A number of stocks fell in the afternoon 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:
SoundHound AI’s shares are extremely volatile and have had 89 moves greater than 5% over the last year. But moves this big are rare even for SoundHound AI and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 1 day ago when the stock dropped 4.8% on the news that investor sentiment soured on the company’s valuation and lack of a clear path to profitability, compounded by a recent analyst downgrade. The decline appears driven by mounting concerns over the company’s valuation relative to its financial performance. Despite strong customer acquisition and increased revenue guidance for 2025, SoundHound AI remains unprofitable with widening losses. One analysis noted the stock trades at a premium, with its AI-driven optimism potentially fully priced in. This fundamental disconnect was highlighted in its last quarterly earnings report, where the company missed consensus estimates for earnings per share.
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