Palantir Stock Plunges 10% on Pentagon Budget Cut News
Palantir's (PLTR) stock nosedived by 10.08% on Wednesday, shedding gains in the final hour of trading after a report by The Washington Post revealed that the Trump administration has instructed the Pentagon to implement significant budget cuts over the next five years.
The Post claimed that Defense Secretary Pete Hegseth issued a memo to Pentagon and U.S. military leaders, outlining plans to reduce the defense budget by 8% annually for the next five years, potentially amounting to billions of dollars in cuts.
"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's memo obtained by the Post stated.
While 17 categories are reportedly exempt from the cuts, including U.S. border operations and munitions acquisitions, Palantir has remained silent on the matter, failing to respond to Yahoo Finance's request for comment.
Palantir offers AI-based surveillance software to the U.S. government. A significant portion of the company's revenue stems from global government contracts, primarily driven by the U.S. Department of Defense's increased spending.
Despite Wednesday's decline, Palantir stock has been on an upward trajectory in 2025, climbing more than 48% year-to-date. It currently stands as the second-best performing stock within the S&P 500, with over 350% growth in the past year.