Palantir Billionaire Peter Thiel Sells 3 AI Stocks in a $74 Million Warning to Wall Street. History Says This Will Happen Next.

Key Points

• Thiel Macro (a hedge fund run by Peter Thiel) sold its positions in Tesla, Microsoft, and Apple in Q4 2025.

• Peter Thiel made a similar decision in Q4 2019 with mixed results; he avoided losses but missed out on gains.

• The S&P 500 is expensive, but most Wall Street analysts think Tesla, Microsoft, and Apple are undervalued.

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Billionaire Peter Thiel was a co-founder of Palantir Technologies, and he still owns a substantial stake in the company (about 100 million shares). However, he also runs a hedge fund, called Thiel Macro, that recently sold every stock in its portfolio.

Specifically, SEC Forms 13F show Thiel Macro had $74 million split between Tesla (NASDAQ: TSLA), Microsoft (NASDAQ: MSFT), and Apple (NASDAQ: AAPL) in the third quarter of 2025, but the hedge fund sold all three positions in Q4 2025 and did not report any new trades.

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I cannot speak to Thiel’s motivation, but the decisions suggest he lost confidence in Tesla, Microsoft, and Apple and couldn’t find other attractive opportunities across the stock market, possibly due to concerns about valuations. The S&P 500 (SNPINDEX: ^GSPC) was very expensive by historical standards in the fourth quarter.

How seriously should investors take Thiel’s $74 million warning? Consider this historical insight.

Image source: Getty Images.

Thiel Macro issued a similar warning in late 2019

Peter Thiel made a similar move in Q4 2019. He sold every position in his portfolio and did not report any new trades for the next five years. The S&P 500 returned approximately 91% (or 13.8% annually) during that five-year period, but nearly two-thirds of Thiel’s portfolio had been invested in put options (bets) against the S&P 500.

On one hand, Thiel avoided heavy losses by selling those put options. On the other hand, he missed out on substantial upside because he did not make any trades for the next five years. In particular, the S&P 500 has performed very well since the artificial intelligence (AI) boom began following the release of ChatGPT in Q4 2022.

The S&P 500 still trades at a historically expensive valuation

The S&P 500 had an average cyclically adjusted price-to-earnings (CAPE) ratio of 39.1 in Q4 2025 (when Thiel Macro sold every stock in its portfolio). That is a substantial premium to the 30-year average of 28.5. In fact, apart from the last few months, the S&P 500 has not recorded a CAPE multiple above 39 since the dot-com crash in 2000.

The S&P 500 has actually gotten a little more expensive in 2026. Its CAPE multiple was 39.2 in February, and the index has historically performed poorly from such high valuations. The chart below shows the S&P 500’s best, worst, and average returns over different periods when its CAPE ratio has exceeded 39.

Data source: Robert Shiller.

As shown above, if the S&P 500’s forward returns match the historical average, the index will decline 4% by February 2027, it will tumble 20% by February 2028, and it will plummet 30% by February 2029. But the most alarming statistic is this: The S&P 500 has never produced a positive three-year return when its CAPE ratio exceeds 39.

Of course, past performance is not a guarantee of future results. The CAPE multiple is a backward-looking valuation metric, meaning it does not account for the possibility that S&P 500 earnings will grow more quickly in the future as companies adopt artificial intelligence.

That trend is already evident in the market. “AI adopters in the S&P 500 have posted margin expansion that outpaces both the index as a whole and the individual companies not using AI by 2 to 3 percentage points,” according to JPMorgan strategist Kriti Gupta.

Wall Street says Tesla, Microsoft, and Apple are undervalued

In general, Wall Street does not share Peter Thiel’s skepticism concerning Tesla, Microsoft, and Apple. While Thiel sold all three stocks in the fourth quarter, most analysts believe they are undervalued.

• Among 56 analysts, Tesla has a median target price of $477.50 per share. That implies 22% upside from the current share price of $391.
• Among 60 analysts, Microsoft has a median target price of $600 per share. That implies 51% upside from the current share price of $396.
• Among 52 analysts, Apple has a median target price of $302.50 per share. That implies 21% upside from the current share price of $250.

Here’s the big picture: Thiel Macro has a mixed track record. Thiel beat the S&P 500 over the past year and avoided losses by selling S&P 500 put options in Q4 2019, but he also missed out on gains by staying out of the market for five years. Also, while the S&P 500 is expensive today — so much so that history says the index could fall sharply in the next few years — Wall Street remains bullish on Tesla, Microsoft, and Apple.

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JPMorgan Chase is an advertising partner of Motley Fool Money. Trevor Jennewine has positions in Palantir Technologies and Tesla. The Motley Fool has positions in and recommends Apple, JPMorgan Chase, Microsoft, Palantir Technologies, and Tesla and is short shares of Apple. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.