Palantir: Morgan Stanley Sours on Palantir Stock as 'Liberation Day' Tariffs and Recession Fears Hang Near

Palantir (PLTR) shares are in the red on Monday, March 31 as investors brace for the potential fallout from President Donald Trump's " Liberation Day " and its implications for the big data analytics firm. According to Morgan Stanley, higher tariffs scheduled to be announced on April 2 could lead to a recession - and PLTR stock is not particularly well-positioned to weather a downturn. That's why Palantir stock has lost roughly 30% since hitting new 52-week highs in February. Palantir Is an Overvalued High-Beta Stock Morgan Stanley analysts recommend caution on PLTR partly because it's a high-beta stock. Beta is a measure of a stock's volatility in comparison to the broader market. A beta of more than 1 , which Palantir currently has, suggests a stock is more volatile than the S&P 500 Index ($SPX) . Additionally, the big data analytics firm is currently trading for more than 150 times its estimated adjusted earnings for 2025, making it egregiously overvalued compared even to Nvidia (NVDA) . Together, these factors make Palantir shares unattractive ahead of a potential recession since investors tend to avoid overvalued, high-beta stocks during challenging times. Federal Spending Cuts Could Hurt PLTR Shares Morgan Stanley turned sour on Palantir as it runs a particularly high risk of downward revisions. Why? Because it's not just tariffs and trade tensions that stand in the way of PLTR shares resuming their upward trajectory in the coming months. It's the Trump administration's plans of lowering federal spending over the next few years as well. Trump has already ordered Pentagon to identify $50 billion worth of cost cuts, which could hurt Palantir stock as the company currently derives more than half of its revenue from federal contracts. Analysts Advise Caution on Palantir Technologies Investors should note that aforementioned concerns are not lost on the rest of the Wall Street either. Analysts currently have a consensus "Hold" rating on Palantir stock and the mean target of $84.22 is roughly in line with the price at which PLTR shares are trading at the time of writing.