Stocks have experienced a tumultuous month, marked by significant fluctuations and changes in investor sentiment. Since the last Monthly Meeting of the CNBC Investing Club on January 22, Wall Street faced a bustling earnings season, mounting concerns about artificial intelligence’s impact on the software sector, and uncertainty regarding the Federal Reserve’s forthcoming interest rate decisions. Compounding these issues were a series of contentious statements from former President Donald Trump relating to U.S. trade partnerships, alongside a Supreme Court ruling that overturned his emergency tariffs. Despite these distractions, the S&P 500 showed a net change close to zero through Thursday’s close, hinting at underlying volatility beneath an otherwise flat headline.
Delving deeper into stock performances, some companies in the portfolio saw substantial gains while others struggled. Among the top performers were Corning, GE Vernova, and Qnity Electronics, showcasing strength amid the broader market instability. Conversely, Palo Alto Networks, CrowdStrike, and Salesforce found themselves at the bottom of the charts.
Corning saw a remarkable 59.4% increase, primarily fueled by a significant agreement with Meta Platforms, Inc. Announced on January 27, the deal will see Meta pay up to $6 billion through 2030 for fiber optic cables for its data centers, propelling Corning’s shares up by 15.6% on the announcement — its best single-day performance since March 2020. The company’s quarterly earnings further solidified optimism about its future, particularly driven by robust demand in its optical communications division. With shares surging 71% year-to-date and hitting a record high recently, the price target for Corning was raised to $160, with some shares sold to capitalize on the upswing.
GE Vernova also shone, experiencing a gain of 32.5%. The company has positioned itself as a key player in the AI sector, particularly with its natural gas turbines catering to data centers. After initially disappointing earnings in late January, the stock rebounded, benefiting from a widespread rally in industrials. The upbeat earnings report from competitor Vertiv kept the momentum thriving for GE Vernova, prompting an increase in its price target from $800 to $875.
Qnity Electronics climbed 26.3% following a stronger-than-expected earnings report. The specialty chemicals enterprise detailed a multi-year transformation plan aiming to boost its EBITDA run rate by $100 million by the end of 2028, further reinforcing its standing as a hidden gem amidst the AI boom.
On the other end of the spectrum, Palo Alto Networks and CrowdStrike faced declines of 18% and 16%, respectively. Both cybersecurity firms have been swept up in fears regarding AI’s potential to disrupt the SaaS business model. The market reacted notably to a competitive AI tool released by startup Anthropic, which raised anxiety around traditional cybersecurity offerings. Despite being at risk from these developments, experts noted that the increasing prevalence of AI also signals an escalating need for robust cybersecurity solutions, as threats evolve. Palo Alto reported strong quarterly earnings, but wavering guidance caused investor concern. CrowdStrike is set to announce its earnings after the market closes on Tuesday.
Lastly, Salesforce saw a 12.5% drop, continuing its downward trajectory from earlier this year. Down 24% year-to-date, fears regarding AI encroachment hit the stock hard, while recent earnings from the company did not fully alleviate investor anxiety. Though management highlighted growth in its AI platform, Agentforce, the stock still fell by another 3.8% on Friday. In light of its performance, the price target for Salesforce has been adjusted from $300 to $250.
As the markets await further developments, the contrasting performances of these stocks illustrate the complex landscape investors are navigating, coupled with the looming uncertainties surrounding technological advancements and economic policy.
