What Happened?
A number of stocks fell in the afternoon session after investors grew concerned over sky-high valuations in the artificial intelligence sector amid fading hopes for an imminent interest rate cut.
Companies at the center of this year's AI boom were among the biggest fallers, with chipmaker Nvidia, Microsoft, and Google's parent company Alphabet all seeing declines. The sell-off reflects broader market anxiety, as the Dow Jones Industrial Average also dropped to a one-month low. This pessimism was compounded by worries that the US Federal Reserve may not lower interest rates as soon as previously hoped.
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:
- Personal Loan company Affirm (NASDAQ: AFRM) fell 2.8%. Is now the time to buy Affirm? Access our full analysis report here, it’s free for active Edge members.
- Diversified Financial Services company Paymentus (NYSE: PAY) fell 6.7%. Is now the time to buy Paymentus? Access our full analysis report here, it’s free for active Edge members.
- Payment Processing company Shift4 (NYSE: FOUR) fell 2.9%. Is now the time to buy Shift4? Access our full analysis report here, it’s free for active Edge members.
Zooming In On Paymentus (PAY)
Paymentus’s shares are very volatile and have had 27 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 14 days ago when the stock gained 22.6% on the news that the company reported third-quarter 2025 financial results that surpassed Wall Street expectations. The company posted revenue of $310.7 million, a 34.2% increase year-on-year, which handily beat analyst forecasts. Adjusted earnings per share also came in ahead of expectations at $0.17. Adding to the positive results, Paymentus provided a revenue forecast for the next quarter of $309.5 million, which was nearly 6% higher than Wall Street had anticipated. The strong beat on key metrics and better-than-expected guidance drove the stock higher.
Paymentus is up 5.1% since the beginning of the year, but at $34.31 per share, it is still trading 13.9% below its 52-week high of $39.84 from May 2025. Investors who bought $1,000 worth of Paymentus’s shares at the IPO in May 2021 would now be looking at an investment worth $1,199.
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