What Happened?

A number of stocks fell in the morning session after markets became increasingly wary of high valuations following a significant AI-driven rally. The tech-heavy Nasdaq fell approximately 1.4% as a wave of caution swept through the market. A key example of this trend is Palantir Technologies, which saw its shares drop around 7% despite reporting record quarterly results that surpassed analyst estimates and raising its full-year revenue outlook. This seemingly contradictory movement highlighted a broader sentiment shift. Investors appeared to be engaging in profit-taking, concerned that the recent surge in AI-related stocks had led to stretched valuations. This broader market caution affected high-growth technology companies that had previously surged on AI optimism but faced increased scrutiny, signaling a potential cooling-off period for the sector. Adding serious weight to this caution, leadership at both Goldman Sachs and Morgan Stanley highlighted the possibility of a correction in the equity markets over the next couple of years. Despite the euphoria driven by AI optimism and the promise of future rate cuts, these banks viewed this cooling-off period not as a disaster, but as a necessary and healthy feature of a long-term bull market.

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 Vishay Precision (NYSE: VPG) fell 4%. Is now the time to buy Vishay Precision? Access our full analysis report here, it’s free for active Edge members.
• Custom Parts Manufacturing company Stratasys (NASDAQ: SSYS) fell 4.3%. Is now the time to buy Stratasys? Access our full analysis report here, it’s free for active Edge members.
• Engineered Components and Systems company Gates Industrial Corporation (NYSE: GTES) fell 3.2%. Is now the time to buy Gates Industrial Corporation? Access our full analysis report here, it’s free for active Edge members.
• Automobile Manufacturing company Rivian (NASDAQ: RIVN) fell 3.6%. Is now the time to buy Rivian? Access our full analysis report here, it’s free for active Edge members.
• Building Materials company Tecnoglass (NYSE: TGLS) fell 3.1%. Is now the time to buy Tecnoglass? Access our full analysis report here, it’s free for active Edge members.

Zooming In On Stratasys (SSYS)

Stratasys’s shares are very volatile and have had 28 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 15 days ago when the stock gained 10.9% as positive news on corporate earnings, easing political and trade tensions, and optimism about future interest rate cuts all converged to lift investor sentiment. The overall market, including the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite, climbed significantly. A major catalyst was Apple shares rising 4% after a firm upgraded its rating, citing improving iPhone demand and predicting a long growth cycle. More broadly, the third-quarter earnings season got off to a strong start, with 76% of the 58 S&P 500 companies beating expectations, lifting the market's mood. Additionally, there were hope for an end to the ongoing U.S. government shutdown, which is seen as good for the economy. Investors also moved past recent fears over credit risks that had caused a sell-off the previous week, with shares of regional banks rebounding. Finally, signs that trade tensions with China were de-escalating, including expectations that new tariffs might be avoided, added to the overall positive momentum, leading traders to focus on more favorable factors like earnings and potential Federal Reserve rate cuts.

Stratasys is up 13.7% since the beginning of the year, but at $9.90 per share, it is still trading 23% below its 52-week high of $12.85 from February 2025. Investors who bought $1,000 worth of Stratasys’s shares 5 years ago would now be looking at an investment worth $765.87.

P.S. In tech investing, "Gorillas" are the rare companies that dominate their markets—like Microsoft and Apple did decades ago. Today, the next Gorilla is emerging in AI-powered enterprise software. Access the ticker here in our special report.