Wall Street deemed the stock too expensive. Retail investors can’t get enough

Kyle Dijamco is a proud member of Palantir Technologies‘ fast growing retail investor base.

The Los Angeles-based marketer has been betting big on defense tech stocks, even increasing its exposure after a pullback earlier this year. The 31-year-old’s position now stands at around $25,000.

“It’s an exciting stock to own,” Dijamco told CNBC.

Dijamco is part of an army of family traders who have invested billions of dollars in the Denver-based company’s stock in 2025, according to VandaTrack data. His monster gains in recent years in the middle of artificial intelligence The boom has made the stock an undeniable star in the retail investing world, despite Wall Street’s reservations about its valuation.

Individual investors were on track to buy nearly $8 billion in Palantir stock in total in 2025, according to Vanda data as of Dec. 8. This represents a gain of more than 80% from the previous year and reflects an increase of more than 400% from 2023.

Palantir is on track to become the fifth most purchased stock overall for the year, according to Vanda data. The stock falls behind only mega-cap names like Tesla And Nvidia and popular exchange-traded funds such as SPDR S&P 500 ETF Trust (SPY)which follows the entire American market benchmark.

“It’s been great,” said Viraj Patel, deputy director of research at Vanda, which tracks retail trader feeds. “Palantir has somehow been lumped into this group of AI tech poster boys [children]”.

The stock has soared nearly 3,000% over the past three years, crushing the S&P500it’s a gain of around 80% and the technological side Nasdaq CompositeThis is an increase of more than 120% in the same period of time.

From its market debut in 2020Palantir has been considered a mysterious company given its relationships with public and private entities.

On the surface, Palantir helps governments and large companies organize their data. In addition to being seen as a beneficiary of the push for AI adoption, it is seen as a winner under the Trump administration’s priorities of increasing effectiveness of the federal government And strengthen national defense.

“For a while, the joke was always like, ‘What does Palantir do?’ ” said Paxton Earl, a software investment banker who began reading regulatory reports to better understand the company. After learning more, he remembers thinking, “This is actually a crazy deal.” It’s really good. »

Earl discovered through research that the company’s revenue was more diversified beyond military work than he had initially anticipated. Additionally, the 23-year-old discovered Palantir working with consumer brands he knew like Ferrari And Wendy’s.

The San Diego resident said he acquired more shares following the company’s buyout. third quarter result report in early November. Palantir fell 16% that month as investors dumped their AI plays on valuation fears, and the stock posted its worst monthly performance in more than two years.

Wall Street largely blamed the selloff on profit-taking and broader concerns about the health of the AI ​​business. Vanda found that the bulk of Palantir’s retail purchases took place in the first nine months of the year, then eased amid growing fears of a AI bubble left investors questioning the trade.

While other well-known companies usually reserve the question and answer portions of earnings calls for Wall Street analysts or journalists, Palantir also responds to requests from individual investors. In an annual video shared from a ski slope late last year, CEO Alex Karp specifically shouted these small shareholders.

“I am extremely grateful to all of you, individual investors, who took the time and opportunity, and had the courage to look beyond the conventional, rusty, crusty platitudes,” said Karp, while wearing reflective glasses and gripping ski poles.

The title has become a hot topic in the popular market Betting on WallStreet Reddit forum. For several days in 2025, it was the most mentioned stock on the discussion board, according to meme stock tracking company Breakout Point.

Palantir “has a long-standing love affair with WallStreetBets,” said Ivan Ćosović, chief executive officer of Breakout Point. “They love it.”

Wall Street hasn’t jumped on board with the same fervor as the average person. The average analyst surveyed by LSEG has a hold rating, with several citing apprehension on the multiple of the title.

The company’s valuation made its stock a “failure” for institutional clients, according to Gil Luria, head of technology research at DA Davidson. Palantir has an earnings multiple of around 450 times, hovering around the S&P 500 average of close to 28.

On the other hand, Luria said retail investors are likely impressed by Palantir’s “ambitious” mission to play a role in U.S. defense. These everyday investors are likely also attracted to Karp, which Luria says is similar to Tesla CEO Elon Musk in its ability to sell a business vision. However, Luria said Karp didn’t attract the same number of people. controversial.

Luria said Palantir also draws parallels to Tesla’s actions 10 years ago, when the automaker was pitching a future focused on electric vehicles. Tesla shares have soared about 3,000% over the past decade, while the S&P 500 has gained more than 230% over the same period.

The question, Luria said, is whether the traders who backed Tesla a decade ago are right about Palantir again.

The analyst said Palantir’s results have been largely strong over the past few years. by Palantir second quarter report in August — during which the company beat Street estimates and raised its full-year guidance due to the AI ​​boom — led him to question whether the stock was worth investing in despite the high multiple.

“Even us, the most jaded, oldest, stodgy Wall Street analysts, were surprised by the level of success,” Luria said. “It was such a success that I had to reconsider everything I knew.”

Scion Asset Management — the now deregistered fund managed by ‘The Big Short’ investor Michael Burry — revealed bet against Palantir and fellow AI darling Nvidia in the third quarter. Karp told CNBC that Burry’s decision was “bat…crazy.”

Palantir has had its share of turbulence this year, falling more than 10% over several single trading days. But for stakeholders like Dijamco, the California-based distributor, these fluctuations offer cheaper entry points to buy a name they believe in.

“You kind of become insensitive to price fluctuations,” said Dijamco, who plans to buy thousands of dollars’ worth of additional stock during the next big downturn. “I just have faith that it’s going to go well.”