Palantir (PLTR) stock tumbled as much as 10% on Monday to extend a four-day drop amid investor concern surrounding potential Pentagon budget cuts and their impact on the data software company's revenue. 

Shares have fallen more than 25% since last Wednesday, when the stock tumbled on a Washington Post report that said that Defense Secretary Pete Hegseth sent a memo to Pentagon and military leaders looking to slash 8% from the defense budget every year over the next five years. 

Some 17 categories would be exempt from the cuts, including US border operations and munitions acquisitions, according to the Post.

The decline in Palantir stock is a major reversal for the AI software high flyer, which up until last week's decline was touching all-time highs on the heels of a massive rally. 

Palantir makes Ai software used for surveillance by the US government. As Yahoo Finance's Laura Bratton reported, more than half of the company's revenue in its most recent quarterly earnings report came from global government contracts, driven by increasing spending from the US Department of Defense.

Last Thursday Wedbush analysts Dan Ives talked up the the company's ability to navigate the cuts, writing "Palantir's unique software approach will enable the company to gain MORE...budget dollars at the Pentagon....not less despite these initial knee jerk reactions from the Street."

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Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.

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