For several years, Palantir Technologies (PLTR 6.79%) seemed invincible. The stock rallied as much as 1,250% over the past two years before gravity took hold. Proposed spending cuts by the U.S. government and a high multiple weighed on Palantir stock, which is down roughly 30% (as of this writing) since its peak in mid-February.

After a slump of those proportions, is it finally time to buy the stock?

Has the tide turned?

Palantir was riding high before some recent developments conspired to take the wind from its sails.

In a regulatory filing, CEO Alex Karp revealed plans to sell 9,975,000 shares of stock using a so-called 10b5-1 trading plan, disposing of the shares between now and September. A great deal of Karp's compensation comes from stock options, so this isn't unusual, though the magnitude of the sale caught some investors off guard.

Perhaps more concerning is the recent focus by the Trump administration to slash federal spending. According to initial reports, Defense Secretary Pete Hegseth instructed Defense Department officials to slash existing budgets by about 8% annually over the coming five years. As a key supplier of data mining and artificial intelligence (AI) systems to the U.S. government, investors feared Palantir's growth could take a hit.

In recent days, however, Republican lawmakers have proposed an increase in military spending, bringing the total to nearly $1 trillion annually. This suggests funds from the proposed cuts will be reallocated, and statements by Hegseth support that view. He asserts these aren't cuts, but a "refocusing and reinvesting existing funds" into other initiatives.

This suggests that news may not be as bad as originally feared. Wedbush analyst Dan Ives believes that "Palantir's unique software approach will enable the company to gain MORE IT budget dollars at the Pentagon ... not less, despite these initial knee-jerk reactions from the Street."

How's the valuation?

While it still looks pricey in terms of traditional valuation metrics, the stock's forward price/earnings-to-growth (PEG) ratio recently dipped below 1, the benchmark for an undervalued stock. Given its pole position and recent robust results, Palantir stock is starting to look interesting.