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Shares of Palantir Technologies (PLTR) experienced a steep decline on Wednesday, plummeting nearly 8% to close at $121.57. This broad market selloff wasn't triggered by any direct news related to Palantir itself. Instead, it followed an unexpected public confrontation between Tesla's CEO Elon Musk and President Donald Trump, an event that created turbulence for stocks often linked to Trump-related trades.

In the wake of this dispute, Trump Media & Technology Group (DJT) saw its shares slide more than 8%, while Geo Group (GEO) lost slightly over 2%. Bitcoin (BTC), a favorite among those who prefer to operate outside the conventional financial ecosystem, also dropped by around 2.5%. The controversy began with a failed behind-the-scenes negotiation and moved into the public eye when Trump accused Musk, during a press briefing, of trying to undermine a key tax-cut bill in Congress that would reduce electric vehicle perks beneficial to Tesla. Musk retaliated online through his platform X, criticizing Trump’s leadership and accusing him of favoritism. Subsequently, Tesla’s stock, which was already dipping, took an additional hit, ending the day down by 14%.

Despite the recent drop, Palantir's fundamentals remain robust. Over the past year, the stock has been one of the top performers, boasting a gain of more than 400%. The company continues to show strong business momentum, driven by new contracts, growing commercial demand, and record revenues.

In the first quarter, Palantir secured a significant defense contract with NATO for its Maven Smart System, an AI platform aimed at enhancing battlefield decision-making capabilities. The company has also extended its partnership with Google Cloud to further develop its FedStart platform, which aids U.S. governmental organizations. This partnership now allows government entities to leverage Palantir’s AI tools via Google’s cloud infrastructure, with Anthropic’s Claude for Enterprise being the first available model.

These strategic initiatives highlight Palantir's core strengths in defense and government services. Even with proposed budget cuts from the Pentagon, Palantir's outlook in AI and national security sectors continues to appear promising.

Turning to Wall Street, analysts maintain a Hold consensus rating on Palantir Technologies stock. This assessment is based on reviews from the past three months, which include three Buys, eleven Holds, and four Sells. The average price target for PLTR stands at $100.13, indicating a potential downside of 16.50%.