Palantir Technologies (PLTR) took a sharp hit on Feb. 19, closing over 10% lower and losing about 6% in morning trading on Thursday, Feb. 20. The selloff was triggered by a Washington Post report indicating that U.S. Defense Secretary Pete Hegseth has directed top Pentagon officials to prepare for defense budget cuts over the next five years.
For a company like Palantir, which is heavily reliant on government contracts, particularly within the defense sector, this news injects significant uncertainty into its future revenue stream. In 2024, Palantir generated $2.9 billion in revenue, with 55% of that coming from government clients and the remaining 45% from the commercial sector. With potential reductions in defense spending, Palantir’s government business faces unpredictability that investors must carefully consider.
