Why Rocket Lab Stock Dropped Today
Key Points
Rocket Lab stock dropped as a post-election sell-off in tech spread to high-growth names in other sectors.
Chipmakers, neoclouds, and construction firms tied to the AI data center build-out were hit especially hard by fears of more scrutiny and potential construction moratoriums, and Rocket Lab got caught in the spillover even though it isn't an AI company.
Rocket Lab reports Q3 results on Monday, and strong numbers could calm fears.
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Rocket Lab Corporation (NASDAQ:RKLB) stock fell 12.2% on Thursday, Nov. 5, amid a post-election sell-off in tech that spread to high-growth names in other sectors.
The S&P 500 (SNPINDEX:^GSPC) and the Nasdaq Composite (NASDAQINDEX:^IXIC) fell 4.4% and 5.6%, respectively.
Missed AI’s "Act 1"? Act 2 Could Be 15x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our analysts, we’re only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue »
Why Rocket Lab stock is falling with AI stocks
Investors dumped tech stocks across the board, but anything tied directly to the AI data center build-out was hit especially hard. Here's a quick sample:
Chipmakers: AMD (NASDAQ:AMD) dropped 15%
Neoclouds: Nebius (NASDAQ:NBIS) lost 15%
Construction Firms: Comfort Systems USA (NYSE:FIX) lost X%
The fear is that after Tuesday's sweeping victory for the Democrats, the data center build-out could face more scrutiny and potential construction moratoriums.
Rocket Lab earnings loom as the sell-off hits speculative stocks
Rocket Lab isn't an AI company and doesn't depend on the AI data center build-out at all, but the sell-off was so extreme that it bled into any names that are viewed as speculative or high-risk. With a price-to-sales (P/S) ratio of about 40, Rocket Lab certainly fits the bill.
Image source: Getty Images.
The company reports Q3 results on Monday, and that could go a long way in calming fears if they are strong, but in this environment, they would need to be quite impressive. Of course, if you believe in the company long term, this shake-up hardly matters.
Missed AI’s "Act 1"? Act 2 Could Be 14x Bigger
Most investors think they missed the AI boat because they didn't buy Nvidia in 2005.
But according to our analysts, we’re only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout, a massive technology build-out that Google’s CEO says could be more profound than fire or electricity.
While everyone watches the chip designers, one "backbone" company provides the critical technology that Nvidia and AMD literally cannot function without. We’ve detailed this under-the-radar player in our new AI Playbook.
Continue »
Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Comfort Systems USA, and Rocket Lab. The Motley Fool has a disclosure policy.
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