In this article, we will list the Cathie Wood 2026 Portfolio: 5 Best Stocks to Buy. Please visit Cathie Wood 2026 Portfolio: 10 Best Stocks to Buy, if you would like to see the extended list and the methodology behind it.
5. Palantir Technologies Inc (NASDAQ:PLTR)
ARK’s Stake Value: $574.5 Million
Cathie Wood’s ARK decreased its stake in Palantir Technologies Inc (NASDAQ:PLTR) by 20% in the fourth quarter to $574.5 million. Overall, the stock saw an increase in hedge fund sentiment as 89 funds in Insider Monkey’s database reported positions in the company in the fourth quarter, up from 81 funds in the previous quarter.
Palantir Technologies Inc (NASDAQ:PLTR) is down 10% so far this year, but some believe it’s positioned to rebound amid rising geopolitical tensions across the globe. The company makes AI-powered battlefield software and data analytics systems used by militaries and governments for surveillance and defense purposes. Four of the US government’s major defense contractors use Palantir software. Palantir Technologies Inc (NASDAQ:PLTR)’s commercial business growth has risen over the past few quarters due to the adoption of its AI platform (AIP). It is also looking to diversify its business and form partnerships with other countries beyond the US.
Legacy Ridge Capital Management stated the following regarding Palantir Technologies Inc. (NASDAQ:PLTR) in its fourth quarter 2025 investor letter:
“At the very least, recent performance for the broader indices is long in the tooth. Most valuations are stretched and some are just bat*hit crazy. We had similar sentiments back in 2019 and wrote about it. Back then the posterchild of the speculative mania was Tesla (TSLA). Now there are dozens of candidates, including TSLA still, but Palantir Technologies Inc. (NASDAQ:PLTR) may be in the pole position. We admit we don’t completely understand what the company does, but it seems super cool. What we do understand is basic arithmetic, and when the CEO goes on CNBC and passionately attacks short sellers, who are just betting the stock is expensive, and he says, “pick something that is not doing a noble task”, not once mentioning valuation during the 10-minute interview, the hair on our neck stands up. We don’t short (we don’t particularly like that math either), but the implied math around Palantir’s valuation is concerning.
PLTR has an enterprise value (EV) of $400B and is expected to have generated $2B of free cash flow (FCF) in 2025. If one assumes that the business grows by its historical topline rate of 30%, buying the whole business today would mean that you wouldn’t see a return of your capital, let alone a return on your capital, for at least 15 years! But once you factor in a discount rate of say 10%, the investor’s payback period moves to 23 years (that’s ~$650B of FCF in year 23—the B is for Billions—but the discounted value is only ~$72B). One could also argue that as a software company, the odds of attaining that level of cash generation appear very steep. Even for a company as ubiquitous as Microsoft, FCF has never exceeded $75B…” (Click here to read the full text)
