Tesla vs. Palantir: Inside a Bold Investment Move
When it comes to investment strategies, few make headlines like Millennium Management’s daring Q3 adjustment in 2025. The renowned hedge fund, helmed by billionaire Israel Englander, made a contrarian pivot, significantly cutting its holdings in Palantir Technologies while quadrupling its stake in Tesla, Inc.
Palantir: A Stellar Performer with a Lofty Valuation
Palantir has long been a frontrunner in the AI landscape. Its Q3 performance was exceptional: revenue surged by 63% year-on-year, customer count increased by 45%, and its Non-GAAP earnings grew 110% to $0.21 per share. These figures cement Palantir’s position as a leader in operationalizing AI projects. Forrester Research even named it a top-tier platform.
However, its valuation raises eyebrows. Palantir trades at a staggering 110 times its sales, making it the most expensive stock in the S&P 500. In contrast, AppLovin, ranked second in valuation, trades at just 38 times sales. Analysts speculate Palantir’s stock could face a sharp correction, potentially dropping by up to 65% to align with sustainable valuation metrics.
Tesla’s Struggles and a Bright AI Future
On the other hand, Tesla is navigating through a complex market. The EV giant reported an 8.5% drop in 2025 annual deliveries, marking its worst performance in years. The decline was largely attributed to production disruptions during the Model Y refresh, although Model 3 sales saw a 17.6% growth in the U.S. over the year’s first nine months. BYD has also unseated Tesla as the global EV leader.
Yet, Tesla’s forward-looking AI focus may justify Millennium’s bullish stance. The company is betting big on its disruptive innovations in robotaxis and humanoid robotics. Projections estimate that the robotaxi market will grow by 74% annually through 2030, while humanoid robots, including Tesla’s Optimus, could expand at a rate of 54% annually through 2035. Elon Musk envisions Tesla leading the physical AI space, with Optimus robots potentially representing a groundbreaking $10 trillion market opportunity.
Tesla also excels in cost-efficient autonomous technology, favoring its camera-only vision systems over competitors like Waymo, which rely on more expensive lidar systems. With an existing fleet of 8 million vehicles on the road, Tesla’s ability to scale its robotaxi network gives it a significant advantage.
A Contrarian Investment That Defies Expectations
Englander’s decision to trim Palantir while doubling down on Tesla challenges conventional wisdom. Palantir’s stellar financial performance contrasts sharply with Tesla’s recent market struggles. Despite this, Millennium Management’s record of outperforming the S&P 500 by 39 percentage points over three years speaks to the fund’s ability to foresee long-term value.
Final Thoughts
Millennium’s reallocation highlights a shift from expensive tech stocks with uncertain sustainability to companies poised for transformative, long-term growth. For investors looking to follow Millennium’s lead, diversifying into emerging AI-driven markets, such as robotics and autonomous vehicles, could be an opportunity worth exploring.
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