Palantir Billionaire Peter Thiel Sells 2 Trillion-Dollar AI Stocks, but Wall Street Says It’s Time to Buy

Billionaire Peter Thiel is an entrepreneur who co-founded Palantir Technologies. He also runs a hedge fund called Thiel Macro, which sold its stake in two trillion-dollar artificial intelligence stocks in the fourth quarter: Tesla (TSLA +0.50%) and Microsoft (MSFT +1.25%).

Those trades were surprising because Thiel had 73% of his portfolio invested in those two stocks in the third quarter. In addition, most Wall Street analysts think Tesla and Microsoft are deeply undervalued today.

• Among 56 analysts, Tesla has a median target price of $460 per share. That implies 32% upside from its current share price of $349.
• Among 61 analysts, Microsoft has a median target price of $600 per share. That implies 60% upside from its current share price of $370.

Here’s what investors should know.

Image source: Getty Images.

1. Tesla

Last year was difficult for Tesla. CEO Elon Musk involved himself in politics and managed to upset both political parties, while President Trump imposed tariffs on imported auto parts and eliminated the federal tax credit for electric vehicles (EVs). In turn, Tesla lost market share in every major geography and ceded its status as the global leader in EV sales.

This year could be better. Tesla plans to bring its robotaxis to dozens more cities. While the company is currently an afterthought compared to Alphabet‘s Waymo, which is on pace to provide a million autonomous rides per week by year’s end, Tesla could catch up quickly because its robotaxis cost less and can theoretically scale more quickly.

Morgan Stanley analysts estimate that autonomous ridesharing will be a trillion-dollar market in the U.S. alone, and they think Tesla will account for 25% of all autonomous trips in the U.S. by 2032. Meanwhile, CEO Elon Musk says the humanoid robot Optimus may be the company’s most important source of revenue in the long run.

Here’s the big picture: Tesla has opportunities in markets beyond electric cars, but neither robotaxis nor humanoid robots are likely to be a consequential source of sales in the next few years. Despite a quickly growing energy business, electric vehicles will remain the core business for the foreseeable future, and Tesla is struggling in that market.

That raises an important question: How should you value Tesla stock? Some investors are willing to look past the near-term challenges in the EV business because they believe the company has a bright future in autonomous driving. However, other investors are nervous about owning an EV stock whose vehicle deliveries and automotive sales declined last year.

I think it makes sense to own a small position in Tesla. But I understand why others may feel differently. The stock could fall sharply if the market loses confidence in growth prospects outside of EVs. That may explain why Peter Thiel sold his entire stake in Tesla during the fourth quarter.

Today’s Change

(0.50%) $1.76

Current Price

$350.71

Key Data Points

Market Cap

$1.3T

Day’s Range

$348.59 – $356.33

52wk Range

$222.79 – $498.83

Volume

920K

Avg Vol

62M

Gross Margin

18.03%

2. Microsoft

Microsoft has a strong presence in enterprise software and cloud services, and its growth strategy in both business segments hinges on artificial intelligence. But the stock fell nearly 25% in the first three months of the year, its worst quarter since 2008, and it currently sits 32% below its record high because investors are concerned about its growth prospects.

Microsoft has touted strong engagement with its copilots, generative AI assistants integrated into software products like Microsoft 365, Dynamics, and Power Platform. Microsoft 365 Copilot paid seats increased 160% in the last quarter and more than 80% of Fortune 500 companies have developed AI agents using Copilot Studio.

However, investors are worried generative AI tools will disrupt the seat-based software industry. Anthropic’s Claude Cowork automates complex, multistep tasks across sales, service, marketing, finance, and other disciplines. If AI agents handle more work that has traditionally been done by humans using seat-based software, Microsoft’s revenue could take a big hit.

Meanwhile, Microsoft Azure has gradually gained market share in cloud computing, mostly at Amazon‘s expense, because of its partnership with OpenAI and strong hybrid cloud offering. Additionally, Morgan Stanely’s latest CIO survey shows Azure as the cloud platform most likely to gain market share over the next three years.

However, investors are concerned because Microsoft is on pace to spend more than $140 billion in capital expenditures in fiscal 2026, up 59% from $88 billion in fiscal 2025. Yet, Azure revenue growth decelerated in the most recent quarter, while Amazon and Alphabet reported accelerating cloud revenue growth.

Here’s the big picture: Despite strong positions in the enterprise software and cloud services, Microsoft stock has fallen sharply in the past few months. Investors are worried its AI strategy is not paying off. That may explain why Peter Thiel sold his position. But I think the stock looks attractive at 23 times earnings. Microsoft has not been that cheap at any point in the past five years.