Why hedge funder Eric Jackson thinks retail is the new smart money

• Eric Jackson thinks investing pros have misunderstood Palantir’s story.

• He described Wall Street’s approach to Palantir “one of the greatest misreads in modern markets.”

• Meanwhile, retail has rallied behind the stock, and their moves in the market are proving they are the smart money.

Eric Jackson thinks the dumb money isn’t so dumb anymore.

The founder of EMJ Capital, Jackson is known for his contrarian takes on struggling stocks that he sees as turnaround stories. He correctly pegged ailing used car seller Carvana as a winner in 2022 and kicked off the surge in Opendoor Technologies that turned it into 2025’s meme stock sensation.

Recently, he’s been touting Palantir, even as the AI-powered data firm has struggled in recent weeks. In short, Jackson believes Wall Street is wrong, and the company’s bullish support from retail investors proves that individual traders are the new smart money.

Even after the stock dropped sharply in recent weeks following earnings, Palantir shares are still up 130% year-to-date. However, Wall Street doesn’t seem to be on board. Of the analysts that cover the stock, fewer than a third rate it a “buy,” with most rating it “hold” and 14% giving it a “sell” rating.

“Most software companies sell tools, walk away, then charge endless service fees because the tools don’t actually solve the problem,” Jackson noted. “Palantir did the opposite. They built a system with a living ontology — a real-time map of the customer’s entire world.”

In his view, analysts see Palantir as a defense contractor rather than a multifaceted software producer. He said that he believes concerns that Palantir is overvalued are unfounded.

“80× revenue isn’t crazy. It’s conservative when you understand the model,” Jackson said.

According to Jackson, while Wall Street is watching from the sidelines, retail traders have been quicker to pick up on the bullish narrative. He also said that he sees the same trend playing out with several other stocks that retail has gotten behind recently.

Jackson flagged the three companies he’s been touting this year as winners of this year’s retail-investing market.

BTQ is a quantum computing company that has struggled this year. However, Jackson hasn’t been touting it for as long as the other two.

Jackson recently told Business Insider that he also believes both Opendoor and Better are poised to benefit from a shift in the housing market that will come as interest rates edge down.

But Jackson is convinced that, similar to Palantir, Wall Street is misunderstanding what these companies are.

“The same pattern repeats,” Jackson stated. “Retail sees platforms. Wall Street sees products. Platforms get valued like jokes… until they get valued like inevitabilities. That arc is how the greatest 100-baggers form.”

Read the original article on Business Insider