Wall Street deemed the stock too expensive. Not enough individual investors

Kyle DiJamko is a proud member Palantir TechnologiesRapidly growing retail investor base.

The Los Angeles-based marketer has bet big on defense technology stocks, increasing his exposure after a drawdown earlier this year. The 31-year-old’s position currently pays about $25,000.

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

DiJamco is part of a legion of mother-and-son traders who poured billions into the Denver-based company’s stock in 2025, according to VandaTrack data. Despite Wall Street’s valuation concerns, its stunning recent gains amid the artificial intelligence boom have made the company’s stock an undisputed star in the retail investing world.

As of Dec. 8, retail investors plan to buy nearly $8 billion in outstanding Palantir stock in 2025, according to Vanda data. This is an increase of over 80% from the previous year and reflects an increase of over 400% from 2023.

Palantir is on track to become the fifth most-purchased security this year by volume, according to Vanda data. This stock is tesla and Nvidia Popular exchange-traded funds such as SPDR S&P 500 ETF Trust (SPY)tracks benchmarks across the US market.

“It’s a great result,” said Viraj Patel, deputy head of research at Banda, which tracks retail trader flows. “Palantir is like being taken into a group of AI technology posters (kids).”

Palantir has captured the hearts of individual investors as its stock price soars. The company’s stock price has soared more than 150% so far in 2025, marking the third consecutive year of triple-digit increases in the company’s stock price.

The stock has soared nearly 3,000% in the past three years; S&P500About 80% of profits and technology-intensive Nasdaq Compositerose more than 120% in the same time frame.

Since its market debut in 2020, Palantir has been considered an enigmatic company, given that it deals with both public and private institutions.

At the surface level, Palantir helps governments and large corporations organize their data. Not only is it seen as a beneficiary of the AI ​​push, but it is also seen as a winner under the Trump administration’s priorities of improving federal efficiency and strengthening national defense.

“For a while, the joke was always, ‘What the hell does Palantir do?'” said Paxton Earle, an investment banker specializing in software who started reading regulatory reports to better understand the company. After learning more, he remembers thinking: “This is actually insane business. It’s really good.”

Through his research, Earle discovered that the company’s revenues were more diversified beyond military operations than he had initially expected. What’s more, it turns out Palantir, 23, has worked with consumer brands he’s known for, including Ferrari and Wendy’s.

The San Diego resident said he bought more shares following the company’s third-quarter earnings report in early November. That same month, Palantir plunged 16%, the stock’s worst monthly performance in more than two years, as investors abandoned AI investments due to valuation concerns.

Wall Street attributes the decline primarily to profit taking and broader concerns about the health of the AI ​​trade. Vanda found that the bulk of Palantir’s retail buying took place in the first nine months of this year, but has since subsided as growing concerns about the AI ​​bubble led investors to question the trades.

Palantir goes out of its way to reach out to individual traders like Earl.

While other big-name companies typically reserve the question-and-answer portion of their earnings calls for Wall Street analysts and journalists, Palantir also accepts inquiries from individual investors. In an annual video shared by the ski trail late last year, CEO Alex Karp specifically gave a shout-out to these smaller shareholders.

“We are extremely grateful to all the individual investors who have taken the time and opportunity and had the courage to ignore the old, rusty platitudes,” Karp said, wearing reflective goggles and clutching a ski pole.

This stock is trending on the popular WallStreetBets reddit forum. For several days in 2025, the stock was the most mentioned stock on discussion boards, according to meme stock tracking firm Breakout Point.

Palantir “has been the romance of WallStreetBets for many years,” said Ivan Chosovich, managing director at Breakout Points. “They love it.”

Wall Street isn’t participating with as much enthusiasm as the average Joe. The average rating from analysts surveyed by LSEG is a hold, with several citing concerns about the stock’s multiple.

The company’s valuation makes the stock a “non-starter” for institutional investors, said Gil Luria, head of technology research at DA Davidson. Palantir’s price-to-earnings ratio is about 450 times, which is around the S&P 500’s average of 28 times.

Meanwhile, Luria said retail investors are likely impressed by Palantir’s “ambitious” mission to play a role in protecting the United States, and those everyday investors are also likely to be attracted to Karp, who he said is similar to him. tesla CEO Elon Musk talks about his ability to sell business vision. But Luria said Karp hasn’t caused as much controversy.

Luria said Palantir is similar to Tesla’s stock price 10 years ago, when the company was pitching a future centered on electric vehicles. Tesla stock has soared about 3,000% over the past decade, while the S&P 500 index has risen more than 230% over the same period.

The question, Luria said, is whether the people in the retail industry who supported Tesla a decade ago are right again about Palantir.

The analyst said Palantir’s financial results have generally been strong in recent years. Palantir’s second-quarter report in August (the company beat Street estimates and raised its full-year outlook on the back of the AI ​​boom) made me question whether it was worth jumping into the stock despite its high multiple.

“Even the most jaded, old, hard-nosed Wall Street analysts of us were surprised by the level of success,” Luria said. “It was such an incredible success that I had to rethink everything I knew.”

Scion Asset Management, a now-deregistered fund run by The Big Short investor Michael Burry, unveiled a bet in the third quarter on Palantir and fellow AI darling Nvidia. Karp told CNBC that Barry’s actions were “bats–crazy.”

Individual investors are not daunted by the caution of institutional investors. As Breakout Point’s Chosovich puts it, where Barry recognizes “overvaluation,” WallStreetBets recognizes “doom.”

Palantir has had its fair share of ups and downs this year, dropping more than 10% in multiple single trading days. But for stakeholders like Dijamco, a California-based marketer, these fluctuations provide a cheaper entry point to buy stocks they believe in.

“It seems like we’ve become a little less sensitive to price movements,” Dijamko said, adding that he plans to buy thousands of dollars worth of additional shares on the next big downturn. “I have nothing but confidence that it will work.”