Does Billionaire Ray Dalio Know Something Wall Street Doesn't? He Just Unloaded All of His CrowdStrike Shares and Is Piling Into This New S&P 500 Artificial Intelligence Stock That's Soared 300% This Year.

From today’s price levels, Wall Street’s average analyst forecast calls for CrowdStrike to advance by about 2.5% over the coming 12 months — not a big increase, but positive movement all the same — and for Palantir to drop by about 40%. Has Dalio made the right move by locking in his profits from CrowdStrike and increasing his bet on Palantir?

It’s still too early to know for sure. But it’s true that CrowdStrike could face some pressure in the months to come. The company’s faulty software update in July unleashed the biggest information technology outage ever, and CrowdStrike has said it expects the costs of packages to compensate customers for the losses that caused will weigh on its growth in the coming quarters. It’s possible this also will limit the stock’s near-term performance, though the company still represents a top long-term investment.

As for Palantir, yes, the stock’s valuation has skyrocketed — it trades for 184 times forward earnings estimates right now. But some investors — including Dalio — may be willing to accept that since Palantir is in the early stages of its AI growth story. The S&P 500 invited Palantir to join this fall, showing that it has entered the ranks of the companies that drive the modern economy.

Palantir launched its Artificial Intelligence Platform (AIP) a year ago, and demand for it is soaring. The company’s commercial customer growth has taken off in recent times, but with only about 300 U.S. commercial customers right now, Palantir still has plenty of room to expand. Finally, forecasts that today’s $200 billion AI market is on track to grow to $1 trillion by the end of the decade suggest more growth ahead for today’s top AI players. Palantir’s recent earnings results support this optimism, with the company reporting its highest profit ever in the third quarter.

All of this means that Dalio may have the right idea about investing in this high-flying AI stock today — even if Wall Street isn’t as optimistic about how it will perform in the coming months. It’s also important to remember that long-term investing can mean holding onto a stock for five to 10 years or even longer. That means that no matter what happens over the first few months you own an investment, it still could be a winner for you over the long run.

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Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CrowdStrike and Palantir Technologies. The Motley Fool has a disclosure policy.

Does Billionaire Ray Dalio Know Something Wall Street Doesn’t? He Just Unloaded All of His CrowdStrike Shares and Is Piling Into This New S&P 500 Artificial Intelligence Stock That’s Soared 300% This Year. was originally published by The Motley Fool