Billionaires Ditch Palantir for Alphabet: Wall Street’s New AI Favorite Emerges

Key Points

• Quarterly Form 13F filings provide invaluable insights into the buying and selling habits of Wall Street’s premier fund managers.

• Several prominent billionaire investors chose to reduce their positions in Palantir Technologies during the second quarter, signaling potential concerns beyond simple profit-taking.

• While some money managers are pulling back from high-flying AI names, other billionaires are aggressively accumulating shares of a major AI applications giant: Alphabet.

One of the most crucial data releases of the second quarter arrived on August 14. While much of the market focus has been trained on corporate earnings reports, the quarterly filing of Form 13Fs offers a unique window into the portfolio moves of Wall Street’s most successful money managers.

The overarching theme of the recent quarter highlights the deeply polarizing nature of artificial intelligence stocks among the billionaire elite. While five high-profile billionaire fund managers significantly reduced their exposure to Palantir Technologies (NASDAQ: PLTR), others found an AI applications stock they are eager to buy at current levels: Google parent company Alphabet (NASDAQ: GOOGL)(NASDAQ: GOOG).

Image source: Getty Images.

Palantir’s Stratospheric Valuation Faces Headwinds

Palantir has experienced extraordinary growth since the beginning of 2023, with its shares rallying over 2,600% as of mid-August 2026. This impressive performance reflects the company’s strong position as an AI-driven software-as-a-service (SaaS) provider, particularly with its Gotham platform used by the U.S. government and allied nations for mission planning and oversight.

However, five prominent billionaire asset managers cashed in their chips during the second quarter, including:

• John Overdeck’s and David Siegel’s Two Sigma Investments
• Cliff Asness’s AQR Capital Management
• Ken Griffin’s Citadel Advisors
• Steven Cohen’s Point72 Asset Management

While profit-taking is a standard portfolio management strategy, the scale of these exits suggests deeper concerns. Historically, companies at the forefront of transformative technologies have struggled to maintain price-to-sales (P/S) ratios above 30 for any sustained period. Having entered the year with a P/S ratio exceeding 100, and still trading at a hefty 73 as of late August, Palantir’s current valuation may simply be unsustainable in the long run.

Image source: Getty Images.

Alphabet Attracts Aggressive Billionaire Buying

On the other hand, Wall Street’s savviest billionaire investors continue to accumulate shares of Alphabet. The latest round of 13F filings reveals four major billionaire buyers, including:

• Ken Fisher’s Fisher Asset Management
• Dan Loeb’s Third Point
• Stanley Druckenmiller’s Duquesne Family Office
• Cliff Asness’s AQR Capital Management

The legendary investor Warren Buffett, through Berkshire Hathaway, also joined this elite group, initiating and building a substantial position that has become one of the company’s largest holdings in the latter half of 2025.

Alphabet’s core competitive advantage lies in its seemingly unbreachable advertising moat. Google commands over 91% of global internet search traffic, and its ownership of YouTube—the second-most-visited website worldwide—provides unparalleled pricing power and robust revenue streams during economic expansions.

$GOOG Alphabet Q2 FY26:

• Revenue +24% Y/Y to $119.8B ($2.8B beat).
• Operating margin 34% (+2pp Y/Y).
• $98B net gains from equity investments.

Google Cloud:
• Revenue +82% Y/Y to $24.8B
• Operating margin 36% (+15pp Y/Y).

YouTube ads +13% to $11.1B pic.twitter.com/seYlITzfg6

— App Economy Insights (@EconomyApp) July 22, 2026

Yet, it is Alphabet’s aggressive push into generative AI that has truly captivated the billionaire investor community. Google Cloud has successfully integrated cutting-edge large language models and generative AI solutions, supercharging its growth trajectory. In the second quarter, high-margin revenue growth for Google Cloud surged by 82% year-over-year, demonstrating the immense monetization potential of AI enterprise tools.

As Wall Street’s premier money managers reallocate their capital, it is clear that their preferred AI applications stock is Alphabet, not Palantir.

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