street hesitates as social media backs the stock

The PLTR stock crashed by 16% in November, its worst monthly performance in more than two years, after investors sold AI-related names over valuation concerns. Wall Street described the decline as profit-taking mixed with worries about the AI trade.

Even so, Palantir stayed popular online, appearing appeared frequently on the dumb money WallStreetBets forum and ranked as the most mentioned ticker on several days in 2025, based on tracking by Breakout Point.

“They [retail investors] adore it,” said Ivan Ćosović, managing director at Breakout Point. Some online creators raised ethical concerns tied to wartime technology and U.S. Immigration and Customs Enforcement contracts, but that debate did not stop discussion.

The company also leaned into retail attention. Unlike many firms, Palantir allows questions from individual investors during earnings calls. In a video filmed on a ski trail, CEO Alex Karp thanked small shareholders. “Exceedingly grateful to all of you individual investors who took the time and opportunity,” Alex said.

Institutional investors surveyed by LSEG mostly rated the stock a hold. Gil Luria, head of technology research at D.A. Davidson, said the valuation makes the shares a “non-starter” for many clients.

Palantir trades at about 450 times trailing earnings, far above the S&P 500 average near 28, which is very similar to Tesla’s setup a decade ago, as the company remains the only one with more retail concentration than institutional.

Michael Burry’s Scion Asset Management revealed short positions against Palantir and Nvidia in the third quarter. Alex dismissed the move as “bats— crazy.” Retail investors stayed focused on price swings. “You kind of become a little bit desensitized to the price swings,” Kyle said. He plans to buy more shares on the next downturn. “I just have that conviction that it’s going to do well.”

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