Trump Backs Palantir Stock Amidst 8% Drop and AI Competition Concerns

Palantir's stock fell over 16% in one week, a bigger drop than seen since February 2021, despite a recent endorsement from Donald Trump.
By Newsroom | Technology, Finance |

Donald Trump has publicly backed Palantir Technologies (PLTR), asserting the company possesses "great war-fighting capabilities and equipment." The former President’s statement, posted on Truth Social, comes as the company's stock has seen significant fluctuations. This endorsement, however, appears to offer only temporary respite as deeper market critiques persist.

Trump posts support for Palantir as stock plunges after 'Big Short' investor blasted the company - 1

The core of the recent market turbulence surrounding Palantir stems from sharp criticism by investor Michael Burry, who claims Anthropic, an AI startup, is significantly outperforming Palantir in the enterprise AI sector. Burry, known for his prescient "Big Short" trade, has pointed to data suggesting Anthropic is winning a substantial majority of direct enterprise AI choices over Palantir, framing the latter as a low-margin business rather than a true AI innovator. This critique has contributed to Palantir's stock slide, with reports indicating an 8% drop on Thursday following Burry's comments.

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Trump posts support for Palantir as stock plunges after 'Big Short' investor blasted the company - 2

Anthropic's Ascent Fuels Investor Skepticism

Anthropic's rapid growth and its direct challenge to Palantir's enterprise market share are central to the current investor unease. Data indicates a dramatic increase in enterprise spending on Anthropic's services, with its annual run rate now reportedly at $30 billion, a substantial jump from $9 billion at the start of the year. Palantir's own valuation, described as 109 times forward earnings, leaves little room for error in the competitive enterprise AI landscape. Anthropic’s recent launch of its Claude Managed Agents platform, designed for building and deploying AI agents, further positions it as a direct competitor.

Trump posts support for Palantir as stock plunges after 'Big Short' investor blasted the company - 3

Despite the concerns, some analysts and commentators highlight Palantir's enduring strengths. These include its strong revenue growth, established government contracts, and strategic partnerships with entities like NATO, the Pentagon, GE Aerospace, and Nvidia. These factors are cited as underpinning recurring revenue and providing a defense sector tailwind. Commercial traction, with partners like Stellantis renewing or expanding deployments, is also noted as a continued driver of long-term growth assumptions.

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Trump posts support for Palantir as stock plunges after 'Big Short' investor blasted the company - 4

Market Context and Shifting Narratives

Palantir's stock has experienced significant volatility, with reports indicating a weekly loss exceeding 16% at its worst moments, marking its largest such decline since February 2021. The stock has reportedly fallen through its 50-day moving average, signaling a weakening momentum. This sell-off occurred even as the broader market saw some recovery.

The narrative of AI potentially undermining established software companies has been a persistent theme, with other tech firms like Palo Alto Networks, ServiceNow, CrowdStrike, Zscaler, Figma, and Atlassian also facing negative AI implications. The prospect of Anthropic potentially going public also looms, potentially diverting investment capital.

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Recent disclosures also show insider activity. Representative Gilbert Ray Cisneros, Jr. reportedly sold off shares of Palantir Technologies. Earlier in the year, other significant insider transactions were noted, including sales by Stephen Andrew Cohen and Alex Karp. Institutional investors like Brookwood Investment Group LLC have also reportedly decreased their stock holdings.

Frequently Asked Questions

Q: Why did Palantir's stock drop by 8% on Thursday?
Palantir's stock dropped 8% on Thursday after investor Michael Burry claimed that AI startup Anthropic is performing much better in the enterprise AI market. Burry suggested Palantir is a low-margin business, not a true AI leader, which caused investor worry.
Q: What did Donald Trump say about Palantir Technologies?
Donald Trump publicly supported Palantir Technologies, stating on Truth Social that the company has 'great war-fighting capabilities and equipment.' This endorsement came as the company's stock faced significant market challenges.
Q: How is Anthropic competing with Palantir in the AI market?
Anthropic is seen as a strong competitor, with its enterprise AI services reportedly growing rapidly. Its annual run rate is now said to be $30 billion, a large increase from $9 billion earlier this year. Anthropic also recently launched a platform for building AI agents, directly challenging Palantir.
Q: What are Palantir's strengths despite the recent stock drop?
Despite concerns, Palantir has strong points like good revenue growth, existing government deals with NATO and the Pentagon, and partnerships with companies like Nvidia. Commercial clients like Stellantis are also continuing to use their services, which helps support long-term growth.
Q: How much has Palantir's stock fallen recently?
Palantir's stock has been very unstable. At one point, it had a weekly loss of over 16%, which was its biggest drop since February 2021. The stock price has also fallen below its 50-day moving average, showing less strength.