Wedbush: Palantir (PLTR) Could Gain from Pentagon Cuts Despite Market Sell-Off

Palantir Technologies (PLTR) shares have been on a rollercoaster ride recently, with the stock experiencing a significant sell-off on Wednesday, February 19, 2025. The market reaction was driven by two primary factors: the proposed Pentagon budget cuts and CEO Alex Karp's new stock trading plan. However, Wedbush Securities analyst Dan Ives believes that Palantir could still gain from the Pentagon cuts, despite the market's current sentiment. This article explores the potential opportunities for Palantir in the face of the proposed budget cuts and the recent market sell-off.

The proposed Pentagon budget cuts, led by Defense Secretary Pete Hegseth, could result in an 8% annual reduction over the next five years. While this may initially seem like a negative development for Palantir, which derives a significant portion of its revenue from government contracts, Ives argues that the company's AI and data analytics capabilities could actually position it to benefit from these cuts. Palantir's software platforms, Gotham and Foundry, can help the Pentagon identify areas for cost savings and improve efficiency, potentially leading to increased demand for its services.



Moreover, Palantir's strong performance in AI and data analytics, as evidenced by its revenue growth and market capitalization, indicates that its technology is highly valued and in demand. This bodes well for the company's ability to leverage its technology to help the Pentagon identify areas for cost savings and improve efficiency, potentially leading to increased demand for its services.

However, the recent market sell-off, driven by CEO Alex Karp's new stock trading plan, has put pressure on Palantir's stock price. Karp's plan allows him to sell up to 9.98 million shares by September 12, 2025, which could further weigh on the stock price. Despite this, Ives remains optimistic about Palantir's long-term prospects, noting that the company's valuation is still significantly higher than its peers in both the tech and defense sectors.

In conclusion, while the proposed Pentagon budget cuts and the recent market sell-off present challenges for Palantir, the company's strong AI and data analytics capabilities could position it to gain from the Pentagon's efforts to reduce costs and improve efficiency. Although the company's high valuation and the potential impact of CEO Karp's stock trading plan on the stock price should be considered, long-term investors may find the current market conditions to be an attractive entry point for Palantir shares. As always, investors should conduct thorough research and consider their risk tolerance before making any investment decisions.