Palantir (NASDAQ:PLTR) shares have taken a sharp hit, sliding ~17% since yesterday morning after CEO Alex Karp unveiled plans to offload up to 9.98 million shares – worth about $1 billion – by September 12, 2025.
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Adding fuel to the fire, reports suggest U.S. Secretary of Defense Pete Hegseth is considering annual defense budget cuts of up to 8%. With Palantir drawing 42% of its revenue from U.S. government contracts – many tied to national security – these potential cutbacks could put a serious dent in its growth trajectory.
Acknowledging the double whammy, top investor Keith Noonan – who is among the top 2% of TipRanks’ stock pros – thinks the current dip is a great opportunity for long-term investors to gobble up shares.
“I expect that investors who buy shares at today’s prices and hold over a five-year period will see very strong returns,” predicts the 5-star investor.
Noonan is not convinced that the cuts in defense spending will negatively impact Palantir. In fact, this move might even create some interesting opportunities for the company.
“There’s a fair chance that the company’s software will be used to identify the best areas to reduce spending,” suggests Noonan, adding that “the company’s artificial intelligence (AI) software tools could also be used to automate tasks at the Pentagon.”
Admittedly, Noonan points out that Palantir has a fairly high valuation at a 203x multiple of 2025 expected earnings, even after the most recent drop in share prices. The investor explains that such a forward-looking valuation means even minor developments can cause significant volatility.
In other words, Noonan notes that PLTR is not an investment for the faint of heart, as both jumps and dips will likely be regular occurrences along the investing journey.
“The stock probably isn’t a good portfolio addition for risk-averse investors or those without tolerance for high levels of volatility in the near term,” Noonan added.
For those who can stomach the risk, however, Noonan believes that buying on PLTR’s dips is a winning strategy. The investor is therefore rating PLTR shares a Buy. (To watch Noonan’s track record, click here)
Wall Street, however, still needs some additional convincing. With 3 Buy, 10 Hold, and 5 Sell ratings, PLTR holds a consensus Hold (i.e., Neutral) rating. Its 12-month average price target of $91.88 implies an ~11% downside from current levels. (See PLTR stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
