In 2025, tech stocks have faced significant challenges, with concerns about recession and trade wars dampening investor confidence in riskier assets. However, Palantir has bucked this trend, seeing its stock rise by 45%, making it the best performer among companies valued at $5 billion or more. Other tech companies such as VeriSign, Okta, Robinhood, and Uber have seen gains of 30% or less.
A major factor behind Palantir’s success is its close ties to the U.S. government, particularly under President Donald Trump’s administration, which has pushed for more efficient government operations. As a result, Palantir’s software, which integrates artificial intelligence, has become increasingly essential for defense and government contracts. The company saw a 45% year-over-year jump in government revenues, reaching $343 million in the fourth quarter of the year.
Amid market volatility in 2025, triggered by concerns over tariffs and global supply chain disruptions, the broader market index has dropped about 7%, while the Nasdaq Composite, heavily weighted by tech stocks, has fallen by 11%. The major tech companies, including Apple, Microsoft, Nvidia, Amazon, Alphabet, Meta, and Tesla, have all seen declines between 7% and 31%.
Palantir’s business model has aligned well with the Trump administration’s goals, which has contributed to the company’s growth during times of economic uncertainty. Some administration officials have expressed interest in shifting government spending away from traditional consulting contracts and toward commercial software providers like Palantir. This has positioned Palantir alongside large defense contractors like Lockheed Martin and Northrop Grumman, both of which have performed well in the current market downturn.
While Palantir has thrived, its stock remains volatile. It experienced a 14% drop when Trump initially announced tariffs and saw a 22% surge in February following strong earnings. The company’s inclusion in both the S&P 500 and Nasdaq, along with growing interest from retail traders, has added to its price fluctuations. Trading at one of the highest price-to-earnings ratios in the software industry, Palantir faces high expectations, leaving little room for error in its future performance.
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