Wall Street wrote off Palantir as too expensive. Retail investors can't get enough

Kyle Dijamco, a 31-year-old marketer from Los Angeles, is among the growing number of retail investors who are enthusiastically backing Palantir Technologies. Despite Wall Street's concerns over the company's valuation, Dijamco has significantly increased his investment, now holding approximately $25,000 in Palantir stock. "It's an exciting stock to own," he shared with CNBC. In 2025, retail investors are projected to invest nearly $8 billion in Palantir shares, marking an impressive 80% increase from the previous year and a staggering 400% rise since 2023, according to data from VandaTrack. Palantir is on track to be the fifth most purchased stock this year, following giants like Tesla and Nvidia, as well as popular ETFs like the SPDR S&P 500 ETF Trust. Investment experts, like Viraj Patel from Vanda, note that Palantir has emerged as a standout player in the AI tech space, with its shares soaring over 150% in 2025 alone. This remarkable performance positions the stock for its third consecutive year of triple-digit gains, boasting a nearly 3,000% increase since its market debut in 2020. This surge significantly outpaces the S&P 500 and Nasdaq Composite, which have gained roughly 80% and 120%, respectively, over the same period. Palantir’s operations involve aiding governments and large corporations in data organization, making it a key player in the AI landscape. The company has also gained traction under the Trump administration, as it aligns with initiatives aimed at enhancing federal efficiency and national defense. Investment banker Paxton Earl, who initially questioned Palantir's business model, has grown to appreciate its complexity and revenue diversification. After the company's Q3 earnings report, which was met with a sell-off in November, he continued to buy shares, demonstrating confidence in the stock despite its volatility. Palantir actively engages with retail investors, a rarity among major companies. CEO Alex Karp has acknowledged the contributions of individual shareholders during earnings calls, expressing gratitude for their support. This approach has helped foster a passionate community around the stock, with frequent discussions on platforms like WallStreetBets, where Palantir often ranks as a top mention. Despite its popularity among retail investors, Wall Street remains cautious. Analysts typically assign a hold rating to Palantir, citing apprehension regarding its high valuation, which stands at approximately 450 times trailing earnings, in stark contrast to the S&P 500's average of about 28. Retail investors, however, seem undeterred by institutional skepticism. They are drawn to Palantir's ambitious vision and Karp's charismatic leadership, which some liken to that of Tesla's Elon Musk. While some analysts have expressed doubts, the excitement among everyday investors continues to drive interest in Palantir, with many waiting for price dips to buy more. Palantir has faced significant price fluctuations throughout the year, but for dedicated investors like Dijamco, these swings represent opportunities to purchase more shares in a company they believe has a promising future. "You kind of become a little bit desensitized to the price swings," he remarked, planning to invest more on the next downturn. As the market evolves, the question remains: will the retail investors who championed Palantir echo the success seen by early Tesla backers, or will institutional caution prevail?