Shares of Palantir Technologies Inc. (NASDAQ: PLTR) have fallen more than 30% since February 19, as concerns grow over potential cuts to the U.S. defense budget under the new administration. However, in an intriguing twist, at least four U.S. Congress members have recently disclosed purchasing stakes in the big data analytics firm, signaling confidence in its long-term potential despite the market turmoil.
Congress Members Increasing Palantir Stock Holdings
While Wall Street remains cautious about Palantir’s short-term prospects, U.S. politicians appear to be taking a different approach. Representative Marjorie Taylor Greene revealed on February 12 that she had acquired up to $15,000 worth of PLTR shares. Greene, who also invested in Nvidia this month, seems to have a keen interest in AI and technology-driven investments.
This buying activity among lawmakers didn’t end with Greene. On February 11, Representatives Gilbert Ray Cisneros Jr. and James Comer also disclosed investments of up to $15,000 in Palantir. Newly elected Texas Representative Julie Johnson followed suit, purchasing as much as $15,000 worth of the stock.
It is important to note that these political figures made their investments prior to Palantir’s significant drop in share price. Therefore, their purchases weren’t timed to take advantage of the recent decline but rather reflect confidence in the company’s long-term growth prospects.
Concerns Over U.S. Department of Defense Budget Cuts
The recent sell-off in Palantir stock can largely be attributed to concerns about the U.S. Department of Defense (DoD) potentially reducing its budget. Since Palantir generates over 40% of its revenue from government contracts, particularly with the DoD, any substantial cuts in defense spending could adversely affect the company’s financial performance.
However, Wedbush Securities’ top analyst, Dan Ives, remains optimistic about Palantir’s future. According to Ives, fears of a DoD budget cut may be overstated. He believes that the Pentagon will continue to prioritize cutting-edge software solutions, which could ultimately benefit Palantir, positioning the company to capitalize on increased IT spending in defense operations.
Palantir’s Strong Q4 Earnings Performance
Before the concerns surrounding DoD budget cuts emerged, Palantir had been trading at all-time highs, driven by strong Q4 earnings. On February 3, the company reported earnings of $0.14 per share on $828 million in revenue, significantly surpassing Wall Street’s expectations of $0.11 per share and $776 million in revenue.
CEO Alex Karp expressed confidence in Palantir’s future, highlighting the firm’s growing role in both the enterprise and government sectors. Despite the recent downturn, Palantir’s consistent ability to exceed expectations underscores its position as a leader in the AI-driven data analytics field.
The Road Ahead for Palantir
Although short-term challenges have led to a decline in investor confidence, the long-term outlook for Palantir remains strong. With bullish analysts supporting the stock and increased stakes from U.S. politicians, the current volatility may present a unique opportunity for long-term investors.
Whether Palantir can withstand the pressures of potential defense budget cuts and continue its growth trajectory will be crucial in determining its future valuation. As the market digests these developments, all eyes are on Palantir’s next steps.
