Billionaire Ken Griffin Sells Broadcom Stock and Buys an AI Stock Up 2,700% Since 2023

Ken Griffin's Citadel Advisors, a top-performing hedge fund, significantly adjusted its portfolio in Q2, divesting 99% of its Broadcom (AVGO) stake while initiating a small position in Palantir (PLTR). Despite Broadcom's strong position in AI accelerators and networking with robust growth forecasts, the article speculates Griffin may be wary of its valuation or potential market hype. Conversely, Citadel's small entry into Palantir, a company with unique AI/ML analytics software and accelerating revenue, occurred despite its extremely high valuation (340x earnings), possibly reflecting an opportunistic 'buy the dip' strategy, though the stake remains minor and the article cautions against following the trade today.

Analysis

Ken Griffin's Citadel Advisors significantly reduced its Broadcom (AVGO) stake by 99% in Q2, despite the company's strong position as a leading AI accelerator supplier with robust growth forecasts in AI Ethernet switching and custom AI accelerators. This substantial divestment suggests potential concerns regarding the sustainability of its narrative or its current valuation. Broadcom's projected 36% annual adjusted earnings growth through 2026, while making its 55x earnings valuation appear reasonable, materially accelerates from last year's 15% growth, implying potential Wall Street optimism and Griffin's skepticism about ASICs' long-term flexibility versus Nvidia GPUs.

Conversely, Citadel initiated a small position in Palantir (PLTR), recognized for its unique ontology-based AI/ML analytics software, driving customer count doubling and eight consecutive quarters of revenue acceleration. Despite this operational strength, Palantir trades at an "absurd" 340x adjusted earnings, significantly above its 37% projected annual growth, with analysts' median target implying 8% downside.

Griffin's Palantir entry is speculated as an opportunistic "buy the dip" when the stock was under $75. However, Citadel's stake remains microscopic, and the article cautions against replicating this trade today, highlighting significant valuation risk despite its innovative technology.

Key Decisions for Investors

• Investors should critically assess Broadcom's (AVGO) valuation at 55x earnings, considering the significant acceleration required to meet 36% projected earnings growth and potential competitive risks from Nvidia's ecosystem.
• Exercise extreme caution with Palantir (PLTR) given its "absurd" 340x adjusted earnings valuation and analysts' implied downside, despite its innovative AI/ML software and accelerating revenue growth.
• Recognize that Ken Griffin's small, opportunistic Palantir entry was likely price-dependent and does not signify a strong conviction position, especially given the article's explicit warning against replicating the trade today.