KEY POINTS

• Data from VandaTrack indicates that despite Wall Street's concerns about valuation multiples, Palantir has attracted billions of dollars in net investment from retail investors this year.

• The defense technology stock, which debuted in 2020, has become an undeniable favorite in the retail investing community.

• Palantir shares have skyrocketed more than 150% in 2025 and have surged nearly 3,000% over the past three years.

Kyle Dijamco proudly counts himself among the rapidly expanding base of retail investors in Palantir Technologies.

The Los Angeles-based marketer has made a significant bet on the defense tech stock, even increasing his stake after a pullback earlier this year. The 31-year-old's investment now totals approximately $25,000.

"It's an exciting stock to own," Dijamco stated.

Dijamco is part of a legion of individual traders who have poured billions of dollars into the Denver-based company's shares in 2025, according to VandaTrack data. The stock's enormous gains in recent years, fueled by the artificial intelligence boom, have cemented its status as a retail investing star, despite Wall Street's reservations about its valuation.

Based on Vanda data through December 8, individual investors were on track for a net purchase of nearly $8 billion in Palantir stock in 2025. This represents an increase of more than 80% over the prior year and a surge of over 400% compared to 2023.

Vanda data shows Palantir is set to be the fifth-most purchased security on a net basis for the year. The stock trails only megacap names like Tesla and Nvidia, as well as popular exchange-traded funds such as the SPDR S&P 500 ETF Trust (SPY).

"It's been great," said Viraj Patel, deputy head of research at Vanda. "Palantir has kind of been brought into this group of AI-tech poster children."

An 'Insane' Business

Palantir has captured the hearts of retail investors during its meteoric rise. Its shares have surged more than 150% so far in 2025, positioning the company for a third consecutive year of triple-digit gains.

The stock has soared nearly 3,000% over the last three years, dramatically outperforming the S&P 500's roughly 80% gain and the tech-heavy Nasdaq Composite's more than 120% climb during the same period.

Since its market debut in 2020, Palantir has been viewed as a somewhat mysterious enterprise due to its work with both public and private sector clients.

On the surface, Palantir assists governments and major corporations in organizing their data. Beyond being seen as a beneficiary of AI adoption, it is also considered a potential winner under priorities of the Trump administration, such as 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 focused on software who began studying regulatory filings to understand the company better. After his research, he recalled thinking, "This is actually an insane business. It's really good."

Earl discovered that the company's revenue streams were more diversified beyond military contracts than he initially thought. The 23-year-old also found that Palantir works with well-known consumer brands like Ferrari and Wendy's.

The San Diego resident said he bought more shares following the company's third-quarter earnings report in early November. Palantir dropped 16% that month as investors sold AI-related stocks on valuation concerns, posting its worst monthly performance in over two years.

Wall Street largely attributed the sell-off to profit-taking and broader worries about the sustainability of the AI trade. Vanda found that the majority of retail buying in Palantir occurred in the first nine months of the year, cooling off as fears of an AI bubble grew.

A Retail 'Romance'

Palantir has made concerted efforts to appeal to individual traders like Earl.

While other prominent companies typically reserve the Q&A sessions of earnings calls for Wall Street analysts or journalists, Palantir also fields questions from retail investors. In an annual video shared from a ski trail late last year, CEO Alex Karp specifically acknowledged 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, wearing reflective goggles and gripping ski poles.

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

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

However, not all social media commentary has been positive. Some investing content creators have questioned the ethics of holding Palantir stock, citing its connections to wartime technology and its partnership with U.S. Immigration and Customs Enforcement.

Big Money's Hesitancy

Wall Street has not embraced the stock with the same fervor as retail investors. The average analyst polled by LSEG maintains a hold rating, with several expressing concern about the stock's valuation multiple.

According to Gil Luria, head of technology research at D.A. Davidson, the company's valuation makes its stock a "non-starter" for many institutional clients. Palantir trades at a multiple of around 450 times trailing earnings, vastly exceeding the S&P 500's average of nearly 28.

Luria suggested that retail investors are likely impressed by Palantir's "ambitious" mission related to U.S. defense. These everyday investors are also probably drawn to CEO Alex Karp, whom Luria compared to Tesla CEO Elon Musk in his ability to articulate a compelling business vision, albeit with less controversy.

Luria also drew parallels between Palantir and Tesla's stock a decade ago, when the automaker was promoting an electric vehicle-focused future. Tesla shares have soared about 3,000% over the past ten years, while the S&P 500 has gained over 230%.

The question, Luria said, is whether the retail investors who backed Tesla a decade ago will be proven right again with Palantir.

The analyst acknowledged that Palantir's earnings results have been largely strong in recent years. Its second-quarter report in August—where the company exceeded estimates and raised full-year guidance due to the AI boom—even made him reconsider his stance on the stock's high multiple.

"Even us most jaded, old, stodgy Wall Street analysts were taken aback by the level of success," Luria admitted. "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 short positions against both Palantir and fellow AI favorite Nvidia in the third quarter. Karp later described Burry's move as "bats--- crazy."

Overvaluation or Destiny?

Retail investors remain undeterred by the caution exhibited by institutional players. As Breakout Point's Ćosović noted: where Burry sees "overvaluation," the WallStreetBets community sees "destiny."

Palantir has experienced significant volatility this year, falling more than 10% on several single trading days. But for stakeholders like Dijamco, these price swings are seen as opportunities to buy into a company they believe in at a lower cost.

"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 during the next major downturn. "I just have that conviction that it's going to do well."