What Happened?
Shares of machine vision technology company Cognex (NASDAQ: CGNX) fell 13.5% in the morning session after the company reported third-quarter results and lowered its full-year earnings forecast, sparking investor concern.
Although third-quarter revenue grew 18% from the previous year and adjusted earnings per share of $0.33 beat analyst estimates, investors focused on the company's outlook. Management significantly decreased its full-year adjusted earnings per share guidance by nearly 19%. Additionally, the company's revenue guidance for the next quarter was only in line with Wall Street's expectations, offering little to offset the profit warning. The weaker forecast for future earnings appeared to be the primary driver for the stock's decline, overshadowing the solid quarterly performance.
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What Is The Market Telling Us
Cognex’s shares are somewhat volatile and have had 11 moves greater than 5% over the last year. But moves this big are rare even for Cognex and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 8 days ago when the stock dropped 4.6% on the news that new trade tensions and disappointing earnings from major tech companies weighed heavily on investor sentiment.
A key driver was the news that the White House is considering new restrictions on Chinese exports that use U.S. software, a move that could significantly impact technology companies. This uncertainty over escalating trade tensions created a broad sense of worry in the market. Simultaneously, shares of the semiconductor giant Texas Instruments dropped 6% after its latest earnings and future revenue forecast both came in weaker than expected, which is a big concern for the health of the tech industry. This poor performance from Texas Instruments immediately dragged down the entire semiconductor sector, causing other major chipmakers like Advanced Micro Devices and Micron Technology to also see significant declines.
Compounding the bad news, streaming service Netflix saw its stock slump 9% after it missed its earnings targets, partly blaming a tax dispute in Brazil. The combined effect of renewed trade war fears and the direct evidence of underperformance from influential companies in the technology sector was enough to push the major market indexes lower.
Cognex is up 16.6% since the beginning of the year, but at $41.61 per share, it is still trading 13.9% below its 52-week high of $48.35 from October 2025. Investors who bought $1,000 worth of Cognex’s shares 5 years ago would now be looking at an investment worth $631.41.
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