Beyond Nvidia: How Billionaires Are Building AI Stocks Portfolios With Palantir and Comfort Systems

While investors have rushed into semiconductor giants like Nvidia and Broadcom as artificial intelligence spending accelerates, several prominent hedge fund managers are taking a different approach to capitalize on the AI boom. In the third quarter, high-profile billionaire investors including Ken Griffin and Cliff Asness invested in Palantir Technologies, the software company that has surged 2,000% since January 2023. At the same time, Israel Englander and Steven Cohen purchased shares of Comfort Systems, a construction services firm that has climbed 970% over the same period. These contrarian moves reveal how sophisticated investors are positioning their portfolios beyond the obvious plays in AI stocks.

For investors looking to understand what these heavyweight hedge fund managers see in these opportunities, here’s what separates Palantir and Comfort Systems from the typical AI infrastructure narrative—and why both have caught the attention of investors who consistently outperform the S&P 500.

Palantir Technologies: The AI Software Alternative to Chip Stocks

Palantir stands out in the crowded landscape of AI stocks through its distinctive approach to data analysis. Rather than focusing on hardware or traditional reporting tools, the company developed analytics platforms built around a concept called an ontology. This decision-making framework allows organizations and government agencies to extract increasingly valuable insights over time as the underlying machine learning models absorb more data. This differentiates Palantir from conventional analytics software that primarily emphasizes reporting and visualization.

The company recently bolstered its AI capabilities through AIP, an artificial intelligence platform that enables the creation of AI agents and supports users in querying data using natural language processing. These features position Palantir as a compelling choice within the broader AI stocks category for investors seeking software-based exposure rather than semiconductor-dependent plays.

The financial performance demonstrates why Ken Griffin, Cliff Asness, and other sophisticated investors have taken notice. Palantir reported impressive fourth-quarter results, exceeding analyst expectations on both revenue and profitability. Revenue jumped 70% to $1.4 billion—marking the tenth consecutive quarter of accelerating growth—while non-GAAP net income surged 79% to $0.25 per diluted share. Most notably, the company achieved an exceptional Rule of 40 score of 127%, a metric that combines growth rate with profitability and rarely reaches such elevated levels.

However, prospective investors need to weigh this success against the company’s valuation challenges. Trading at 214 times earnings is steep by most standards. Wall Street anticipates earnings will expand at 45% annually for the next three years, but even meeting these ambitious targets leaves the current price difficult to justify fundamentally. For those considering a position, limiting initial investment size may be prudent, given the stock could realistically decline 50% or more from current levels.

Comfort Systems: The Overlooked Infrastructure Play in AI’s Heat Problem

While software captures most attention in discussions of AI stocks, the infrastructure required to power artificial intelligence operations faces a critical challenge: heat management. Comfort Systems addresses this through its dual-pronged business model spanning mechanical and electrical services.

The company designs, installs, upgrades, and maintains HVAC systems, electrical installations, and plumbing infrastructure across commercial, industrial, and institutional facilities. Its competitive edge stems from the ability to construct modular mechanical and electrical components at off-site locations, reducing both time and expenses compared to traditional on-site assembly. With over 50 subsidiaries operating across 184 locations, Comfort Systems possesses the scale necessary to handle complex projects efficiently.

Crucially for investors eyeing the AI infrastructure opportunity, Comfort Systems manufactures specialized cooling systems for data centers, which are essential as AI operations generate tremendous heat loads. The company also serves semiconductor manufacturers with cleanroom ventilation and related mechanical systems. This exposure to the technology sector has expanded significantly: technology customers now represent 42% of revenue in the recent quarter, compared to 32% the previous year—demonstrating the accelerating demand for AI-related infrastructure services.

The third-quarter earnings report reveals why Israel Englander and Steven Cohen identified an opportunity here. Revenue increased 35% to $2.4 billion, operating margins expanded by 3 percentage points, and GAAP net income doubled to $8.25 per diluted share. Perhaps most importantly, revenue backlog—the total value of contracted or committed future work—surged 66%, signaling robust demand and predictable revenue growth ahead.

On a valuation basis, Comfort Systems trades at 52 times earnings. While not historically inexpensive, this multiple becomes reasonable when contextualized against expected earnings growth of 39% annually over the coming three years. For investors hunting for exposure to the AI infrastructure buildout, this represents a more defensible entry point than Palantir at current levels.

The Contrarian Strategy: Why These AI Stocks Matter

The investment decisions by these veteran hedge fund operators suggest a clear thesis: the most compelling opportunities in AI stocks extend well beyond semiconductor manufacturers. Palantir’s software innovation and data analytics capabilities, combined with Comfort Systems’ indispensable role in addressing infrastructure constraints, represent differentiated plays on the artificial intelligence revolution. Both companies have delivered earnings acceleration exceeding typical growth benchmarks, which explains why investors who have regularly beaten market benchmarks are building positions now.

The contrast is instructive: rather than chasing the obvious semiconductor narrative, discerning investors are deploying capital toward software-driven analytics solutions and infrastructure services essential to running AI systems at scale. For investors constructing their own AI stocks exposure, this diversified approach—beyond the Nvidia and Broadcom consensus—warrants serious consideration.