The possibility of Pentagon budget cuts along with CEO Alex Karp's stock trading plan triggered a plunge of over 10% in Palantir Technologies Inc. PLTR’s stock on Wednesday, with Wedbush analyst Dan Ives drawing a comparison of this event to the impact of DeepSeek on Nvidia Corporation NVDA.
What Happened: Defense Secretary Pete Hegseth reportedly ordered Pentagon leaders to plan for 8% annual budget cuts over the next five years, with the current defense budget at $850 billion.
Ives, in an X post compared this to Nvidia's selloff after DeepSeek grabbed the top spot on Apple Inc.’s AAP App Store. He said this was "not a headwind," for the stock.
PLTR deals with providing access to artificial intelligence targeting tools to the government and military contracts.
Additionally, the company informed the SEC that CEO Alex Karp adopted a new Rule 10b5-1 trading plan to sell up to 9.98 million shares by Sept. 12, potentially worth $1.23 billion, replacing a larger previous plan.
Why It Matters: Ives also argued that the Department of Defense's budget cuts and more focus on efficiency are bullish factors for PLTR. He said PLTR will "GAIN" more share of their allocated budget's dollars.
CNBC’s Jim Cramer also urged investors to “support the stock,” via an X post.
Hegseth's order as reported by the Washington Post mandated that proposed cuts shall be drafted by Feb. 24. It mentioned exemptions on nuclear weapon modernization, missile defense, and certain acquisitions like submarines, drones, and munitions.
Price Action: PLTR fell 10.08% on Wednesday, contrasting with a slight 0.028% uptick in the Invesco QQQ Trust, Series 1 QQQ, which tracks the Nasdaq 100 index.
In premarket on Thursday, PLTR fell 2.9% whereas QQQ was down 0.27%. PLTR remains up 49.04% on a year-to-date basis and 378.89% over a year.
Benzinga tracks 23 analysts with an average price target of $65.5 for the stock, reflecting a “sell” rating. Estimates range widely from $7.5 to $125. Recent ratings from Citigroup, RBC Capital, and UBS average $85, suggesting a potential 22.51% downside.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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