What Happened?
A number of stocks fell in the afternoon session after the major indices continued to pull back, with technology stocks accounting for most of the market's largest decliners. A key reason for this trend is that much of the recent market gains were concentrated in the "AI trade," which includes these large technology and semiconductor companies. So this could also mean that some investors are locking in some gains ahead of more definitive feedback from the Fed.
Despite the downturn, some analysts viewed this as an opportunity to own some of the "Core AI winners." Dan Ives of Wedbush Securities commented, "In our view, the tech bull cycle will be well intact for at least another 2-3 years, given the trillions being spent on AI infrastructure/software/chips/power/apps looking ahead. This remains our tech playbook and investor roadmap." Additionally, mixed earnings reports from retailers, such as Target, have added to the market's weakness. Investors are closely monitoring these reports for insights into the broader economic health and the potential impact of new tariffs on inflation.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Renewable Energy company FuelCell Energy (NASDAQ:FCEL) fell 4.1%. Is now the time to buy FuelCell Energy? Access our full analysis report here, it’s free.
- Hardware & Infrastructure company Dell (NYSE:DELL) fell 5.7%. Is now the time to buy Dell? Access our full analysis report here, it’s free.
- Medical Devices & Supplies - Diversified company CooperCompanies (NASDAQ:COO) fell 4.6%. Is now the time to buy CooperCompanies? Access our full analysis report here, it’s free.
- Vulnerability Management company Rapid7 (NASDAQ:RPD) fell 4.1%. Is now the time to buy Rapid7? Access our full analysis report here, it’s free.
- Marketing Software company Sprout Social (NASDAQ:SPT) fell 3.7%. Is now the time to buy Sprout Social? Access our full analysis report here, it’s free.
Zooming In On Dell (DELL)
Dell’s shares are quite volatile and have had 18 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 13 days ago when the stock gained 4% on the news that several Wall Street analysts expressed confidence in the company by raising their price targets. Analysts at TD Cowen increased their price target on Dell to $125.00, while Bank of America lifted its target to $165.00 with a "buy" rating. This positive sentiment from Wall Street analysts appeared to bolster investor confidence. The company also declared a quarterly dividend of $0.525 per share. These developments occurred despite a recent mixed earnings report where earnings per share missed estimates, but revenue saw a slight year-over-year increase. Overall, the stock maintained a "Moderate Buy" consensus rating from sixteen analysts.
Dell is up 9.6% since the beginning of the year, but at $127.70 per share, it is still trading 11.4% below its 52-week high of $144.21 from November 2024. Investors who bought $1,000 worth of Dell’s shares 5 years ago would now be looking at an investment worth $2,141.
Unless you’ve been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) semiconductor stock benefiting from the rise of AI. Click here to access our free report on our favorite semiconductor growth story.