Citadel's Ken Griffin Backs AI Powerhouses: Inside the Early Hedge Fund Bets on Tech Giants

When the most profitable hedge fund in history makes a move, the market takes notice. Citadel Advisors, run by billionaire Ken Griffin, made strategic additions to its portfolio in the third quarter by scooping up shares of two AI-focused companies that have delivered explosive returns. These weren’t random picks—they represent calculated early positioning in technologies reshaping enterprise operations and consumer finance.

Why Palantir Caught the Attention of Top Hedge Fund Managers

Citadel acquired 388,000 shares of Palantir Technologies (NASDAQ: PLTR), a company whose stock has surged more than 2,200% from the early months of 2023. But this isn’t just about historical gains; it’s about what Palantir represents in the current market.

The company provides advanced analytics software to both commercial enterprises and government agencies. Its core products, Gotham and Foundry, combine data integration with machine learning models through a decision-making framework called an ontology. More importantly, Palantir has developed an AI platform that allows clients to embed generative AI capabilities directly into their business applications.

Industry recognition validates this positioning. Morgan Stanley analysts have identified Palantir as emerging as the de facto standard for enterprise AI adoption. Forrester Research recently ranked it among leaders in AI decisioning platforms, while the International Data Corporation recognized its strength in AI-enabled source-to-pay software—technology critical for supply chain optimization.

The third-quarter numbers tell a compelling story. Revenue climbed 63% to $1.1 billion, marking the ninth consecutive quarter of acceleration. Adjusted net income surged 110% to $0.21 per diluted share. Management raised full-year guidance, projecting 53% revenue growth for 2025. Yet here lies the tension: Palantir trades at 96 times sales—a metric that has moderated from August 2025’s peak of 137 times sales but still makes it the most expensive holding in the S&P 500, nearly three times pricier than the second-most expensive stock, AppLovin, at 33 times sales.

The mathematics are stark. Palantir could decline 65% and still command the highest valuation multiple in the index. This valuation disconnect raises questions: Are investors paying for today’s momentum, or for legitimate long-term AI infrastructure dominance? Industry projections from Grand View Research suggest AI platform spending will grow 38% annually through 2033—a runway that could justify premium multiples. But timing matters tremendously for investors entering these positions early.

Robinhood’s AI Assistant Powers a New Generation of Market Access

Simultaneously, Citadel took a 128,100-share position in Robinhood Markets (NASDAQ: HOOD), which has climbed 1,100% from early 2023. Robinhood operates differently—as a mobile-first trading platform built explicitly for younger demographics. With 19 million funded accounts controlled by millennials and Gen Z investors—nearly double its closest competitor—Robinhood sits at the intersection of demographic wealth transfer and market access democratization.

The backdrop matters here. Over the coming decades, baby boomers will transfer more than $120 trillion to younger generations. This represents not just the largest wealth transfer in modern history but also a fundamental shift in how investment capital will be deployed and managed.

Robinhood’s recent moves reflect keen strategic awareness. The company now captures approximately 30% of the emerging prediction markets sector, a category it entered just over a year ago. More significantly, it launched Cortex, an AI-powered conversational assistant that helps investors navigate financial markets. Rather than pushing customers toward complexity, Cortex uses generative AI to synthesize breaking news, analyst insights, and technical data into digestible format. Recent iterations have grown more sophisticated, connecting real-time portfolio data to personalized market signals. The feature remains available exclusively to Gold subscribers ($5 monthly or $50 annually), creating an additional revenue stream.

Robinhood’s Q3 results underscore the appeal. Funded accounts, platform assets, and net deposits all reached record levels. Revenue doubled to $1.2 billion while GAAP net income more than tripled to $0.61 per diluted share. CEO Vladimir Tenev highlighted that prediction market trading volume has doubled every quarter since the feature launched in late 2024.

On valuation, Robinhood trades at 42 times earnings—a premium, but one cushioned by analyst expectations of 22% annual earnings growth over the next three years. Unlike Palantir’s valuation fragility, Robinhood’s multiple appears anchored to growth trajectory.

What These Early Positions Reveal About AI Market Evolution

Ken Griffin’s third-quarter positioning reveals a sophisticated hedge fund approach to AI investing. Both stakes remain modest relative to Citadel’s total portfolio, yet they represent thoughtful exposure to complementary theses: Palantir as enterprise infrastructure, Robinhood as consumer adoption.

The broader lesson transcends these two specific companies. Securities that have delivered outsized returns in recent years need not be relegated to “too late” status. Past appreciation doesn’t preclude future wealth creation, provided the investment case remains intact. Palantir’s challenge is valuation sustainability; Robinhood’s strength is growth runway aligned with demographic tailwinds.

For investors watching closely, the question isn’t whether these companies will prove successful—their market positions suggest they will. The question is whether current prices leave adequate margin of safety and whether the investment horizon matches the volatility these growth plays can exhibit. Griffin’s early recognition of these opportunities suggests the early innings may still be unfolding in AI infrastructure and consumer financial technology.