What Happened?

A number of stocks jumped in the afternoon session after a broader market rally drove investor optimism in artificial intelligence and big tech stocks. The S&P 500, Dow Jones, and Nasdaq all pushed higher, approaching record levels set late last year. Much of the positive momentum was linked to the technology sector, with a particular focus on companies advancing artificial intelligence, a key theme at the annual CES trade show in Las Vegas. This continued a powerful trend from 2025, when AI-related developments were a primary catalyst for the market's bull run. The upbeat sentiment was further supported by hopes for easier monetary policy from the Federal Reserve following a weaker-than-expected US Services PMI reading.

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:

• Analog Semiconductors company Microchip Technology (NASDAQ: MCHP) jumped 11.2%. Is now the time to buy Microchip Technology? Access our full analysis report here, it’s free for active Edge members.
• Analog Semiconductors company NXP Semiconductors (NASDAQ: NXPI) jumped 8.7%. Is now the time to buy NXP Semiconductors? Access our full analysis report here, it’s free for active Edge members.
• Analog Semiconductors company Texas Instruments (NASDAQ: TXN) jumped 8%. Is now the time to buy Texas Instruments? Access our full analysis report here, it’s free for active Edge members.
• Memory Semiconductors company Western Digital (NASDAQ: WDC) jumped 16.8%. Is now the time to buy Western Digital? Access our full analysis report here, it’s free for active Edge members.
• Processors and Graphics Chips company Allegro MicroSystems (NASDAQ: ALGM) jumped 10.6%. Is now the time to buy Allegro MicroSystems? Access our full analysis report here, it’s free for active Edge members.

Zooming In On Western Digital (WDC)

Western Digital’s shares are extremely volatile and have had 32 moves greater than 5% over the last year. But moves this big are rare even for Western Digital and indicate this news significantly impacted the market’s perception of the business.

The previous big move we wrote about was 4 days ago when the stock gained 7.4% on the news that reports highlighted a favorable market for data storage companies, driven by soaring demand from the artificial intelligence sector. The market came to realize that the growth in AI was not just a computing issue, but also a significant storage problem. Western Digital benefited from this trend, particularly after separating its Hard Disk Drive (HDD) business to focus on storage for large cloud providers. This shift occurred as storage providers reported severe shortages of high-capacity drives, creating a supply-demand imbalance. This dynamic allowed Western Digital and its chief rival, Seagate Technology, to dictate favorable pricing terms.

Western Digital is up 16.8% since the beginning of the year, and at $219.21 per share, has set a new 52-week high. Investors who bought $1,000 worth of Western Digital’s shares 5 years ago would now be looking at an investment worth $4,104.

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