Palantir Stock Plunges on Pentagon Budget Cut Reports
Palantir Technologies (PLTR) saw a sharp decline in its stock price following a Washington Post report indicating the Trump administration's plans to implement significant budget cuts within the Pentagon over the next five years.
Shares of PLTR dropped 10% on Wednesday, with the majority of the losses occurring during the final hour of trading. On Thursday, the stock continued its decline, falling over 5% in early trading.
The potential cuts of 8% per year were outlined in a memo sent by Defense Secretary Pete Hegseth to senior military officials, potentially amounting to tens of billions of dollars in reductions. "Our budget will resource the fighting force we need, cease unnecessary defense spending, reject excessive bureaucracy, and drive actionable reform including progress on the audit," Hegseth stated in the memo.
While some categories, including border operations and munitions acquisitions, reportedly remain exempt from the cuts, Palantir's business could be significantly impacted. The company relies heavily on government contracts, particularly from the US Department of Defense, which accounted for over half of its revenue in the most recent quarterly report.
Earlier in December, the Financial Times reported that Palantir was in discussions with competitors to form a consortium and bid for government contracts. Despite Wednesday's decline, PLTR remains the second-best performer in the S&P 500 in 2025, with a year-to-date rise of over 48%. Over the past year, the stock has appreciated by more than 350%.