Palantir Stock vs. Rigetti Computing Stock: Billionaires Buy One and Sell the Other

Hedge fund managers Israel Englander and Cliff Asness adjusted their portfolios in Q2, notably increasing their stakes in Palantir Technologies (PLTR) while reducing or exiting Rigetti Computing (RGTI). Palantir, an AI decisioning platform leader, reported robust Q3 results with 63% revenue growth, but its price-to-sales ratio of 112 is highlighted as an unsustainable valuation extreme. Rigetti, a quantum computing company, trades at an even higher 1,087 times sales, despite its core technology being years from widespread commercialization. The article cautions institutional investors against both stocks due to these elevated valuations, irrespective of the recent hedge fund interest.

Analysis

Hedge fund managers Israel Englander and Cliff Asness made notable Q2 portfolio adjustments, with Englander tripling his Palantir (PLTR) stake to 3.6 million shares and exiting Rigetti Computing (RGTI). Asness also increased PLTR holdings by 20% while reducing RGTI, signaling a preference for PLTR despite both stocks' substantial recent gains. These Q2 trades from managers with a track record of S&P 500 outperformance offer a significant signal, though they are now four months old.

Palantir reported robust Q3 financial results, with revenue soaring 63% year-over-year to $1.1 billion, marking its ninth consecutive acceleration, and non-GAAP net income increasing 110%. Management raised full-year guidance, projecting 53% revenue growth in 2025, driven by strong demand for its AI platform, AIP. This fundamental strength is juxtaposed against an extreme valuation.

The company trades at a price-to-sales (PS) ratio of 112, three times higher than the next most expensive S&P 500 company, indicating a valuation "disconnected from reality." Rigetti Computing presents an even more extreme case, trading at 1,087 times sales despite its gate-based quantum technology being potentially a decade from widespread commercial viability. The article highlights these unsustainable valuations, suggesting a major correction for PLTR is "all but guaranteed."

Key Decisions for Investors

• Investors should exercise extreme caution regarding Palantir (PLTR) and Rigetti Computing (RGTI) due to their unsustainable valuations, despite recent hedge fund activity and PLTR's strong Q3 earnings.
• Consider trimming large existing positions in PLTR given its 112x price-to-sales ratio and the high likelihood of a significant market correction.
• Avoid initiating new positions in RGTI, which trades at an even more speculative 1,087x sales multiple, reflecting a market that has significantly outpaced its commercial viability timeline.