Retail investors are pouring billions into Palantir Technologies, embracing the defense-tech firm as a premier AI play despite Wall Street's deep reservations over its soaring valuation. Individual traders are on track to buy nearly $8 billion of Palantir stock on balance in 2025—an 80% increase from the prior year and a more than 400% surge from 2023—making it the fifth-most purchased security this year behind giants like Tesla, Nvidia, and the SPY ETF.

A Retail “Romance” with Triple-Digit Returns

Palantir’s retail appeal is rooted in spectacular performance. The stock has soared over 150% in 2025 and nearly 3,000% in the past three years, far outpacing major indices. This growth, coupled with CEO Alex Karp’s direct engagement with small shareholders—including taking retail questions on earnings calls—has cultivated a loyal following. On forums like WallStreetBets, Palantir remains a “long-standing romance,” often among the most mentioned stocks.

“It’s an exciting stock to own,” said Kyle Dijamco, a 31-year-old marketer with a $25,000 position who plans to buy more on dips. For believers like Dijamco, volatility is an opportunity: “You become a little desensitized to the price swings. I just have that conviction that it’s going to do well.”

The Valuation Divide: Wall Street Hesitation vs. Retail Conviction

While retail investors see a visionary AI leader, institutional analysts remain cautious. The average Wall Street rating is a “hold,” with many citing Palantir’s stratospheric valuation—around 450 times trailing earnings, compared to the S&P 500’s 28. “It’s a non-starter for institutional clients,” said Gil Luria of D.A. Davidson.

Retail traders, however, are drawn to Palantir’s dual narrative: a beneficiary of both the AI boom and the Trump administration’s focus on defense and government efficiency. After digging into its diverse client base—from Ferrari to Wendy’s—investor Paxton Earl concluded, “This is actually an insane business. It’s really good.”

Ethical Debates and the “Destiny” Mindset

Not all social media chatter is bullish. Some content creators question the ethics of investing in a company tied to wartime technology and ICE contracts. Yet for many on forums like WallStreetBets, skepticism is overshadowed by a sense of technological destiny. As Breakout Point’s Ivan Ćosović observed, “Where [some] see ‘overvaluation,’ WallStreetBets sees ‘destiny.’”

This disconnect highlights a broader shift: retail investors, empowered by digital communities and undeterred by traditional metrics, are increasingly driving momentum in high-concept tech stocks. For Palantir, their faith has turned it into a retail phenomenon—one where conviction continues to override conventional valuation concerns, for now.