Palantir stock (PLTR) fell 10% for a second day on Thursday, adding to Wednesday’s 10% that followed a Washington Post report which said the Trump administration has told the Pentagon to plan for massive budget cuts over the next five years, casting doubt on a major source of the tech firm’s revenue.
The Post reported that Defense Secretary Pete Hegseth sent a memo to senior leaders within the Pentagon and US military to slice 8% from the defense budget every year over the next five years, potentially equating to tens of 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 wrote in a memo seen by the Post.
As of 10:11:12 AM EST. Market Open.
Some 17 categories would reportedly be exempt from the cuts, including US border operations and munitions acquisitions, the Post wrote.
Palantir did not immediately respond to Yahoo Finance’s request for comment.
Palantir makes AI software used for surveillance by the US government. More than half of the company’s revenue in its most recent quarterly earnings report came from global government contracts, driven by increasing spending from the US Department of Defense.
Despite the selloff, Wedbush analyst and Palantir bull Dan Ives was quick to defend the tech firm’s ability to weather the potential budget cuts: «[I]n our view Palantir’s unique software approach will enable the company to gain MORE…budget dollars at the Pentagon….not less despite these initial knee jerk reactions from the Street,» he wrote in a note to investors Thursday morning.
«Palantir is so well positioned for this new disciplined spending environment at the Pentagon and this will ultimately be a positive growth catalyst as the various programs are scrutinized and as Karp & Co. get a bigger seat at the table in the Beltway,» he added.
The Financial Times reported in December that Palantir is also in talks with competitors, including Anduril, to form a consortium that will bid for US government contracts.
The stock has been on a tear in 2025, rising more than 48% year through Wednesday, making it the second-best-performing stock in the S&P 500.
Over the past year, the stock has gained more than 300%.
Laura Bratton is a reporter for Yahoo Finance. Follow her on Bluesky @laurabratton.bsky.social. Email her at [email protected].
Click here for the latest stock market news and in-depth analysis, including events that move stocks
Read the latest financial and business news from Yahoo Finance
