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Palantir Technologies PLTR has been in full focus this week since it reported Q1 earnings on Monday, May 5.
The multi-faceted software company, known for using artificial intelligence (AI) to enhance defense technology and cybersecurity, has been one of the past year’s breakout stocks, rising more than 320%. Part of its growth can be attributed to its lucrative defense contracts from the U.S. government.
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When Palantir reported mixed earnings for Q1, though, shares quickly began to slide and are still trending downward. The company surpassed Wall Street estimates for revenue but also revealed that its international commercial business, responsible for selling software overseas, had declined 10%.
Even before the earnings report, some experts speculated that Palantir could be compromised if the so-called Department of Government Efficiency (DOGE) continues making cuts to federal spending. But on the call, one of the company’s leaders issued an expected take on the pressing matter.
A Palantir exec reveals how he feels about Musk and the DOGE cuts
As noted, Palantir has benefited significantly from its success in the defense contracting space, positioning itself as a leader alongside companies such as Lockheed Martin and RTX Technologies. While this might seem like an indisputable advantage, it has led to a complicated outlook for the company.
Related: Analysts reset Palantir stock forecast amid rally
When President Donald Trump returned to the White House and appointed Elon Musk to a high position at the newly formed DOGE, some experts speculated that Palantir would benefit from its leaders' ties to Musk. Palantir chairman and founder Peter Thiel has a longstanding relationship with Musk, and CEO Alex Karp has praised his leadership.
However, when Musk and the rest of the DOGE team began implementing steep cuts to federal spending, speculation quickly rose that Palantir could be compromised. Some tech companies reported that the DOGE cuts were negatively impacting their business, including IBM, which revealed it has seen 15 federal contracts cancelled in just three months.
Despite these risks, Palantir’s leaders don’t seem too worried about further DOGE cuts derailing their company’s progress. On the Q1 earnings call, chief technology officer Shyam Sankar addressed this topic, describing it as the right thing for the U.S., comparing the new government to a highly prized Japanese beef cattle breed.
“We have way too much spending on things that do not work,” he stated. “The government has started to resemble a finely marbled wagyu. The fake projects that do not deliver and will never deliver crowd out and suffocate the things that could actually be excellent. And so, we welcome DOGE. I mean, to me, these guys are heroes.”