What Happened?

A number of stocks traded in opposite directions in the afternoon session after geopolitical tensions between the United States and the European Union escalated, sparking fears of a renewed trade war. 

The broader markets adopted a "risk-off" mode, with investors seeking safe-haven assets amidst the uncertainty. The market's primary fear gauge, the VIX, jumped to a fresh eight-week high, signaling rising investor anxiety. 

The dispute, centered on Greenland, raised the possibility of a revived trade conflict, which could disrupt global supply chains and economic activity. 

Mega-cap technology stocks, many of which have significant international sales and operations, were particularly affected by the souring risk sentiment as a potential trade war threatened their global business models.

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:

• Developer Operations company GitLab (NASDAQ: GTLB) fell 0.9%. Is now the time to buy GitLab? Access our full analysis report here, it’s free.
• Advertising Software company DoubleVerify (NYSE: DV) jumped 0.7%. Is now the time to buy DoubleVerify? Access our full analysis report here, it’s free.
• Data Analytics company Samsara (NYSE: IOT) fell 7%. Is now the time to buy Samsara? Access our full analysis report here, it’s free.
• Automation Software company SoundHound AI (NASDAQ: SOUN) fell 2.4%. Is now the time to buy SoundHound AI? Access our full analysis report here, it’s free.
• Video Conferencing company 8x8 (NASDAQ: EGHT) fell 2.7%. Is now the time to buy 8x8? Access our full analysis report here, it’s free.

Zooming In On Samsara (IOT)

Samsara’s shares are very volatile and have had 23 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 12 days ago when the stock dropped 6.3% on the news that a broader market rotation out of the technology sector led to profit-taking following a recent rally. 

The move was part of a wider trend that saw high-growth technology stocks fall, with the Nasdaq experiencing the sharpest decline among the major indices. Multiple reports indicated that traders were locking in profits, particularly from the artificial-intelligence trade, which had previously seen a strong run-up. This market action represented a shift in investor focus, as money moved out of tech. 

Defense stocks emerged as the primary beneficiary of this capital shift, surging after President Trump proposed a massive $1.5 trillion defense budget for 2027. Major contractors rallied on the news, with Northrop Grumman jumping over 10% and Lockheed Martin gaining nearly 8%, providing a counterbalance to the tech slump that kept the S&P 500 flat. The rotation into heavy industry was further supported by a stabilization in energy markets, as crude prices rebounded.

Samsara is down 4.8% since the beginning of the year, and at $32.28 per share, it is trading 47% below its 52-week high of $60.96 from February 2025. Investors who bought $1,000 worth of Samsara’s shares at the IPO in December 2021 would now be looking at an investment worth $1,307.

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