03:01 PM EST, 02/20/2025 (MT Newswires) -- Palantir Technologies ( PLTR ) is poised to benefit from the Trump administration's new defense spending strategy, which will ultimately be a positive growth catalyst for the software maker, Wedbush Securities said Thursday.

On Wednesday, the Trump administration outlined a plan that would cut defense spending by 8%. The amount will be spent on programs "aligned with President (Donald) Trump's priorities," Robert Salesses, who is performing the duties of deputy secretary of defense, said in a statement.

The defense budget cut news triggered concerns about potential impact on deals between the US government and contractors like Palantir ( PLTR ). The company's shares were down 7.8% in Thursday late-afternoon trade after plunging 10% on Wednesday.

"The bears that have hated Palantir ( PLTR ) from $12 to $120 in the last 18 months now have found their latest 'silver bullet' negative thesis around (the company) being exposed to these budget cuts," Wedbush analysts, including Daniel Ives, said in a note to clients. The company's "unique" software approach will allow it to gain more information technology budget dollars at the Pentagon, rather than less, Ives wrote.

"Palantir ( PLTR ) is so well positioned for this new disciplined spending environment at the Pentagon and this will ultimately be a positive growth catalyst as the various programs are scrutinized and as (the company's management) get a bigger seat at the table in the Beltway," the analysts said.

The brokerage reiterated an outperform rating and a $120 price target on the Palantir ( PLTR ) stock.

The recently announced Stargate project under the Trump administration is also expected to benefit Palantir ( PLTR ), according to Wedbush.

Microsoft ( MSFT ) -backed OpenAI and Japan's SoftBank said last month that Stargate Project aims to invest $500 billion over the next four years building new AI infrastructure for OpenAI in the US. Arm (ARM), Microsoft ( MSFT ), Nvidia ( NVDA ) , Oracle (ORCL), and OpenAI are the key initial technology partners for the project.

Palantir ( PLTR ) has Federal Risk and Authorization Management Program authorization for its entire cloud services offerings that allows it to sell its products across the entire US government, Ives said.

"Palantir ( PLTR ) remains one of our top names to own in 2025 and we believe (the latest) sell-off represents another opportunity, with (the company) generating traction across both federal and commercial for its entire portfolio," the analysts said. "In essence, Palantir ( PLTR ) is in the sweet spot to benefit from a tidal wave of federal spending on AI."

Price: 104.12, Change: -7.94, Percent Change: -7.09