What Happened?

A number of stocks fell in the afternoon session after the major indices continued to pull back, with technology stocks accounting for most of the market's largest decliners. A key reason for this trend is that much of the recent market gains were 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. 

Despite the downturn, some analysts viewed this as an opportunity to own some of the "Core AI winners." Dan Ives of Wedbush Securities commented, "In our view, the tech bull cycle will be well intact for at least another 2-3 years, given the trillions being spent on AI infrastructure/software/chips/power/apps looking ahead. This remains our tech playbook and investor roadmap." Additionally, mixed earnings reports from retailers, such as Target, have added to the market's weakness. Investors are closely monitoring these reports for insights into the broader economic health and the potential impact of new tariffs on inflation.

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:

• Health Insurance Providers company Oscar Health (NYSE: OSCR) fell 8.4%. Is now the time to buy Oscar Health? Access our full analysis report here, it’s free.
• Traditional Fast Food company Krispy Kreme (NASDAQ: DNUT) fell 3.5%. Is now the time to buy Krispy Kreme? Access our full analysis report here, it’s free.
• Perishable Food company Beyond Meat (NASDAQ: BYND) fell 3.5%. Is now the time to buy Beyond Meat? Access our full analysis report here, it’s free.
• Medical Devices & Supplies - Diversified company Neogen (NASDAQ: NEOG) fell 3.7%. Is now the time to buy Neogen? Access our full analysis report here, it’s free.

Zooming In On Oscar Health (OSCR)

Oscar Health’s shares are extremely volatile and have had 63 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 5 days ago when the stock gained 7.1% on continued positive momentum as it announced a partnership to launch a new health insurance plan with grocery chain Hy-Vee. The healthcare technology company is partnering with grocery and pharmacy chain Hy-Vee to launch a new employer health insurance plan called “Hy-Vee Health with Oscar.” The plan, which will debut in the Des Moines, Iowa area, utilizes a model known as an Individual Coverage Health Reimbursement Arrangement (ICHRA). This allows employers to provide workers with a set amount of money to purchase their own health insurance, potentially saving businesses 20% to 30% and employees up to $1,000 annually. The partnership is expected to expand Oscar's customer base and strengthen its competitive position. 

Adding to the positive momentum, the broader health insurance sector received a boost after news that prominent investors like Warren Buffett's Berkshire Hathaway had taken a new stake in industry giant UnitedHealth, lifting sentiment for peers like Oscar.

Oscar Health is up 14.1% since the beginning of the year, but at $15.47 per share, it is still trading 33.5% below its 52-week high of $23.27 from September 2024. Investors who bought $1,000 worth of Oscar Health’s shares at the IPO in March 2021 would now be looking at an investment worth $444.40.

Today’s young investors won’t have read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.