Palantir Stock Drops Sharply Following Military Budget Cut Report and CEO Stock Sale Plan

An 8% annual reduction in U.S. defense spending and Alex Karp's new stock trading plan contribute to a steep decline in Palantir's share price.

Palantir Technologies' stock fell over 10% following reports of significant U.S. military budget cuts and CEO Alex Karp's new stock trading plan.
The Pentagon's defense budget is projected to face 8% annual reductions for five years, impacting Palantir, which relies heavily on government contracts for revenue.
CEO Alex Karp disclosed a plan to sell up to 10 million shares under preset conditions, raising concerns among investors after selling 40.7 million shares last year.
Despite the recent sell-off, Palantir shares remain up 48% year-to-date after a strong performance in 2024, driven by bumper earnings and generative AI enthusiasm.
Analysts warn that Palantir's high valuation and reliance on government contracts pose risks, particularly as it seeks to diversify into the commercial sector.