Why Palantir Technologies Stock Dropped Today
Key Points
Midterm election results last night put Democrats in control of both the U.S. Senate and House of Representatives.
The Pentagon is preparing to see its record $1.5 trillion defense budget request shrunk to $1.1 trillion.
If defense spending declines, Wall Street thinks Palantir can pivot to commercial work.
- 10 stocks we like better than Palantir Technologies ›
The 2026 midterm results are in, and the Democrats won in a landslide. So what does this mean for Palantir Technologies (NASDAQ:PLTR) stock? Maybe nothing good, but also maybe... nothing.
Shares of the artificial intelligence and defense contractor sold off more than 6% in early trading, before paring their losses to just 1% as of 11:15 a.m. ET Wednesday. And yet, Wall Street's reaction to the sea change in government seems muted -- or even positive in Palantir's case.
Missed AI’s "Act 1"? Act 2 Could Be 15x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our analysts, we’re only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue »
Image source: The Motley Fool.
Bad news for defense contractors?
President Donald Trump had requested $1.5 trillion for fiscal year 2027 defense spending in the months leading up to November's election. A Democratic Congress may not approve anything like that.
At last report, the U.S. Senate will number 54 Democrat votes to just 44 Republicans, and the House of Representatives is tilting blue 228-139 (with 68 seats unconfirmed). Even before the results are all in, Politico reports the Pentagon plans to reduce its spending request from $1.5 trillion to $1.1 trillion. With more than half its revenue coming from government contracts, many military, this could be bad news for Palantir.
What's next for Palantir stock
And yet, Wall Street seems unconcerned. This morning, Barclays analyst Anthony Valentini raised his target price on Palantir to $273 with an overweight rating, reports StreetInsider.com. Bank of America's Mariana Perez Mora reiterated her buy rating on Palantir, too, with a $255 price target implying 47% upside.
Why? "Palantir can no longer be viewed only as a government services/software provider with its commercial growth engine running hot," says Mora. While its government sales grew 78% year-to-date, Palantir's commercial sales year-to-date roughly doubled.
Assuming it can pivot to emphasize its commercial business and keep growing at this rate, Palantir stock should do just fine.
Should you buy stock in Palantir Technologies right now?
Before you buy stock in Palantir Technologies, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Palantir Technologies wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $342,020!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,270,017!*
Now, it’s worth noting Stock Advisor’s total average return is 885% — a market-crushing outperformance compared to 208% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of November 4, 2026.
Bank of America is an advertising partner of Motley Fool Money. Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool has a disclosure policy.
Recommended Articles
