Wall Street wrote off the stock as too expensive. Retail investors can’t get enough

Kyle Dijamco is a proud member of Palantir Technologies‘ fast-growing retail investor base.

The Los Angeles-based marketer has bet big on the defense tech stock, even increasing his exposure after a drawdown earlier this year. The 31-year-old’s position now stands at roughly $25,000.

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

Dijamco is part of an army of mom-and-pop traders who have poured billions of dollars into the Denver-based company’s shares in 2025, according to data from VandaTrack. Its monster gains over recent years amid the artificial intelligence boom has made the stock an indisputable star of the retail investing world, in spite of Wall Street’s reservations about valuation.

Individual investors were on track to buy nearly $8 billion in Palantir stock on balance in 2025, per Vanda data as of Dec. 8. That is a gain of more than 80% over the prior year, and it reflects an increase of over 400% from 2023.

Palantir is on pace to be the fifth-most bought security on balance for the year, Vanda data shows. The stock sits behind only megacap names like Tesla and Nvidia and popular exchange-traded funds such as the SPDR S&P 500 ETF Trust (SPY), which tracks the entire U.S. market benchmark.

“It’s been great,” said Viraj Patel, deputy head of research at Vanda, which tracks retail trader flows. ​​”Palantir has kind of been brought into this group of AI-tech poster [children].”

Palantir has won the hearts of retail investors amid its takeoff as a stock. Its shares have surged more than 150% so far in 2025, placing the name on track for its third straight year with triple-digit gains.

The stock has skyrocketed nearly 3,000% in the last three years, crushing the S&P 500‘s roughly 80% gain and the technology-heavy Nasdaq Composite‘s more than 120% climb in the same time frame.

Since its 2020 market debut, Palantir has been considered a mysterious enterprise given its business with both public and private entities.

On the surface level, Palantir helps both governments and major corporations organize their data. Beyond being viewed as a beneficiary of the push to adopt AI, it’s seen as a winner under the Trump administration’s priorities of increasing federal government efficiency and bolstering national defense.

“The joke for a while has always been like, ‘What does Palantir even do?'” said Paxton Earl, an investment banker with a focus on software who began reading regulatory reports to better understand the company. After learning more, he remembers thinking: “This is actually an insane business. It’s really good.”

Earl discovered through research that the company’s revenue was more diversified beyond military work than he initially predicted. In addition, the 23-year-old found Palantir worked with consumer-facing brands he knew like Ferrari and Wendy’s.

The San Diego resident said he picked up more shares following the company’s third-quarter earnings report in early November. Palantir tanked 16% that month as investors dumped their AI plays on valuation fears, and the stock posted its worst monthly performance in more than two years.

Wall Street largely chalked up the sell-off to profit-taking and broader concerns about the health of the AI trade. Vanda found the bulk of Palantir’s retail buying took place in the first nine months of the year, then cooled off as growing fears of an AI bubble left investors questioning the trade.

Palantir has gone out of its way to court individual traders like Earl.

While other well-known companies typically reserve the question-and-answer portions of earnings calls for Wall Street analysts or journalists, Palantir also takes inquiries from retail investors. In an annual video shared from a ski trail late last year, CEO Alex Karp specifically shouted out these small shareholders.

“Exceedingly grateful to all of you individual investors who took the time and opportunity, and had the courage to look past conventional, rusty, crusty platitudes,” Karp said, while was wearing reflective goggles and gripping ski poles.

The stock has become a hot topic on the popular WallStreetBets Reddit forum. On several days in 2025, it was the most mentioned stock on the discussion board, according to meme stock tracking firm Breakout Point.

Palantir “has been a long-standing WallStreetBets romance,” said Ivan Ćosović, managing director at Breakout Point. “They adore it.”

Wall Street hasn’t jumped on board with the same fervor as the average Joe. The average analyst polled by LSEG has a hold rating, with several citing apprehension about the stock’s multiple.

The company’s valuation has made its stock a “non-starter” for institutional clients, according to Gil Luria, head of technology research at D.A. Davidson. Palantir has a multiple of around 450 times trailing earnings, running circles around the S&P 500’s average of close to 28.

On the other hand, Luria said retail investors are likely impressed by Palantir’s “ambitious” mission to play a role in defending the U.S. These everyday investors are likely also enticed by Karp, who Luria said is similar to Tesla CEO Elon Musk in his ability to sell a business vision. However, Luria said Karp hasn’t attracted the same amount of controversy.

Luria said Palantir also draws parallels to Tesla’s stock 10 years ago, when the carmaker was presenting an electric vehicle-focused future. Tesla shares have soared about 3,000% in the past decade, while the S&P 500 has gained more than 230% in the same period.

The question, Luria said, is if the retail crowd who backed Tesla a decade ago are right once again about Palantir.

The analyst said Palantir’s earnings results have been largely strong over the last several years. Palantir’s second-quarter report in August — in which the company topped the Street’s estimates and raised its full-year guidance due to the AI boom — left him questioning if the stock is worth jumping into despite the lofty multiple.

“Even us most jaded, old, stodgy Wall Street analysts were taken aback by the level of success,” Luria said. “It was such a staggering success that I had to reconsider everything I knew.”

Scion Asset Management — the now-de-registered fund run by “The Big Short” investor Michael Burry — revealed bets against Palantir and fellow AI darling Nvidia in the third quarter. Karp told CNBC that Burry’s move was “bats— crazy.”

Retail investors are undeterred by the wariness among their institutional counterparts. As Breakout Point’s Ćosović put it: where Burry sees “overvaluation,” WallStreetBets sees “destiny.”

Palantir has had its fair share of choppiness this year, falling more than 10% on multiple single trading days. But for stakeholders like Dijamco, the California-based marketer, these fluctuations provide cheaper entry points to buy into a name that they believe in.

“You kind of become a little bit desensitized to the price swings,” said Dijamco, who plans to purchase thousands of dollars’ worth of additional shares on the next big downturn. “I just have that conviction that it’s going to do well.”