What Happened?
A number of stocks fell in the morning session after investors reassessed stretched valuations following a period of strong gains.
The tech-heavy Nasdaq fell as much as 1.6%, with the S&P 500 also declining. The pullback was exemplified by AI firm Palantir Technologies, which dropped over 7% despite reporting better-than-expected sales. This negative reaction to positive news suggests investors are concerned about extreme valuations and are engaging in "long liquidation"—selling positions to lock in profits after a significant rally. 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:
- Analog Semiconductors company Power Integrations (NASDAQ: POWI) fell 4%. Is now the time to buy Power Integrations? Access our full analysis report here, it’s free for active Edge members.
- Analog Semiconductors company Monolithic Power Systems (NASDAQ: MPWR) fell 3.2%. Is now the time to buy Monolithic Power Systems? Access our full analysis report here, it’s free for active Edge members.
- Analog Semiconductors company MACOM (NASDAQ: MTSI) fell 2.9%. Is now the time to buy MACOM? Access our full analysis report here, it’s free for active Edge members.
- Analog Semiconductors company Skyworks Solutions (NASDAQ: SWKS) fell 4.9%. Is now the time to buy Skyworks Solutions? Access our full analysis report here, it’s free for active Edge members.
- Analog Semiconductors company Vishay Intertechnology (NYSE: VSH) fell 3.2%. Is now the time to buy Vishay Intertechnology? Access our full analysis report here, it’s free for active Edge members.
Zooming In On Skyworks Solutions (SWKS)
Skyworks Solutions’s shares are somewhat volatile and have had 14 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 13 days ago when the stock dropped 3.2% on the news that a weak forecast from industry peer Texas Instruments sparked concerns about a slowdown in the semiconductor sector. Texas Instruments, one of the largest makers of analog chips, provided a lackluster forecast for the fourth quarter, with revenue and profit projections falling short of analyst estimates. This news raised concerns that the recovery in the semiconductor industry was sputtering. The negative sentiment was felt across the sector, with the Philadelphia Semiconductor Index having declined in the previous session.
Skyworks Solutions is down 18.6% since the beginning of the year, and at $71.98 per share, it is trading 23.4% below its 52-week high of $93.96 from January 2025. Investors who bought $1,000 worth of Skyworks Solutions’s shares 5 years ago would now be looking at an investment worth $515.87.
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