Peter Thiel Was an Early Outside Investor in Facebook and Co-Founded Both PayPal and Palantir Before Building a Hedge Fund Now Concentrated in Power and Energy Stocks. Here's What That Track Record Says About Following His Contrarian Bets.

Wall Street is always looking for the next guru. But market history is filled with investors who scored big once, or even a few times, and then faded from history because they didn't keep hitting home runs. That's important to keep in mind as you consider the big shift toward electric stocks in Peter Thiel's portfolio.

Even the best sometimes make mistakes

Peter Thiel is a famous investor thanks to his successful investments in the technology sector, including Facebook (now called Meta (NASDAQ: META)). He also helped found PayPal (NASDAQ: PYPL) and Palantir (NASDAQ: PLTR). There's a good reason to listen to Thiel when it comes to investing, particularly in the technology sector.

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However, you don't want to forget that even good investors make mistakes. Warren Buffett, the longtime CEO of Berkshire Hathaway (NYSE: BRKA)(NYSE: BRKB) was famous for pointing out his missteps even though his investment approach had been incredibly successful over the long term. Simply put, just because an investor is famous, it doesn't mean you should blindly follow them. They are human, just like you.

What Peter Thiel's shift into energy tells you is that you may want to consider following him... after you do your own homework. As your parents probably asked when you were a kid, "If your friend jumped off a cliff, would you jump too?" When it comes to investing, too many people follow without thinking. You don't want to be one of them.

Is energy the next big thing?

In this situation, Peter Thiel might be on to something. Electricity demand grew 10% between 2005 and 2025, but is expected to climb 60% between 2025 and 2045. That's a step change in demand driven by new technologies like artificial intelligence and electric vehicles. Thiel clearly knows a thing or two about technology and how the industry operates, so a deep dive into electric stocks is probably a good idea.

On that front, Thiel's purchases included independent power producers American Electric Power (NASDAQ: AEP) and Vistra (NYSE: VST). It also included utility CMS Energy (NYSE: CMS) and nuclear power start-up X-Energy (NASDAQ: XE). There's a lot going on in that mix, and it might be hard for investors with jobs and lives outside the stock market to dig into and understand all the companies Thiel has chosen to own.

How should you follow Thiel?

If you step back, however, Thiel's broad focus on electricity suggests you could pick just about any electricity-related stock for your portfolio. But you could also select a diversified exchange-traded fund (ETF), such as Vanguard Utilities ETF (NYSEMKT: VPU), which would allow you to follow the electricity theme without taking on stock-specific risk. And if you don't have the time or energy to dig deeply into Thiel's specific stock picks, that may be the better way to play the power theme he appears to be leaning into.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway, Meta Platforms, Palantir Technologies, PayPal, and Vistra. The Motley Fool recommends the following options: short December 2026 $62.50 calls on PayPal. The Motley Fool has a disclosure policy.