What Happened?
A number of stocks fell in the afternoon session after the major indices continued to pull back, with technology stocks accounting for most of the market's largest decliners.
A key reason for this trend is that much of the recent market gains were concentrated in the "AI trade," which includes these large technology and semiconductor companies. So this could also mean that some investors are locking in some gains ahead of more definitive feedback from the Fed.
Despite the downturn, some analysts viewed this as an opportunity to own some of the "Core AI winners." Dan Ives of Wedbush Securities commented, "In our view, the tech bull cycle will be well intact for at least another 2-3 years, given the trillions being spent on AI infrastructure/software/chips/power/apps looking ahead. This remains our tech playbook and investor roadmap." Additionally, mixed earnings reports from retailers, such as Target, have added to the market's weakness. Investors are closely monitoring these reports for insights into the broader economic health and the potential impact of new tariffs on inflation.
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:
- Home Furniture Retailer company Sleep Number (NASDAQ:SNBR) fell 4.5%. Is now the time to buy Sleep Number? Access our full analysis report here, it’s free.
- Modern Fast Food company Sweetgreen (NYSE:SG) fell 4.6%. Is now the time to buy Sweetgreen? Access our full analysis report here, it’s free.
- Sit-Down Dining company Red Robin (NASDAQ:RRGB) fell 4.1%. Is now the time to buy Red Robin? Access our full analysis report here, it’s free.
- Renewable Energy company Fluence Energy (NASDAQ:FLNC) fell 4.9%. Is now the time to buy Fluence Energy? Access our full analysis report here, it’s free.
- Renewable Energy company Generac (NYSE:GNRC) fell 5.4%. Is now the time to buy Generac? Access our full analysis report here, it’s free.
Zooming In On Generac (GNRC)
Generac’s shares are somewhat volatile and have had 12 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 21 days ago when the stock gained 14.7% on the news that the company reported second-quarter results that surpassed analyst expectations and raised its full-year profit margin guidance. The company posted revenue of $1.06 billion, a 6% increase from the prior year, driven by growth in both its residential and commercial & industrial segments. Adjusted earnings came in at $1.65 per share, handily beating analyst consensus.
A key factor in the strong performance was an improved gross profit margin, which expanded to 39.3% from 37.6% a year ago. Management attributed this to favorable pricing and lower input costs. Following the strong quarter, Generac raised the low end of its full-year adjusted EBITDA margin forecast to a range of 18.0% to 19.0%, signaling confidence to investors. Adding to the positive sentiment, Guggenheim had also upgraded the stock to a "buy" rating just a day prior to the earnings release.
Generac is up 20.7% since the beginning of the year, and at $189.58 per share, it is trading close to its 52-week high of $202.85 from August 2025. Investors who bought $1,000 worth of Generac’s shares 5 years ago would now be looking at an investment worth $1,039.
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