What Happened?
A number of stocks fell in the afternoon session after tech stocks pulled back as reports surfaced that Chinese customs authorities blocked Nvidia's H200 AI chips, effectively halting their entry despite recent U.S. export approvals.
This semiconductor sell-off, led by Broadcom and Micron, reflected deepening fears that the "AI trade" was colliding with a protectionist "new normal." Investors were concerned about the prospect of a fragmented global order where tech giants are caught between Washington's industrial strategy and Beijing's push for semiconductor sovereignty. Broadening the risk, markets were also agitated about the Justice Department's investigation into Fed Chair Jerome Powell, sparking concerns over central bank independence. This domestic political friction, paired with rising oil prices from Iranian civil unrest, likely forced a pivot from growth to defense.
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:
- Communications Platform company Bandwidth (NASDAQ: BAND) fell 3%. Is now the time to buy Bandwidth? Access our full analysis report here, it’s free.
- Cloud Monitoring company Dynatrace (NYSE: DT) fell 3%. Is now the time to buy Dynatrace? Access our full analysis report here, it’s free.
- HR Software company Paylocity (NASDAQ: PCTY) fell 2.7%. Is now the time to buy Paylocity? Access our full analysis report here, it’s free.
- Healthcare And Life Sciences Software company Doximity (NYSE: DOCS) fell 3.1%. Is now the time to buy Doximity? Access our full analysis report here, it’s free.
- Hospitality & Restaurant Software company Agilysys (NASDAQ: AGYS) fell 2.7%. Is now the time to buy Agilysys? Access our full analysis report here, it’s free.
Zooming In On Doximity (DOCS)
Doximity’s shares are very volatile and have had 25 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 dropped 3.6% on the news that a broader market rotation out of the technology sector led to profit-taking following a recent rally.
The move was part of a wider trend that saw high-growth technology stocks fall, with the Nasdaq experiencing the sharpest decline among the major indices. Multiple reports indicated that traders were locking in profits, particularly from the artificial-intelligence trade, which had previously seen a strong run-up. This market action represented a shift in investor focus, as money moved out of tech.
Defense stocks emerged as the primary beneficiary of this capital shift, surging after President Trump proposed a massive $1.5 trillion defense budget for 2027. Major contractors rallied on the news, with Northrop Grumman jumping over 10% and Lockheed Martin gaining nearly 8%, providing a counterbalance to the tech slump that kept the S&P 500 flat. The rotation into heavy industry was further supported by a stabilization in energy markets, as crude prices rebounded.
Doximity is down 7.4% since the beginning of the year, and at $40.07 per share, it is trading 51.8% below its 52-week high of $83.14 from February 2025. Investors who bought $1,000 worth of Doximity’s shares at the IPO in June 2021 would now be looking at an investment worth $756.13.
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