Israel Englander has made news with a bold move that has raised eyebrows across Wall Street. During the third quarter, his hedge fund, Millennium Management, dramatically reduced its stake in Palantir Technologies (PLTR) by 91%, selling off 4.5 million shares, while simultaneously increasing its position in Tesla, Inc. (TSLA) by adding 311,000 shares. This shift—especially in light of the recent downturn in Tesla’s sales—marks a significant contrarian bet for the billionaire hedge fund manager.
On the surface, this maneuver seems counterintuitive. Palantir, known for its AI-driven data analytics solutions, had outperformed in prior quarters, whereas Tesla had been wrestling with disappointing performance. However, Englander’s track record speaks volumes; Millennium has outperformed the S&P 500 by approximately 39 percentage points over the past three years.
With this recent divestiture, Palantir drops down from being a top-10 holding for Millennium. Meanwhile, Tesla, despite its challenges, has seen an astonishing 27,300% increase since its 2010 initial public offering, highlighting its long-term potential even in the face of temporary setbacks.
Palantir’s Overvaluation Dilemma
Palantir’s software business is undeniably thriving, boasting a 63% revenue growth in Q3 that resulted in $1.1 billion in earnings. Additionally, customer acquisition has surged by 45%, with spending per customer increasing by 34%. With accolades from Forrester Research naming Palantir a leader in AI platforms, the firm showcases impressive growth metrics, including a remarkable 110% surge in non-GAAP net income.
However, despite these successes, Palantir’s valuation presents a conundrum. Trading at an eye-watering 110 times its sales, it stands as the most expensive stock in the S&P 500—nearly three times pricier than the second-most expensive stock in the index, AppLovin, which trades at 38 times sales. This scenario creates heightened risk for investors, as a substantial drop in price would not provide enough cushion against its lofty valuation.
Tesla’s Future: A Transformational Shift
While Tesla faces significant challenges, particularly a drop in its market share, a deeper examination reveals a possible path to recovery. Full-year 2025 electric vehicle deliveries fell by 8.5%, and Tesla experienced increased competition from Chinese automaker BYD. Nonetheless, the investment landscape is changing. The downturn is attributed in part to production shifts and consumer anticipation for the refreshed Model Y, which constitutes over a quarter of U.S. EV sales.
Interestingly, model-specific performances tell a different story. The Model 3 saw sales increase by 17.6% during the first nine months of 2025 in the U.S., signaling that the struggles are more pronounced with the Model Y rather than the company as a whole. Furthermore, annualized deliveries in the second half reached 1.83 million vehicles, with forecasts suggesting a rebound to around 1.75 million in 2026, aided by the global launch of the Juniper model.
Examining Tesla’s AI Aspirations
Tesla’s vision extends beyond electric vehicles, focusing on physical artificial intelligence. This includes ambitious plans for robotaxis and humanoid robots that could transform the automotive and service industries. By employing a camera-only approach, Tesla positions itself advantageously compared to competitors relying on more expensive lidar and radar technologies.
With approximately 8 million vehicles on the road, Tesla plans to leverage these assets for a crowdsourced robotaxi platform—a significant head start in what could be a lucrative market. Elon Musk suggests that their Optimus robot could one day generate revenues upwards of $10 trillion and anticipates regulatory approvals for robotaxi services in 2026.
Despite disappointing fourth-quarter production and delivery figures from 2025, which capped a year of declining EV sales, Tesla’s innovation strategies—particularly the rollout of more affordable Model Y variations—signal a potential turnaround. With excitement building around the Juniper model and sustained consumer interest, the electric vehicle giant might be on the cusp of a resurgence.
