Palantir Billionaire Peter Thiel Sells 3 AI Stocks in a $74 Million Warning to Wall Street. History Says This Will Happen Next.
Billionaire Peter Thiel was one of the founders Palantir Technologiesand still owns a significant stake in the company (about 100 million shares). But he also runs a hedge fund called Thiel Macro, which recently sold all the stocks in its portfolio.
Especially, SEC Forms 13F Show Thiel Macro’s $74 million split between them Tesla’s(NASDAQ:TSLA), Microsoft(NASDAQ:MSFT)And Apple(NASDAQ:AAPL) in the third quarter of 2025, but the hedge fund sold all three positions in the 4th quarter of 2025 and did not report any new transactions.
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I can’t say exactly what Thiel’s motivation is, but the decisions suggest he has lost faith in Tesla, Microsoft, and Apple and is likely unable to find other attractive opportunities in the stock market due to concerns about valuations. S&P 500(SNPINDEX: ^GSPC) It was very expensive by historical standards in the fourth quarter.
How seriously should investors take Thiel’s $74 million warning? Consider this historical view.
Image source: Getty Images.
Peter Thiel He made a similar move in the 4th quarter of 2019. He sold all positions in his portfolio and did not report any new transactions for the next five years. The S&P 500 returned about 91% (or 13.8% annually) during that five-year period, but nearly two-thirds of Thiel’s portfolio was invested in put options (bets) against the S&P 500.
On the one hand, Thiel avoided heavy losses by selling these put options. On the other hand, it missed out on a significant rise because it did not take any action for the next five years. The S&P 500 in particular has performed very well since the start of the artificial intelligence (AI) boom following the launch of ChatGPT in Q4 2022.
The average cyclically adjusted price-to-earnings (CAPE) ratio of the S&P 500 was 39.1 in Q4 2025 (when Thiel Macro sold all the stocks in his portfolio). This is a significant premium over the 30-year average of 28.5. In fact, except for the last few months, the S&P 500 has not recorded a CAPE coefficient above 39 since the dot-com crash of 2000.
The S&P 500 actually becomes slightly more expensive in 2026. The CAPE multiple was 39.2 in February, and the index has historically performed poorly due to such high valuations. The chart below shows the S&P 500’s best, worst, and average returns over different periods when the CAPE ratio exceeded 39.
Time Range
S&P 500’s Best Return
S&P 500’s Worst Return
Average Return of S&P 500
1 Year
16%
(28%)
(4%)
2 Years
8%
(43%)
(20%)
3 Years
(10%)
(43%)
(30%)
Data source: Robert Shiller.
As seen above, if the S&P 500’s forward returns match the historical average, the index will fall 4% in February 2027, 20% in February 2028, and 30% in February 2029. But the most alarming statistic is this: The S&P 500 has never produced a positive three-year return when the CAPE ratio exceeds 39.
Of course, past performance is no guarantee of future results. The CAPE multiple is a backward-looking valuation metric; that is, it does not take into account the possibility that S&P 500 earnings will grow faster in the future as companies adopt AI.
This trend is already clearly visible in the market. “Margin expansion for AI adopters in the S&P 500 outpaced both the index as a whole and individual non-AI adopters by 2 to 3 percentage points.” JPMorgan strategist Kriti Gupta.
In general, Wall Street does not share Peter Thiel’s skepticism about Tesla, Microsoft and Apple. Although Thiel sold all three stocks in the fourth quarter, most analysts believe they are undervalued.
Tesla has an average target price of $477.50 per share among 56 analysts. This represents a 22% increase from the current share price of $391.
Microsoft has an average target price of $600 per share among 60 analysts. This represents a 51% increase from the current share price of $396.
Among 52 analysts, Apple has an average target price of $302.50 per share. This represents a 21% increase from the current share price of $250.
The big picture is this: Thiel Macro has a checkered past. Thiel beat the S&P 500 last year and avoided losses by selling S&P 500 put options in Q4 2019, but he also missed gains by being out of the market for five years. Additionally, while the S&P 500 is expensive today — so much so that history suggests the index could fall sharply over the next few years — Wall Street remains bullish on Tesla, Microsoft, and Apple.
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JPMorgan Chase is Motley Fool Money’s advertising partner. Trevor Jennewine He has positions in Palantir Technologies and Tesla. The Motley Fool has positions in and recommends Apple, JPMorgan Chase, Microsoft, Palantir Technologies, and Tesla, and shorts Apple. The Motley Fool has a feature disclosure policy.
