Billionaires Buy 2 AI Stocks Up 970% and 2,000% Since Early 2023 (Hint: Not Nvidia or Broadcom)

Hedge-fund billionaires increased positions in two technology-linked names in Q3: Ken Griffin and Cliff Asness bought Palantir Technologies, while Israel Englander and Steven Cohen bought Comfort Systems. Palantir reported fourth-quarter revenue up 70% to $1.4 billion and non-GAAP EPS up 79% to $0.25 with a Rule of 40 of 127%, though it trades at an elevated ~214x earnings and carries a Wall Street forecast of ~45% EPS CAGR over the next three years. Comfort Systems delivered third-quarter revenue up 35% to $2.4 billion, operating margin expansion of 3 percentage points, GAAP EPS up 101% to $8.25, and backlog growth of 66%; the stock trades near ~52x earnings with analysts forecasting ~39% annual earnings growth. Investors should weigh strong top-line and margin momentum and billionaire buying against Palantir's rich valuation and the recommendation to size positions conservatively.

Analysis

Market structure: Hedge fund accumulation in PLTR and FIX signals differentiated flows into AI software and data-center enablement. Winners: immersion-cooling vendors, data-center contractors, NVDA/AVGO ecosystem suppliers; losers: legacy on-site HVAC contractors and incumbents with low modular capability. Expect pricing power for turnkey modular builders (FIX) and platform pricing leverage for Palantir (PLTR) if enterprise AI adoption continues, tightening supply of specialized cooling capacity over 12–36 months.

Risk assessment: Tail risks include regulatory limits on PLTR’s government contracts/privacy (6–18 month horizon), and a commercial real-estate slowdown that could cancel FIX backlog (>20% downside tail). Short-term (days–weeks) moves will be driven by earnings beats/backslog prints; medium-term (quarters) by capex cycles for hyperscalers; long-term (2+ years) by durable AI adoption. Hidden dependency: energy prices and power availability constrain data-center buildouts and can amplify cost inflation for FIX.

Trade implications: Direct plays: buy FIX for durable backlog conversion and buy NVDA/AVGO exposure to capture AI hardware spending; treat PLTR as tactical, size-constrained. Use pair trades (long FIX vs short PLTR or high-valuation software peers) and options (protective puts on PLTR; call spreads on FIX/NVDA) to manage asymmetric risk. Time entries to post-earnings or 10–15% pullbacks.

Contrarian angles: Consensus underestimates operational leverage in FIX (66% backlog growth converts into outsized margin expansion) and overestimates secular safety of PLTR’s valuation — the 214x P/E implies >45% CAGR for multiple years. Historical parallel: early cloud infrastructure boom where select infrastructure contractors outperformed software after hardware cycles normalized. Unintended consequence: rapid pricing and margin expansion at FIX could attract competition, compressing multiples if growth disappoints.

Key Decisions for Investors

• Establish a 3% long position in Comfort Systems (FIX) at market for a 12–24 month hold; set a protective stop-loss at -18% and target +30% if quarterly revenue growth remains >=30% and backlog conversion exceeds 50% over the next two quarters.
• Take a tactical, size-constrained 1% position in Palantir (PLTR) only via stock with downside protection: buy shares and purchase a 6–9 month put ~30% OTM (cost-funded by selling a 3-month call 20% OTM if comfortable with capped upside). Exit or re-price if PLTR falls 40% or if next two quarters’ YoY revenue growth drops below 30%.
• Implement a relative-value pair: long FIX 3% vs short PLTR 1.5% (or buy PLTR puts) to express conviction in hardware/cooling secular growth versus software multiple reversion; unwind if the spread compresses by >25% within 3 months or if FIX misses backlog conversion targets.
• Overweight AI hardware ecosystem: add 2% overweight to NVDA and 1% to AVGO via outright shares or 9–12 month call spreads, trimming on any single-day rallies >10%; hedge portfolio tail risk with a 0.5–1% allocation to 10–20% OTM index puts if 10-year yields rise >50bp in 30 days.