Palantir Technologies (PLTR) stock has come under the limelight lately as the U.S. DOD (Department of Defense) implements an additional $580 million in budget cuts across various programs, contracts, and grants. Defense Secretary Pete Hegseth signed a new memo yesterday as part of the continued effort to eliminate wasteful spending within the DOD. The cuts are recognized through President Trump’s DOGE (Department of Government Efficiency) committee, which is headed by billionaire Elon Musk. The committee seeks to ensure that taxpayer money is spent wisely and aims to be transparent and accountable with its spending programs.
The $580 million in terminated contracts include an HR software project that exceeded its budget by $280 million, DOD grants amounting to $360 million, and $30 million in consulting contracts from Gartner (IT) and McKinsey for IT services. Some of the other companies that have been impacted by DOD’s spending cuts include Lockheed Martin (LMT), Accenture (ACN), and Northrop Grumman (NOC). To date, the DOD and DOGE have collectively reduced $800 million in wasteful spending.
Palantir’s Future Uncertain Amid DOD Cuts
Palantir provides big data analytics solutions and earns a large portion of its revenue from government contracts. The ongoing budget cuts put Palantir’s future earnings potential at risk. Although the latest cuts were related largely to IT contracts, the secretary said in his remarks that the DOD is focused on ending various spending programs that do not align with the DOGE’s current priorities. The exact impact of the DOD’s latest announcements on Palantir’s performance remains ambiguous, since the secretary did not mention which types of contracts are under review.
On the brighter side, Palantir’s inclusion in the S&P 100 index, effective March 24, is poised to increase the stock’s visibility, liquidity, and demand. Thanks to a massive demand for AI and data analytics services, PLTR stock has surged over 256% in the past year. Notably, Palantir has built a loyal customer base, aided by its “Revolving Door” policy, while the company also continues to make meaningful contracts to strengthen its business, such as the recent partnership with Databricks.
Is Palantir Stock Worth Buying?
Analysts prefer to remain on the sideline on Palantir stock for now, possibly because the stock has already gained significantly. On TipRanks, PLTR stock has a Hold consensus rating based on four Buys, 10 Holds, and four Sell ratings. The average Palantir Technologies price target of $92.13 implies 5.4% upside potential from current levels.
Questions or Comments about the article? Write to editor@tipranks.com