What Happened?

A number of stocks fell in the morning session after concerns regarding lofty artificial intelligence valuations triggered a pullback in the technology 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:

• Renewable Energy company Fluence Energy (NASDAQ: FLNC) fell 2.3%. Is now the time to buy Fluence Energy? Access our full analysis report here, it’s free for active Edge members.
• Electronic Components company nLIGHT (NASDAQ: LASR) fell 4%. Is now the time to buy nLIGHT? Access our full analysis report here, it’s free for active Edge members.
• Electrical Systems company Vertiv (NYSE: VRT) fell 2.4%. Is now the time to buy Vertiv? Access our full analysis report here, it’s free for active Edge members.
• Waste Management company Quest Resource (NASDAQ: QRHC) fell 5.7%. Is now the time to buy Quest Resource? Access our full analysis report here, it’s free for active Edge members.
• Engineering and Design Services company Sterling (NASDAQ: STRL) fell 0.9%. Is now the time to buy Sterling? Access our full analysis report here, it’s free for active Edge members.

Zooming In On Quest Resource (QRHC)

Quest Resource’s shares are extremely volatile and have had 50 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 6 days ago when the stock gained 6.3% on the news that investors continued to pile into value-oriented names amid growing valuation concerns. 

This shift reflected growing caution over high valuations within the technology and artificial intelligence (AI) spheres. As market participants reassessed risk, they reallocated capital from growth-heavy indices, like the Nasdaq, to companies in areas like industrials and financials, perceived to be more reasonably priced. 

Contributing to the positive momentum, markets remained hopeful that a prolonged 40-day government shutdown would be over. The U.S. Senate approved a compromise funding package, which was pending a vote in the House. The potential end to the shutdown brought a sense of relief to markets.

Quest Resource is down 74.3% since the beginning of the year, and at $1.64 per share, it is trading 77.6% below its 52-week high of $7.31 from November 2024. Investors who bought $1,000 worth of Quest Resource’s shares 5 years ago would now be looking at an investment worth $856.02.

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.