Why Billionaire Hedge Funds Are Dumping PLTR for a Stablecoin Play

Two of Wall Street’s sharpest money managers just made a notable pivot: they’re bailing on Palantir and loading up on Circle Internet Group.

The Exit

Israel Englander’s Millennium Management cut 91% of its Palantir stake (4.6M shares), while David Shaw’s D.E. Shaw offloaded 41% (6.4M shares) in Q3. Meanwhile, both started fresh positions in Circle—tiny by hedge fund standards, but the signal matters.

Why They’re Leaving PLTR Behind

Yes, Palantir crushed earnings again: revenue up 63% YoY to $1.1B, net income up 110%. The AI platform story is legit. But here’s the problem—the valuation is absolutely unhinged.

PLTR trades at 102x sales, the most expensive stock in the S&P 500 by a country mile. AppLovin, the next most expensive? 32x sales. Even Michael Burry (the guy who shorted subprime mortgages in 2008) is betting against it with put options on two-thirds of his $1.4B portfolio.

Wall Street analysts are bullish (Citigroup: $243 PT, Canaccord: $247 PT, Seaport: $280 PT), but they’re pricing in perfection. One stumble and there’s nowhere to hide.

The Pivot: Circle’s Stablecoin Dominance

Circle issues USDC (second-largest stablecoin) and EURC (largest euro stablecoin). Together they control ~25% of a $310B market.

Here’s the bull case: the stablecoin market is expected to hit $2-4 trillion within the decade. If true, that’s a 6-12x expansion. And Circle is positioned to capture a meaningful slice because:

1. Regulatory moat: USDC is MiCa-compliant in Europe and audited regularly—JPMorgan analysts call it “the preferred stablecoin for financial institutions”
2. Network effects: 29 financial institutions already on Circle Payments Network since May launch; 500 more in pipeline
3. Growth trajectory: USDC volume expected to grow 40% annually; Wall Street models 33% revenue growth through 2027

The Valuation Gap

Circle trades at 6.5x sales. PLTR at 102x sales.

For the risk/reward to flip in Palantir’s favor, either:

• Its valuation compresses 60%+, or
• Revenue growth accelerates dramatically above current guidance

Neither looks imminent. Meanwhile, Circle benefits from an entire asset class inflection (stablecoins going mainstream) at a fraction of the valuation premium.

The billionaire money isn’t saying Circle is a slam dunk. They’re just saying Palantir’s risk/reward is broken, and there are better-positioned plays in the fintech stack.