What Happened?

A number of stocks fell in the afternoon session after investor anxiety grew over stretched valuations in the sector. 

Nvidia slid 3% ahead of its earnings report, dragging down fellow "Magnificent Seven" peers despite a major partnership announcement with Anthropic, as investors increasingly question the durability of the AI rally. Market sentiment was further dampened by Bitcoin dropping below $90,000, signaling reduced risk appetite, and growing anxiety that the Federal Reserve may pause rate cuts in December, with the implied probability of a cut falling to roughly 50%. Adding to the weakness, Home Depot shares declined following an earnings miss and a cut to its full-year outlook. This combination of continued de-risking and valuation skepticism put the S&P 500 on pace for its fourth consecutive daily decline.

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:

• Professional Staffing & HR Solutions company Alight (NYSE: ALIT) fell 4.7%. Is now the time to buy Alight? Access our full analysis report here, it’s free for active Edge members.
• Specialized Technology company OSI Systems (NASDAQ: OSIS) fell 3.7%. Is now the time to buy OSI Systems? Access our full analysis report here, it’s free for active Edge members.
• IT Services & Consulting company Kyndryl (NYSE: KD) fell 3.2%. Is now the time to buy Kyndryl? Access our full analysis report here, it’s free for active Edge members.
• Business Process Outsourcing & Consulting company Concentrix (NASDAQ: CNXC) fell 2.6%. Is now the time to buy Concentrix? Access our full analysis report here, it’s free for active Edge members.
• Specialized Technology company PAR Technology (NYSE: PAR) fell 3.3%. Is now the time to buy PAR Technology? Access our full analysis report here, it’s free for active Edge members.

Zooming In On Alight (ALIT)

Alight’s shares are quite volatile and have had 15 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 1 day ago when the stock dropped 3.7% on the news that investors continued to the company's recent quarterly earnings report, which missed analyst expectations on both profit and revenue. 

The company posted earnings per share of $0.12, falling short of the consensus estimate of $0.13. Revenue for the quarter was $533 million, which was below the anticipated $539.43 million and represented a 4.0% decrease compared to the same period in the previous year. In the wake of the results, analysts at Wedbush and UBS Group lowered their price targets on the stock. Wedbush reduced its target to $5.00 from $7.00, and UBS Group cut its target to $4.00 from $6.50, signaling reduced confidence following the financial update.

Alight is down 69.4% since the beginning of the year, and at $2.07 per share, it is trading 74.5% below its 52-week high of $8.09 from November 2024. Investors who bought $1,000 worth of Alight’s shares at the IPO in July 2021 would now be looking at an investment worth $228.68.

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.