Palantir stock (PLTR) is getting hammered, down nearly 6% Monday, as fears over $50 billion in potential U.S. defense cuts and a sky-high 150x PLTR stock valuation collide with a volatile macro backdrop. The result? Investors are running for cover.
PLTR Tumbles ahead of Tariff Shock
Shares of Palantir dropped 5.9% to $80.79 on Monday. This extended a rough five-day streak. The selloff comes as Wall Street braces for April 2, dubbed “Liberation Day,” when President Donald Trump is expected to announce sweeping tariffs. While the entire tech sector took a hit, Palantir’s sharp drop outpaced the S&P 500 and Nasdaq, both of which closed lower.
Morgan Stanley Flags Government Risk
Morgan Stanley (MS) analysts were already flashing warning signs late last week. The firm said Palantir could face downward estimate revisions thanks to its unusually high exposure to U.S. federal contracts. Government revenue made up $1.2 billion of Palantir’s $1.9 billion U.S. total in 2024—so any cutbacks in public sector spending hit especially hard.
That risk ramped up in February when the Pentagon was told to identify $50 billion in potential cuts. It’s added pressure to a stock already wobbling under macro uncertainty.
PLTR Stock Valuation Looks Stretched in Shaky Market
Palantir’s forward price-to-earnings ratio sits near 150—about seven times the S&P 500’s 20x average. That might fly in a frothy bull market, but in today’s environment? Not so much. The stock also carries a beta of 1.8, putting it among the most volatile names in the index—on par with Tesla (TSLA).
Investors Rotate Out of High-Risk Tech
This latest pullback is part of a broader rotation. Risk-sensitive investors are moving out of high-beta growth names and into steadier software players like Fortinet (FTNT), Intuit (INTU), and Palo Alto Networks (PANW). Morgan Stanley specifically cited a “tone shift” from Q4 optimism to renewed caution.
Beyond Palantir, the broader software sector is feeling the squeeze. Trade tensions, rising yields, and concerns over global IT spending are piling up. In a market craving stability, Palantir’s volatility and reliance on government dollars may be too much to stomach right now.
Is Palantir a Good Stock to Buy?
Analysts remain divided about PLTR stock, with a Hold consensus rating based on four Buys, 10 Holds, and four Sells. Over the past year, PLTR has increased by more than 250%, and the average PLTR price target of $92.13 implies an upside potential of 13% from current levels.
