What Happened?
Shares of ioT solutions provider Samsara (NYSE: IOT) fell 6.3% in the morning session after 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.
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 Samsara? Access our full analysis report here.
What Is The Market Telling Us
Samsara’s shares are very volatile and have had 22 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 about 1 month ago when the stock dropped 3% on the news that investors focused on a cautious outlook regarding its sales cycle for large deals, which overshadowed a strong third-quarter earnings report. The company posted upbeat results, beating analyst estimates with quarterly earnings of 15 cents per share and revenue of $415.98 million. However, during the earnings call, Samsara highlighted that larger deals were experiencing longer and less predictable sales cycles. This comment appeared to raise concerns about the consistency of future growth, as it could introduce more variability into the company's results.
Samsara is flat since the beginning of the year, and at $33.85 per share, it is trading 44.5% below its 52-week high of $60.96 from February 2025. Investors who bought $1,000 worth of Samsara’s shares at the IPO in December 2021 would now be looking at an investment worth $1,371.
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