What Happened?
A number of stocks fell in the after-market session after investors took some profits off the table as markets awaited signals on future monetary policy from the Federal Reserve's Jackson Hole symposium later in the week.
The downturn in the market was largely attributed to a significant sell-off in megacap tech and chipmaker shares. Nvidia, Advanced Micro Devices (AMD), and Broadcom all saw notable drops, dragging down the VanEck Semiconductor ETF. Other major tech-related companies like Tesla, Meta Platforms, and Netflix were also under pressure. A key reason for this trend is that much of the recent market gains have been 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.
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:
- Heavy Transportation Equipment company REV Group (NYSE: REVG) fell 4.5%. Is now the time to buy REV Group? Access our full analysis report here, it’s free.
- Renewable Energy company TPI Composites (NASDAQ: TPIC) fell 8.7%. Is now the time to buy TPI Composites? Access our full analysis report here, it’s free.
- Defense Contractors company AeroVironment (NASDAQ: AVAV) fell 5.5%. Is now the time to buy AeroVironment? Access our full analysis report here, it’s free.
- Electronic Components company nLIGHT (NASDAQ: LASR) fell 4.2%. Is now the time to buy nLIGHT? Access our full analysis report here, it’s free.
- Law Enforcement Suppliers company Axon (NASDAQ: AXON) fell 4.3%. Is now the time to buy Axon? Access our full analysis report here, it’s free.
Zooming In On TPI Composites (TPIC)
TPI Composites’s shares are extremely volatile and have had 112 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 1 day ago when the stock dropped 46.2% on the news that the stock extended its negative momentum as the company filed for Chapter 11 bankruptcy. The wind blade manufacturer announced it has voluntarily filed for Chapter 11 bankruptcy to pursue a financial restructuring. This move follows a period of financial difficulty, highlighted by a recent second-quarter earnings report where both revenue and earnings per share missed analyst estimates significantly.
TPI Composites is down 93.2% since the beginning of the year, and at $0.12 per share, it is trading 97.5% below its 52-week high of $4.92 from October 2024. Investors who bought $1,000 worth of TPI Composites’s shares 5 years ago would now be looking at an investment worth $3.81.
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.
