Palantir’s (PLTR) share price plummeted by as much as 12.5% on Wednesday after a report by The Washington Post said that the Pentagon is preparing to slash the current $850 billion U.S. defense budget by 8% per year for the next five years. As a major provider of software and technology services to defense agencies, Palantir’s revenue could be significantly impacted by this move.
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According to the report, Hegseth ordered senior Pentagon leaders to develop plans for the budget cuts by Monday. This is part of the Trump administration’s broader effort to reduce government spending, which is being led by Tesla CEO Elon Musk’s Department of Government Efficiency (DOGE). Interestingly, though, Palantir CEO Alex Karp defended Musk during an appearance on CNBC’s Squawk Box.
Indeed, he suggested that Musk is the most qualified person to lead this initiative and called for left-leaning politicians to have a dialogue in order to work together. However, the opposite has been happening so far, as Democrats have vocally opposed cutting wasteful government spending. This has led to former Democrat adviser Dan Turrentine slamming the Democrat’s strategy as “terrible” during Jesse Watters Primetime because it fails the “common sense” test, especially after DOGE uncovered legitimate issues.
What Is the Prediction for PLTR Stock?
Turning to Wall Street, analysts have a Hold consensus rating on PLTR stock based on two Buys, 10 Holds, and five Sells assigned in the past three months, as indicated by the graphic below. After a 380% rally in its share price over the past year, the average PLTR price target of $88.60 per share implies 21% downside risk.
