What Happened?
A number of stocks jumped in the morning session after strong results from chipmaker Nvidia, eased lingering concerns about a potential bubble in the artificial intelligence sector.
The tech giant delivered another blockbuster earnings report, with sales, profits, and guidance exceeding Wall Street expectations. CEO Jensen Huang let the data do the talking as he acknowledged the growing sentiment about an AI bubble, while affirming that sales for Nvidia's current-generation GPU, called Blackwell (mostly used for AI applications), are "off the charts."
A stronger-than-expected September jobs report from the Bureau of Labor Statistics reinforced this bullish sentiment. Nonfarm payrolls rose by 119,000, easily surpassing the consensus estimates of 50,000. While the unemployment rate ticked up to 4.4% and wage growth slowed slightly, the data suggest the U.S. economy remains on a firm footing. While this resilience made some investors unsure of the Fed's December rate decision, the market welcomed the news, rallying on the strength of a solid economy and a booming tech sector.
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 Coherent (NYSE:COHR) jumped 4.9%. Is now the time to buy Coherent? Access our full analysis report here, it’s free for active Edge members.
- Enterprise Networking company Applied Digital (NASDAQ:APLD) jumped 2%. Is now the time to buy Applied Digital? Access our full analysis report here, it’s free for active Edge members.
- Government & Technical Consulting company Maximus (NYSE:MMS) jumped 3.5%. Is now the time to buy Maximus? Access our full analysis report here, it’s free for active Edge members.
Zooming In On Coherent (COHR)
Coherent’s shares are extremely volatile and have had 46 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 2 days ago when the stock dropped 2.2% on the news that 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.
Coherent is up 41.4% since the beginning of the year, but at $142.29 per share, it is still trading 14.7% below its 52-week high of $166.72 from November 2025. Investors who bought $1,000 worth of Coherent’s shares 5 years ago would now be looking at an investment worth $2,195.
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