What Happened?

A number of stocks fell in the afternoon session as investors continued to question how much more the superstar stocks can add to their already spectacular gains. 

The main story? Investors are cashing in on a good run and feeling a bit cautious. After a fantastic run, many of those high-flying AI and technology stocks saw investors take profits: selling shares to lock in their gains. This is often called a "market rotation." Money is moving out of the red-hot tech sector (which some worry has become too expensive) and into other parts of the market that investors may currently deem more stable or reasonably-priced. 

There's a secondary reason for the cautious mood: The long government shutdown came to an end. Though it's typically interpreted as good news, it also means a flood of delayed economic reports will be released. For weeks, investors were "flying blind" without key updates on the economy's health, like inflation data and the jobs report. In typical "sell the news" fashion, investors may also be taking profits and selling in anticipation that the new data would potentially give the Federal Reserve reasons to slow or even pause future rate cuts.

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:

• Electronic Components & Manufacturing company Benchmark (NYSE: BHE) fell 4.8%. Is now the time to buy Benchmark? Access our full analysis report here, it’s free for active Edge members.
• Electronic Components & Manufacturing company Plexus (NASDAQ: PLXS) fell 4.9%. Is now the time to buy Plexus? Access our full analysis report here, it’s free for active Edge members.
• Satellite Telecommunication Services company Globalstar (NASDAQ: GSAT) fell 4.3%. Is now the time to buy Globalstar? Access our full analysis report here, it’s free for active Edge members.

Zooming In On Plexus (PLXS)

Plexus’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.

The biggest move we wrote about over the last year was 4 months ago when the stock dropped 11.2% on the news that its third-quarter earnings report showed a significant beat on profit but included a weak forecast for fourth-quarter revenue. While the electronics manufacturing services company posted third-quarter earnings per share of $1.90, which surpassed the analyst estimate of $1.71, its revenue of $1.01 billion slightly missed consensus expectations. The main point of concern for investors was the company's guidance for the upcoming fourth quarter. Plexus forecasted Q4 revenue between $1.025 billion and $1.065 billion, which was below the consensus estimate of $1.084 billion. This weaker outlook suggested a potential slowdown and raised concerns about future growth prospects, causing investors to look past the strong quarterly profit.

Plexus is down 10% since the beginning of the year, and at $139.74 per share, it is trading 18% below its 52-week high of $170.49 from January 2025. Investors who bought $1,000 worth of Plexus’s shares 5 years ago would now be looking at an investment worth $1,862.

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.