Palantir Technologies (NASDAQ: PLTR) defied Wall Street’s cautious outlook at the start of 2025, extending its remarkable run from the previous year.
After an impressive 340% surge in 2024, which made it the best-performing stock in the S&P 500, PLTR continued its momentum, gaining another 65% in the first two months of 2025.
The stock hit a peak of $124.62 on February 18, driven in part by the company’s earnings report on February 3, which triggered a 23% single-day surge. However, the momentum didn’t last. Palantir has since tumbled 32%, now trading at $84.79.
What triggered Palantir’s downturn?
Palantir’s decline was fueled by multiple factors, with growing uncertainty over government contracts emerging as the primary concern.
Reports indicate that the Pentagon has been directed to prepare for an 8% annual reduction in the U.S. defense budget over the next five years, raising concerns about potential cuts to government contracts, a key revenue driver for Palantir.
Adding to the pressure, investor confidence took another blow after reports surfaced that CEO Alex Karp had set up a stock trading plan, allowing him to sell nearly 10 million shares over the next six months. The move has only added to selling pressure, leaving investors worried about the stock’s near-term stability.
How much an early 2025 investment in Palantir would be worth today
Investors who witnessed Palantir’s remarkable surge in 2024 entered 2025 with high expectations. A $1,000 investment in Palantir on January 2 at $75.19 per share would have peaked at $1,650 during the February rally.
However, at the current price of $84.22, that same investment is now worth approximately $1,120, with a 12% year-to-date gain.
What’s next for Palantir
Palantir Technologies is expanding its reach beyond government contracts, with a strong push into AI-driven manufacturing and defense technology. CEO Alex Karp highlighted the company’s goal to enhance American industrial efficiency, announcing a series of new partnerships at AIPCon in Palo Alto.
Among the key collaborations, Archer Aviation will leverage Palantir’s AI for route planning and air traffic control, while Saildrone, an autonomous marine vessel startup, will use its software for fleet management. Meanwhile, Epirus Inc., which develops anti-drone weaponry, is also integrating Palantir’s technology.
That being said, Palantir’s AI-driven expansion and growing enterprise adoption continue to fuel bullish sentiment, with the stock surging 244% over the past year.
However, the real challenge lies in scaling its AI solutions in the private sector and proving its ability to generate sustainable revenue growth. As Palantir expands across industries, investors will be watching closely to see if that momentum can sustain the stock’s rally.
Featured image via Shutterstock
