What Happened?
Shares of personal computing and printing company HP (NYSE:HPQ) fell 3.2% in the afternoon session after a report from Wedbush Securities identified the company as one of several potential "AI losers."
The report featured a list of 12 stocks that the firm believed had the highest probability of being "left in the dust" as the artificial intelligence trade progressed. Analysts argued that even though HP builds hardware, the AI infrastructure boom actually hurt its core business. This negative impact was described as a "memory squeeze," where the intense focus on AI development diverted resources and attention away from the company's main product areas.
The shares closed the day at $25.08, down 3.1% from previous close.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy HP? Access our full analysis report here.
What Is The Market Telling Us
HP’s shares are somewhat volatile and have had 11 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 17 days ago when the stock gained 6.5% on the news that comments from a key Federal Reserve official hinted at a potential interest rate cut in December. John Williams, president of the Federal Reserve Bank of New York, signaled he was open to lowering the fed funds rate—the key interest rate that banks charge each other for overnight loans—to support the job market. Speaking at an event, Williams stated that he sees “room for a further adjustment” for interest rates, which immediately shifted market expectations. Following his remarks, the perceived likelihood of an interest rate cut at the Federal Reserve's December meeting flipped from unlikely to more likely than not. The prospect of lower borrowing costs sent a wave of optimism through the markets, leading to a rally in major indices like the S&P 500, Dow Jones Industrial Average, and the Nasdaq Composite.
HP is down 22.8% since the beginning of the year, and at $25.08 per share, it is trading 31.2% below its 52-week high of $36.45 from December 2024. Investors who bought $1,000 worth of HP’s shares 5 years ago would now be looking at an investment worth $1,066.
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.