Why Palantir Stock Is Soaring Today

Shares of Palantir (NASDAQ: PLTR) are surging on Tuesday. The stock gained 1.7% as of 1:30 p.m. ET but was up as much as 10.6% earlier in the day. The rise comes as the S&P 500 gained 1.4% and the Nasdaq Composite saw significant volatility.

President Donald Trump's pledge of a historic trillion-dollar defense budget is fueling investor enthusiasm for the government-focused AI company and defense contractor.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Trump wants $1 trillion for defense

Palantir shares jumped after President Donald Trump and Defense Secretary Pete Hegseth announced plans for a first-ever $1 trillion Department of Defense budget. During a press event on Monday, Trump stated the upcoming budget would be "in the vicinity" of $1 trillion. That's a big jump from the $892 billion Congress allocated this year.

Defense Secretary Hegseth was even more explicit, posting on X that "COMING SOON: the first TRILLION dollar @DeptofDefense budget," adding that they "intend to spend every taxpayer dollar wisely -- on lethality and readiness."

Palantir could benefit

While Palantir has significant commercial operations, a major contributor to its bottom line is the U.S. DOD. The news that the DOD budget would not see its budget cut -- as Trump had indicated earlier this year -- but would actually grow could mean more contracts for Palantir and other contractors.

Still, shares of Palantir -- even after a 35% decline over the past few months -- are trading at an insane multiple. Its price-to-earnings ratio is still above 400. That is absurdly high and anything less than perfection from the company will spell trouble for investors.

Should you invest $1,000 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 Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $578,035!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 5, 2025

Johnny Rice 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.