Palantir Stands Tall As IT Defense Peers Slip On Pete Hegeseth's $580M DoD Cuts: Retail Sees Upside, With Caution
A DoD release said Defense Secretary Pete Hegseth signed a memo on Thursday terminating more than $580 million in programs, contracts, and grants.
FollowPalantir Technologies, Inc. (PLTR) stock defied the sell-off seen across IT defense contractors on Thursday. The weakness in the latter stemmed from Accenture plc’s (ACN) lackluster guidance and the Department of Defense (DoD) confirming $580 million in spending cuts, focused mainly on IT services.
New York-based professional services firm Accenture reported better-than-expected results for the second quarter of the fiscal year 2025. Still, the guidance for the third quarter and full year proved lackluster.
On the earnings call, Accenture CEO Julie Sweet said the company expects ongoing uncertainty amid the government's evolving priorities and its focus on efficiency, according to transcripts on Koyfin.
“During this process, many new procurement actions have slowed, which is negatively impacting our sales and revenue,” she said.
Sweet also noted that the General Services Administration has instructed all federal agencies to review their contracts with the top 10 highest-paid consulting firms contracting with the U.S. government, which included Accenture Federal Services.
Later, a DoD release said Defense Secretary Pete Hegseth signed a memo on Thursday terminating more than $580 million in programs, contracts, and grants.
The secretary said in prerecorded remarks that the department seeks to end various spending identified by the Department of Government Efficiency (DOGE) that does not match the priorities of President Donald Trump or the Defense Department.
Without mentioning a company name, DoD said the top contract being cut is a software development program for the Defense Civilian Human Resources Management System, which has seen cost and time overruns.
The Pentagon also cut contracts for external consulting services, including $30 million allotted to one company that purchased several unused licenses, and $360 million in grants.
Shares of IT defense contractors such as Accenture, CACI International, Inc. (CACI), Gartner, Inc. (IT), Science Applications International Corp. (SAIC) and Booz Allen Hamilton Holding Corp. (BAH) fell sharply in Thursday’s regular trading.
On the other hand, Palantir stock climbed 1.50% to $87.39 before giving back some of the gains in the after-hours session. Palantir derived over 63% of its 2024 revenue ($1.20 billion of the $1.90 billion) from the U.S. government.
While stray comments on the stream reflected pessimism over the developments, retailers were largely bullish.
A bearish user said he exited the stock on Thursday after Accenture’s poor report due to stalled contracts.
A few others were left wondering about the impact of the DOD announcement on Palantir.
A bullish watcher, however, recommended holding the stock and continuing to accumulate on the premise that Palantir would be the fastest to the $1 trillion market cap.
Another user based his optimism on Palantir joining the S&P 100 Index, effective Monday, increasing demand and liquidity.
Palantir stock has gained over 15% for the year-to-date period, although it is trading off its all-time high of $125.41, reached on Feb. 19.
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