What Happened?
A number of stocks fell in the afternoon session after markets gave up early gains with optimism over progress in US-China trade talks quickly fading as the Trump administration announced plans to raise tariffs on all Chinese imports to well above 100%.
Hopes had been lifted by chatter of constructive negotiations aimed at easing and eventually removing U.S. trade tariffs. But the news confirmed fears of a prolonged trade fight, increasing uncertainty about the direction of economic policy. This left investors grappling with the dual threat of slower growth and higher inflation, both of which could linger if the standoff continues.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, following stocks were impacted:
- Processors and Graphics Chips company Qorvo (NASDAQ: QRVO) fell 8.2%. Is now the time to buy Qorvo? Access our full analysis report here, it’s free.
- Automobile Manufacturing company Ford (NYSE: F) fell 6%. Is now the time to buy Ford? Access our full analysis report here, it’s free.
- Hardware & Infrastructure company Hewlett Packard Enterprise (NYSE: HPE) fell 5.7%. Is now the time to buy Hewlett Packard Enterprise? Access our full analysis report here, it’s free.
- Hardware & Infrastructure company HP (NYSE: HPQ) fell 5.5%. Is now the time to buy HP? Access our full analysis report here, it’s free.
Zooming In On Qorvo (QRVO)
Qorvo’s shares are somewhat volatile and have had 11 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 biggest move we wrote about over the last year was 5 months ago when the stock dropped 27.7% on the news that the company reported weak third-quarter 2024 earnings, with its revenue and EPS guidance for next quarter missing analysts' expectations.
The company provided weak full-year revenue and gross margin guidance due to an unfavorable shift in smartphone demand as more consumers opted for lower-priced 5G smartphones rather than mid-range options. Notably, cheaper smartphones tend to fetch lower profit margins compared to mid-tier and flagship models. Even worse, Qorvo didn't expect the trend to reverse, at least in the near term.
On the other hand, Qorvo recorded a big improvement in inventory levels, and its revenue outperformed Wall Street's estimates. Still, this was a weaker quarter for the company.
Qorvo is down 25.2% since the beginning of the year, and at $52.16 per share, it is trading 59.6% below its 52-week high of $129.21 from July 2024. Investors who bought $1,000 worth of Qorvo’s shares 5 years ago would now be looking at an investment worth $599.40.
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