What Happened?
A number of stocks fell in the morning session after concerns regarding lofty artificial intelligence valuations triggered a pullback in the technology sector.
Nvidia slid 3% ahead of its earnings report, dragging down fellow "Magnificent Seven" peers despite a major partnership announcement with Anthropic, as investors increasingly question the durability of the AI rally. Market sentiment was further dampened by Bitcoin dropping below $90,000, signaling reduced risk appetite, and growing anxiety that the Federal Reserve may pause rate cuts in December, with the implied probability of a cut falling to roughly 50%.
Adding to the weakness, Home Depot shares declined following an earnings miss and a cut to its full-year outlook. This combination of continued de-risking and valuation skepticism put the S&P 500 on pace for its fourth consecutive daily decline.
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:
- Electronic Components company Vicor (NASDAQ:VICR) fell 3.2%. Is now the time to buy Vicor? Access our full analysis report here, it’s free for active Edge members.
- Energy Products and Services company FTAI Infrastructure (NASDAQ:FIP) fell 1.8%. Is now the time to buy FTAI Infrastructure? Access our full analysis report here, it’s free for active Edge members.
- Aerospace company Rocket Lab (NASDAQ:RKLB) fell 2.6%. Is now the time to buy Rocket Lab? Access our full analysis report here, it’s free for active Edge members.
- Automobile Manufacturing company Lucid (NASDAQ:LCID) fell 4%. Is now the time to buy Lucid? Access our full analysis report here, it’s free for active Edge members.
- Aerospace company Redwire (NYSE:RDW) fell 3.6%. Is now the time to buy Redwire? Access our full analysis report here, it’s free for active Edge members.
Zooming In On Lucid (LCID)
Lucid’s shares are extremely volatile and have had 53 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 7.4% on the news that Stifel lowered its price target on the stock, citing concerns about the company's need for more capital.
The investment firm cut its price target to $17.00 from $21.00, though it maintained a Hold rating on the electric vehicle maker. This decision followed Lucid's third-quarter financial results, where revenue fell short of expectations. The company also narrowed its 2025 production guidance to 18,000 vehicles. Stifel noted confidence in Lucid's technology but expressed worry about its need to raise more money in the coming years. Adding to the negative sentiment, Lucid had recently announced an offering of $875 million in convertible senior notes, which created fears among investors about the potential for their holdings to be diluted.
Lucid is down 58.8% since the beginning of the year, and at $12.47 per share, it is trading 64.2% below its 52-week high of $34.80 from February 2025. Investors who bought $1,000 worth of Lucid’s shares 5 years ago would now be looking at an investment worth $128.07.
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