This week, Palantir Technologies (PLTR) delivered what can only be described as its “DeepSeek moment,” mirroring the dramatic market response we saw with NVIDIA (NVDA) following the launch of the Chinese AI startup’s latest advancements. But unlike NVDA, which saw a surge in investor confidence, PLTR investors got a gut check as shares plunged from $125.00 on Wednesday to as low as $95.00 on Thursday before rebounding above $107.00 by the end of the session.

So, what happened? Let’s break it down.

1. The Pentagon’s Budget Cuts: Fear vs. Reality

The most immediate catalyst for PLTR’s sell-off was news from the Department of Defense (DOD). Defense Secretary Pete Hegseth issued a memo outlining plans for an 8% reduction in the defense budget annually over the next five years. The knee-jerk reaction? Panic selling in PLTR, as investors feared the company’s lucrative government contracts could be at risk.

But here’s the reality: not all defense spending is getting slashed. In fact, several high-priority areas exempt from these cuts fall right into Palantir’s sweet spot:

• Cybersecurity

• Uncrewed Systems

• The Air Force’s Emerging Uncrewed Fighter Jet Program

These areas are Palantir’s bread and butter. The company’s deep government ties and expertise in AI-driven defense solutions make it a key player in modern military tech, which remains a top priority even under budget constraints.

2. The Karp Sell-Off: CEO Moves Shake the Market

Adding fuel to the fire was news that CEO Alex Karp plans to sell nearly 10 million shares by September 2025, amounting to roughly $1.2 billion at current prices. Insider sales always raise eyebrows, as they can be interpreted as a lack of confidence in the company’s future. But Karp’s move appears to be more about personal liquidity than a red flag for Palantir’s fundamentals.

3. The Rebound and the FOMO Effect

After tanking to $95.00, PLTR clawed its way back to over $107.00 by Thursday’s close. The strong recovery highlights what we’ve seen time and again in AI and defense stocks—investors will rush back in when the dust settles.

For those who bought the dip, congratulations—you played this perfectly. For those feeling FOMO (fear of missing out), pre-market is your best friend. Palantir is still trading well below its highs, and with AI-driven defense solutions being a focal point of modern warfare, the long-term narrative remains intact.

4. What About NVIDIA? The DeepSeek Parallels

This entire episode for PLTR mirrors what we saw happen to NVIDIA (NVDA) after DeepSeek launched its AI model. Despite fears of rising competition, NVDA held strong, with price targets remaining bullish as AI demand continues to surge.

We’re seeing a similar story with Palantir—yes, there’s volatility, but the bigger picture remains bullish. Government contracts aren’t going anywhere, and neither is Palantir’s dominance in AI-powered defense applications.

Final Thoughts: Stay Calm and Buy Smart

PLTR’s wild swings this week prove one thing: AI defense stocks aren’t for the faint of heart. But for those with a long-term vision, these dips are buying opportunities.

If you’re still on the sidelines, pre-market action could be your chance to grab shares before they march back toward $120 and beyond.

In the AI arms race, Palantir is still a key player—and the market knows it.