What Happened?

A number of stocks fell in the morning session after markets became increasingly wary of high valuations following a significant AI-driven rally. 

The tech-heavy Nasdaq fell approximately 1.4% as a wave of caution swept through the market. A key example of this trend is Palantir Technologies, which saw its shares drop around 7% despite reporting record quarterly results that surpassed analyst estimates and raising its full-year revenue outlook. This seemingly contradictory movement highlighted a broader sentiment shift. Investors appeared to be engaging in profit-taking, concerned that the recent surge in AI-related stocks had led to stretched valuations. This broader market caution affected high-growth technology companies that had previously surged on AI optimism but faced increased scrutiny, signaling a potential cooling-off period for the sector. 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:

• Renewable Energy company Array (NASDAQ: ARRY) fell 2.6%. Is now the time to buy Array? Access our full analysis report here, it’s free for active Edge members.
• Electronic Components company Vicor (NASDAQ: VICR) fell 3.3%. Is now the time to buy Vicor? Access our full analysis report here, it’s free for active Edge members.
• Electronic Components company nLIGHT (NASDAQ: LASR) fell 4.2%. Is now the time to buy nLIGHT? Access our full analysis report here, it’s free for active Edge members.
• Construction and Maintenance Services company Comfort Systems (NYSE: FIX) fell 3.2%. Is now the time to buy Comfort Systems? Access our full analysis report here, it’s free for active Edge members.
• Construction and Maintenance Services company Concrete Pumping (NASDAQ: BBCP) fell 3%. Is now the time to buy Concrete Pumping? Access our full analysis report here, it’s free for active Edge members.

Zooming In On nLIGHT (LASR)

nLIGHT’s shares are extremely volatile and have had 40 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 15 days ago when the stock gained 5.2% on the news that positive news on corporate earnings, easing political and trade tensions, and optimism about future interest rate cuts all converged to lift investor sentiment. The overall market, including the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite, climbed significantly. A major catalyst was Apple shares rising 4% after a firm upgraded its rating, citing improving iPhone demand and predicting a long growth cycle. More broadly, the third-quarter earnings season got off to a strong start, with 76% of the 58 S&P 500 companies beating expectations, lifting the market's mood. Additionally, there were hope for an end to the ongoing U.S. government shutdown, which is seen as good for the economy. Investors also moved past recent fears over credit risks that had caused a sell-off the previous week, with shares of regional banks rebounding. Finally, signs that trade tensions with China were de-escalating, including expectations that new tariffs might be avoided, added to the overall positive momentum, leading traders to focus on more favorable factors like earnings and potential Federal Reserve rate cuts.

nLIGHT is up 193% since the beginning of the year, but at $30.48 per share, it is still trading 9.1% below its 52-week high of $33.53 from October 2025. Investors who bought $1,000 worth of nLIGHT’s shares 5 years ago would now be looking at an investment worth $1,355.

While Wall Street chases Nvidia at all-time highs, an under-the-radar semiconductor supplier is dominating a critical AI component these giants can’t build without. Click here to access our full research report.