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Updated at 10:12 AM EST
Palantir Technologies shares moved higher in early Wednesday trading, but have fallen sharply over the past month, as analysts look to the impact of insider selling from top executives and planned government spending cuts on the data analytics group.
Palantir (PLTR) shares, a standout market performer that has gained more than 910% over the past two years, have levelled-off notably since peaking in mid-February amid concerns tied to pullback in government spending and emergence of China's cut-priced DeepSeek AI chatbot.
Company executives, including CEO Alex Karp, are also looking to cash in on the stock's meteoric rise, noted in the group's recent annual report as well as 10b5-1 plan filings to the Securities and Exchange Commission.
Karp, in fact, is planning to offload another $45 million in Palantir shares his year, having sold around 21% of his stake over the past six months.
Jefferies analyst Brent Thill, who maintained his 'underperform' rating on Palantir stock in a note published Wednesday, said the recent share sales aren't his only concerns.
"After peaking at 61x (2026) revenue, Palantir's multiple has quickly compressed by 36% to 39x but is still around two times higher than the next-highest software name," Thill said. "Given how other big multiple stories have traded post-peak, we think there is more multiple contraction to come."
DOGE cuts in focus
Investors have also been spooked by comments from Defense Secretary Peter Hegseth, who has vowed to take around 8%, or $290 billion, out of the Pentagon budget over the next five years, a move that could affect one of Palantir's crucial revenue sources.
The U.S. Department of Defense for around 17% of Palantir's overall revenue in 2024, and around 18% in 2023, according to its annual report.
Wedbush analyst Dan Ives, however, feels Palantir could actually gain from the DOGE-lead focus on government cost-cutting given its "unique software value proposition."
Related: Palantir stock hit hard as worry mounts
Palantir uses its artificial-intelligence platform, known as AIP, to help clients pull together disparate collections of data into a single model that they then can build, train and deploy in their day-to-day processes.
The group also benefits from its ontology offering, a framework that helps represent and connect real-world entities, data and processes for its government and commercial clients.
Palantir may boost government efficiency
"Palantir is in the sweet spot to benefit from a tidal wave of federal spending on AI while other non-strategic areas of the federal IT budget get scrutinzied/cut," Ives said in a note published earlier this week.