What Happened?

A number of stocks jumped in the afternoon session after the semiconductor sector rallied in intraday trading as a favorable inflation report bolstered investor hopes for a potential Federal Reserve interest rate cut. The latest Consumer Price Index (CPI) data showed a slowdown in inflation, fueling a broad market rally that pushed the S&P 500 and Nasdaq to new all-time highs. For the capital-intensive semiconductor industry, the prospect of lower interest rates is particularly welcome, as it can reduce borrowing costs for expansion and research and development. The positive macroeconomic sentiment provided a significant tailwind for the entire sector, as investors anticipate that a more accommodative monetary policy from the central bank will stimulate economic growth and demand for technology.

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:

• Memory Semiconductors company Micron (NASDAQ: MU) jumped 3.2%. Is now the time to buy Micron? Access our full analysis report here, it’s free.
• Processors and Graphics Chips company Qorvo (NASDAQ: QRVO) jumped 3.1%. Is now the time to buy Qorvo? Access our full analysis report here, it’s free.
• Analog Semiconductors company Impinj (NASDAQ: PI) jumped 5.9%. Is now the time to buy Impinj? Access our full analysis report here, it’s free.

Zooming In On Impinj (PI)

Impinj’s shares are very volatile and have had 26 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 11 days ago when the stock dropped 3.2% on the news that the U.S. jobs report for July came in significantly weaker than expected while new widespread import tariffs were announced, sparking fears of a potential economic slowdown. The U.S. economy added only 73,000 jobs, far below estimates, and massive downward revisions to the prior two months painted a much weaker picture of the labor market. This has stoked recession fears, which would directly impact demand for chips used in countless products. Compounding these worries, the White House announced new tariffs, including a 20% levy on imports from Taiwan, a global hub for chip manufacturing. This dual shock of slowing domestic growth and renewed trade friction creates a challenging outlook for the highly cyclical and globally connected semiconductor industry, leading to a broad-based sell-off.

Impinj is up 10.7% since the beginning of the year, but at $162.42 per share, it is still trading 31.9% below its 52-week high of $238.58 from October 2024. Investors who bought $1,000 worth of Impinj’s shares 5 years ago would now be looking at an investment worth $6,308.

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