Palantir Technologies stock fell in premarket trading Wednesday as Wall Street braced fora barrage of tariffson U.S. trading partners from President Donald Trump on what he has dubbed “Liberation Day.”

Stock futures tracking the three major U.S. indexes were in the red, but Palantir was dragging even further behind, declining 3.3% to $81.90 after closing up 0.3% on Tuesday and snapping a five-day losing streak. The once high-flying stock, which remains up 273% over the past 12 months, has fallen 34% from its all-time closing high of $124.62 in mid-February.

Uncertainty about government funding cuts has caused shares to waver. The software company, best known for its suite of artificial-intelligence tools, is a major federal contractor. In 2024, $1.2 billion out of a total $1.9 billion in revenue came from the government.

Morgan Stanley analysts noted last week that Palantir was at higher risk for downward estimate revisions than other stocks in their coverage, in part due to “high federal exposure.”

Management has pushed back on these concerns, with Chief Technology Officer Shyam Sankar remarking on the company’s last earnings call that the real issue was a “lack of accountability in government.”

“I think [the Department of Government Efficiency] is going to bring meritocracy and transparency to government, and that’s exactly what our commercial business is,” Sankar said. “The commercial market is meritocratic and transparent, and you see the results that we have in that sort of environment. And that’s the basis of our optimism around this.”

Palantir works closely with the U.S. Department of Defense, which isn’t immune to funding cuts and restructuring. The Pentagon has proposed trimming roughly $50 billion from the budget each year while prioritizing spending on drones and other military technology.

At the end of last month, Defense Secretary Pete Hegseth signed a memo directing the termination of more than $580 million in grants, contracts, and programs. Among the casualties was a software development program for the Defense Civilian Human Resources Management System.

As Barron’s previously reported, other factors contributing to Palantir’s decline could be more fundamental, such as the stock’s valuation and high beta. Those metrics show it has gotten considerably more expensive and volatile than the broader market, posing possible red flags to investors.