Ken Griffin's AI Investment Strategy: Why Citadel Bet Big on Two Surging Tech Stocks

Billionaire investor Ken Griffin made a strategic move in the third quarter that offers valuable lessons for anyone paying attention to artificial intelligence. Through his hedge fund Citadel Advisors—widely recognized as the most profitable hedge fund in history by net gains—Griffin deployed capital into two artificial intelligence-focused equities that have delivered extraordinary returns since early 2023.

The investment choices reveal something important about the current market: high past performance doesn’t automatically disqualify a stock from being a smart buy today. Both positions, while modest in size, underscore how Ken Griffin and his team identify emerging AI opportunities amid a rapidly evolving technology landscape.

Understanding Citadel’s AI Stock Selection

Ken Griffin’s Citadel acquired 128,100 shares of Robinhood Markets (NASDAQ: HOOD), a position representing confidence in the retail trading platform’s recent momentum. Since January 2023, HOOD has appreciated 1,100%. Additionally, Citadel took a stake of 388,000 shares in Palantir Technologies (NASDAQ: PLTR), which has surged 2,200% during the same period.

These purchases demonstrate that massive historical gains haven’t deterred sophisticated investors like Ken Griffin from recognizing continued potential. The thesis behind each investment tells a distinct story about where artificial intelligence is creating genuine business value.

Robinhood: Capturing Generational Wealth Through Prediction Markets

Robinhood operates a mobile-first trading ecosystem engineered specifically for younger demographics. With 19 million funded accounts populated by millennials and Gen Z—nearly double its nearest competitor—the company sits at the intersection of demographic change and technological disruption.

The wealth transfer narrative is compelling. Over the next several decades, members of these younger cohorts will inherit more than $120 trillion in assets from baby boomers. This represents perhaps history’s greatest intergenerational wealth transfer, and Robinhood’s market positioning directly benefits from this structural trend.

The company has demonstrated particular strength in prediction markets, recently capturing approximately 30% market share in just over one year. CEO Vladimir Tenev noted that trading volume has doubled in every quarter since the feature launch in late 2024, signaling explosive organic growth rather than artificial expansion.

Beyond core trading functions, Robinhood unveiled Cortex, an AI assistant powered by generative technology. Cortex synthesizes breaking news, analyst reports, and technical analysis into digestible insights for users, available through the Gold subscription tier ($5 monthly or $50 annually). The platform recently enhanced this offering with portfolio-connected insights using real-time data.

The financial picture validates this growth narrative. In the third quarter, Robinhood reported revenue doubling to $1.2 billion and GAAP net income more than tripling to $0.61 per diluted share—both driven by record funded accounts, platform assets, and net deposits.

At 42 times forward earnings with Wall Street projecting 22% annual earnings growth over three years, Robinhood’s valuation appears more defensible than many high-growth technology stocks currently in the market.

Palantir: Enterprise AI Leadership Meets Extreme Valuation

Palantir provides enterprise analytics software to commercial organizations and government agencies. Its flagship products—Gotham and Foundry—integrate data with machine learning models into a decision-making framework the company calls an ontology. The software-maker also offers an AI platform enabling clients to embed generative AI capabilities directly into their applications and business processes.

The company’s market position has strengthened notably. Morgan Stanley analysts regard Palantir as emerging as the enterprise AI standard. Forrester Research ranked Palantir as a leader in AI decisioning platforms, while the International Data Corporation recognized the company’s dominance in AI-enabled source-to-pay software—a category that streamlines supply chain management for large enterprises.

Q3 financial results demonstrated execution capability. Revenue climbed 63% to $1.1 billion, marking the ninth consecutive quarter of accelerating sales growth. Non-GAAP net income increased 110% to $0.21 per diluted share. Management raised 2025 guidance, projecting revenue growth of 53% for the full year.

However, Palantir trades at an alarmingly steep valuation. At 96 times sales, the company’s multiple remains prohibitive—down from its August 2025 peak of 137 times sales but still making Palantir the most expensive stock in the S&P 500 by nearly threefold. AppLovin ranks second at 33 times sales. This means Palantir could decline 65% and remain the index’s most expensive holding.

The industry spending outlook is favorable. Grand View Research projects spending on AI platforms will expand at a 38% annual rate through 2033. Yet favorable long-term tailwinds cannot justify the current valuation structure. The risk-reward profile remains heavily skewed toward downside risk.

Investment Lessons from Ken Griffin’s Portfolio Actions

Ken Griffin’s dual investment in both companies yields important takeaways. Investors should recognize that powerful historical performance in a stock does not inherently make it dangerous to own today. The relevant question is whether a company’s future prospects justify its current price—not whether past returns have been impressive.

Robinhood demonstrates that a company with compelling growth demographics, expanding market position, and reasonable valuation multiples can represent genuine opportunity. Palantir shows that exceptional operational execution and strong industry positioning cannot compensate for an unsustainable financial valuation.

The broader insight: artificial intelligence continues reshaping enterprise software and consumer financial services in ways that reward early-moving investors. Ken Griffin’s strategy suggests the most prudent approach involves identifying quality businesses in AI-adjacent markets while demanding disciplined entry prices that reflect realistic growth expectations rather than speculative enthusiasm.