Peter Thiel Exits Apple and Microsoft: A Contrarian AI Play?
In a surprising move, billionaire investor and Palantir Technologies co-founder Peter Thiel’s hedge fund, Thiel Macro, liquidated its positions in both Apple and Microsoft during the fourth quarter of 2025. This decision comes despite the fact that most Wall Street analysts currently rate both stocks as undervalued, presenting a potential buying opportunity for investors.
Why Did Thiel Sell?
Thiel’s rationale appears to be rooted in a contrarian investment strategy, focusing on companies poised to benefit directly from the application of artificial intelligence rather than those simply building the underlying infrastructure. While Apple and Microsoft are significant players in the tech landscape, Thiel seems to be prioritizing companies actively leveraging AI for modern revenue streams.
Apple: Solid Fundamentals, But Concerns Remain
Apple reported strong financial results, with revenue increasing 16% to $144 billion in its first quarter, driven by robust iPhone and services sales. IPhone 17 demand was particularly strong in Greater China, with sales increasing 38%, the fastest growth in four years. GAAP net income too rose 18% to $2.84 per diluted share.1
Despite these positive results, analysts suggest potential headwinds. Concerns center around shrinking profit margins due to rising memory chip prices and a relatively high valuation of 34 times earnings. Wall Street analysts have a median target price of $303 per share for Apple, implying an 11% upside from its current price of $273.1
Apple is preparing to integrate generative AI features, utilizing Alphabet’s Gemini models to enhance Siri and other functionalities, potentially opening new avenues for monetization.1
Microsoft: AI Integration and Cloud Growth
Microsoft also delivered strong financial performance, with revenue increasing 17% to $81 billion, fueled by growth in commercial software, consumer software, and cloud services. Non-GAAP net income increased 24% to $4.14 per diluted share.1
The company’s strategy of integrating AI assistants, like Microsoft 365 Copilot, across its product suite is seen as a key driver for future growth. Paid Microsoft 365 Copilot seats increased 160%, and daily active users climbed tenfold in the recent quarter. Microsoft Azure continues to gain market share in cloud infrastructure and platform services.1
Despite these positives, investor concerns about potential disruption from AI code generation tools and the return on investment in AI initiatives led to a sell-off of Microsoft stock. However, analysts believe Microsoft is well-positioned to benefit from the transformative potential of AI. Wall Street’s median target price for Microsoft is $600 per share, suggesting a 49% upside from its current price of $402.1
Thiel’s Portfolio Shift
Thiel Macro previously held stakes in Tesla, Apple, and Microsoft at the end of September 2025, but no longer reported a position in Nvidia as of that date.2 The fund’s disclosed U.S. Equity holdings fell from approximately $212.0 million to $74.4 million between June and September 2025.2
More recently, Thiel’s fund has focused on Meta, Tesla, and Apple, bypassing investments in Palantir and Nvidia.4 This strategy prioritizes companies that *use* AI rather than those that *build* the technology.4
Looking Ahead
Peter Thiel’s decision to exit Apple and Microsoft underscores the complex dynamics of the AI investment landscape. While both companies remain fundamentally strong, Thiel’s contrarian approach highlights the potential for greater returns in companies directly applying AI to create new products and services. Investors should carefully reassess their own risk tolerance and investment goals before following Thiel’s lead.1