US Defense Budget Cuts Spark 10% Drop In Palantir Stock
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Palantir Technologies’ (NASDAQ: PLTR) stock experienced a significant downturn, plummeting 10% on Wednesday, February 19, 2025, following reports of potential defence budget cuts proposed by the Trump administration.
The stock continued its decline on Thursday, dropping an additional 6% in early trading.
The Washington Post reported that Defense Secretary Pete Hegseth has directed Pentagon officials to prepare for an 8% annual reduction in defence budgets over the next five years.
This news has raised concerns among investors about the potential impact on companies heavily reliant on government contracts, such as Palantir.
Palantir’s exposure to government contracts is substantial, with approximately 54.9% of its revenue, or $1.2 billion, coming from this sector as of early 20244.
The company’s Gotham platform, which is crucial for defence and intelligence agencies, underscores its deep integration with government operations.
Despite the recent downturn, Palantir’s stock has shown remarkable performance, remaining the second-best performer in the S&P 500 this year.
Even after Wednesday’s 10% slump, the stock is up 48% in 2025 and has surged 379% over the past year.
The potential budget cuts could significantly impact Palantir’s future revenue streams.
In Q3 2024, the company reported a 40% year-over-year increase in US government revenue, reaching $320 million. Any reduction in defence spending could slow this growth trajectory.
As of now, Palantir has not issued an official comment on the potential budget cuts or their possible impact on the company’s operations and financial outlook.
Investors and analysts will be closely monitoring any statements from Palantir’s management regarding this development and its potential consequences for the company’s government-related business.
Sources: eToro, MarketScreener
