What Happened?
A number of stocks jumped in the afternoon session after the technology sector climbed as an OpenAI share sale catapulted the firm to the world's most valuable startup, bolstering optimism for artificial intelligence.
The Nasdaq 100 and S&P 500 benchmarks both reached new records, powered by gains in tech giants and AI-related companies like Nvidia, Microsoft, Alphabet, and Broadcom. Investors are increasingly viewing AI as a significant long-term growth driver, a sentiment strong enough to overshadow concerns from a U.S. government shutdown. This continued enthusiasm highlights the market's strong belief in the transformative potential of artificial intelligence, which is propelling major indices to unprecedented heights.
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:
- Online Retail company Revolve (NYSE: RVLV) jumped 3.1%. Is now the time to buy Revolve? Access our full analysis report here, it’s free.
- Gig Economy company Lyft (NASDAQ: LYFT) jumped 3.1%. Is now the time to buy Lyft? Access our full analysis report here, it’s free.
Zooming In On Lyft (LYFT)
Lyft’s shares are very volatile and have had 26 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 2 days ago when the stock dropped 4.6% on the news that Mizuho initiated coverage on the company with a Neutral rating and a $24 price target.
A "Neutral" rating often suggested that an analyst believed the stock was fairly valued with limited potential for significant gains. This lack of a strong "buy" signal from a new analyst covering the stock appeared to weigh on investor sentiment. Adding to this view, MoffettNathanson LLC also maintained its own neutral recommendation on Lyft's shares. While MoffettNathanson did raise its price target to $20 from $16, the prevailing neutral stance from the analysts seemed to have prompted the sell-off.
Lyft is up 65.5% since the beginning of the year, and at $22.60 per share, it is trading close to its 52-week high of $22.93 from September 2025. Investors who bought $1,000 worth of Lyft’s shares 5 years ago would now be looking at an investment worth $817.77.
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.
