Palantir, which was on a high, plunges 10%.
WP “Ordered to establish a plan to cut the US defense budget.”
Palantir, government sales ratio ↑… Concerns about a hit
Palantir, an American artificial intelligence (AI)-based big data analysis company, plummeted on the 19th (local time). This is interpreted as the result of the possibility of budget cuts by its major customer, the Department of Defense. Palantir, which counts the Central Intelligence Agency (CIA) and the Federal Bureau of Investigation (FBI) as its customers in addition to the Department of Defense, gets about two-thirds of its US sales from government contracts.
On this day, Palantir’s stock price on the New York Stock Exchange closed at $112.06, down 10.08% ($12.56) from the previous trading day. Palantir’s stock price had been breaking all-time highs since breaking the $100 mark for the first time earlier this month, but the upward trend has broken.
On this day, the Washington Post (WP) reported, citing a memo it obtained, that Defense Secretary Pete Hegseth had instructed the Department of Defense and senior U.S. military officials to develop a plan to cut the defense budget by 8% over the next five years and submit it by the 24th. The Trump administration’s desired areas, such as cracking down on illegal immigration at the southern border, modernizing nuclear weapons and missile defense systems, and attack drones, were excluded.
The U.S. Department of Defense budget this year is approximately $850 billion (approximately 1,226 trillion won), and if the budget cut for the Department of Defense is actually implemented, hundreds of billions of dollars will be cut annually for five years, the WP predicted. The cuts are being made despite the bipartisan consensus in Congress that extensive defense spending is necessary to deter threats from China and Russia.
Thanks to the AI craze, Palantir’s stock price rose 340% last year and has risen nearly 50% this year. With better-than-expected results, investors saw the arrival of the Trump administration, which emphasizes America First and a “small government,” as an opportunity for Palantir. However, the market perceived it as a risk as the Trump administration targeted major customers by cutting spending and reducing the number of public employees and reorganizing the federal government on a large scale.
Also, Alex Karp, co-founder and CEO of Palantir, announced in a disclosure the previous day that he could sell about 10 million shares over the next six months. CNBC, an American economic media outlet, pointed out that CEO Karp’s new stock trading plan also had a negative impact on the stock price.
Meanwhile, in an interview with CNBC the previous day, CEO Karp defended the Department of Government Efficiency (DOGE), a new advisory body leading the reorganization of the federal government, and Tesla CEO Elon Musk, who leads it. CEO Karp said, “What the progressive camp (criticizing CEO Musk) should do is recognize that Musk is the best person to do this (restructuring the federal government) and have a conversation with Musk about how he is doing it.”
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