Palantir Technologies, a key player in the artificial intelligence (AI) sector, saw its stock plunge more than 10% following the Department of Defense (DoD)’s budget cuts.
On Monday, Palantir’s shares fell 10.53% to close at $90.68 on the New York Stock Exchange, extending its losses to 24% over the past five trading sessions.
According to Bloomberg, the decline followed Secretary of Defense Lloyd Austin’s directive on Thursday, instructing top military officials to prepare for an 8% reduction in defense spending over the next five years.
Bloomberg’s analysis shows that government contracts account for over half of Palantir’s total revenue, making the company especially vulnerable to defense budget cuts.
While Palantir initially built its reputation through government contracts, particularly with the DoD, the recent AI boom on Wall Street has spurred substantial private-sector interest. This diversification had positioned the company as a major beneficiary of the AI surge.
Although Palantir plummeted 24% over the past five trading sessions, it still surged 15% over the past month and an astonishing 294% over the past year.