Investing

Let's Talk About This Palantir (PLTR) Meltdown and How Little Sense It Makes

Austin Smith

Published: March 4, 2025 9:51 am

24/7 Wall St. Key Points:

• Palantir (NYSE: PLTR) has dropped nearly 30% over six trading days, driven by fears of potential U.S. defense budget cuts, despite strong earnings and continued AI integration in defense operations.
• Analysts argue that deep defense cuts are politically unlikely, and even if minor reductions occur, demand for AI-driven efficiencies—Palantir’s core strength—will likely persist or grow.
• The current sell-off is viewed as an overreaction, presenting a potential “buy the dip” opportunity for investors bullish on Palantir’s long-term role in defense and AI sectors.
• Palantir is one of “The Next Nvidia” stocks that made investors rich last year. We called it, and named two more. Click here to unlock the other two investments we think could soar.

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Transcript:

[00:00:04] Doug McIntyre: All right. So Palantir, I don’t know what to tell you. This stock was, I believe of all the S&P 500 (VOO) stocks was up the most last year. That, I mean, that’s my, memory of it. In the last, I’ve got six trading days, it’s down over, over 20%. All right, coming up on 30%.

[00:00:29] Doug McIntyre: Yeah, yeah, it is. Now the theory behind the sell-off. And I’m going to call it a theory because it isn’t true. Maybe eventually is that defense spending is going to be cut. Right. I have two problems with that thesis. Number one, defense spending may not be cut. There’s a lot of support in Congress for not cutting defense spending.

[00:00:52] Doug McIntyre: There are congressmen who rely on getting votes from bases. The company lobby may be the biggest in the world. The United States is still, has peril all over the Pacific. And I think, the fact that we may pull partially out of NATO doesn’t mean that we don’t have a problem.

[00:01:09] Doug McIntyre: The proposal is a 8 percent cut each of the next five years. Just, I want to start by saying that’s impossible. The other thing is fine. Premise number one, defense cuts make Palantir stock go down on the third. We said, no, not, no, no. Second one is if you were going to cut money in defense, where do you make up for it in terms of efficiency?

[00:01:33] Doug McIntyre: Artificial intelligence. Read my lips. Artificial intelligence. If I am looking at Palantir right now, I’m a net buyer. Even if they decide to cut the defense budget, which I don’t think they will do or can get away with, you’re going to need efficiency, efficiency, efficiency. And that is what AI is all about.

[00:01:53] Lee Jackson: Yeah. Especially in defense contracts. You’re exactly right. Throwing out a number that big and Hegseth throwing out that number and saying, I can get it done. It’s like, our stockpiles of so many items even at one point was just bullets and things the smallest that are woefully lower because they didn’t do much production for years and we were shipping a ton of it off.

[00:02:17] Lee Jackson: The defense companies were making a lot of dough, but we were shipping it off to, the Israelis are shipping it off to Ukraine and or someplace like that. And yeah, they’ll be hard pressed to cut 8 percent of the defense budget.

[00:02:31] Doug McIntyre: I’d also make the point that the Secretary of Defense doesn’t decide how much money gets spent on defense.

[00:02:36] Doug McIntyre: No, he does not. it’s an interesting source, but I don’t think that. Look, I think there are 100 senators and 435 members of the House of Representatives, plus, 10 massive defense companies that spend tens of millions of dollars a year on lobbying. So to me, I’m going to say it right here.

[00:02:56] Doug McIntyre: Palantir is oversold by a ton. Probably. The premise behind buying Palantir when it was, way up a week or two ago. It’s, the premise hasn’t changed at all.

[00:03:09] Lee Jackson: Yeah.

[00:03:09] Doug McIntyre: It has not changed at all.

[00:03:12] Lee Jackson: No, I think on big dips like this and this is probably a buy the dip stock simply because of the involvement and how much AI is going to be embedded in the military as a whole, across all branches of the military.

[00:03:27] Lee Jackson: So, yeah, I think you’re 100 percent right. I mean, you don’t. Need to go in and, triple down on it at this level. But boy, you can certainly start nibbling at it again. Or, and if you want it to establish positions, probably the best time in a while,

[00:03:41] Doug McIntyre: If you’re, if you can hear me wherever you are in the world on Wall Street, this is crazy.

[00:03:47] Doug McIntyre: A sell down of a stock like this with earnings like this based on what is basically somebody standing in front of a microphone saying how much they plan to cut and that they’re going to get memos from people about how to do it. That ain’t how it works with defense spending.

[00:04:02] Lee Jackson: No, it really isn’t. And Ike warned of it in the, when he turned over the presidency to Jack Kennedy, he kind of feared that military industrial complex.

[00:04:14] Lee Jackson: But there’s one thing about that. That was 60 years ago. And it hasn’t changed very much since then. So yeah, I wouldn’t be overly concerned and, really on, on a financial trajectory. the stocks are on earnings and all of that has been, pretty strong over the last year. So they’ve really turned around all of that.

[00:04:34] Lee Jackson: So yeah, it’s definitely something to look at. I love this stock.