What Happened?
A number of stocks jumped in the afternoon session after 10-year Treasury yield eased to 4.46% following a preliminary agreement between President Trump and President Xi to keep the Strait of Hormuz open.
Cisco Systems further energized the sector surging 14% after raising its AI infrastructure guidance, signaling a massive new wave of technical consulting demand.
Business services companies, consulting firms, advisors, and IT service providers, earn revenue from corporate operating budgets and M&A activity. The easing of yields lowers the cost of the debt used to finance the enterprise projects that drive consulting revenue.
Also, Cisco's 'networking supercycle' narrative confirms that the AI boom is moving beyond the experimental phase and into the large-scale deployment phase, which requires significant advisory and integration services.
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:
- Satellite Telecommunication Services company Viasat (NASDAQ: VSAT) jumped 5.7%. Is now the time to buy Viasat? Access our full analysis report here, it’s free.
- Electronic Components & Manufacturing company CTS (NYSE: CTS) jumped 3%. Is now the time to buy CTS? Access our full analysis report here, it’s free.
- Hardware & Infrastructure company IonQ (NYSE: IONQ) jumped 4.3%. Is now the time to buy IonQ? Access our full analysis report here, it’s free.
- Specialized Technology company Cognex (NASDAQ: CGNX) jumped 3.3%. Is now the time to buy Cognex? Access our full analysis report here, it’s free.
- IT Distribution & Solutions company Connection (NASDAQ: CNXN) jumped 3.2%. Is now the time to buy Connection? Access our full analysis report here, it’s free.
Zooming In On Viasat (VSAT)
Viasat’s shares are extremely volatile and have had 64 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 27 days ago when the stock gained 4.4% on the news that Iran announced the reopening of the Strait of Hormuz, easing international tensions and providing a much-needed boost to corporate IT spending outlooks. Many IT service providers rely on long-term contracts that are sensitive to the global macroeconomic climate. With the threat of a prolonged Middle East conflict receding, enterprise clients are more likely to commit to multi-year digital transformation projects and cloud migration initiatives. The sector also benefits from improved labor mobility and reduced operational costs as global travel becomes less risky for specialized consultants. As inflation expectations moderate alongside oil prices, IT firms can more accurately forecast their wage and overhead expenses. This clarity is driving investor interest back into the sector as a reliable play on global productivity growth.
Viasat is up 97.4% since the beginning of the year, and at $74.29 per share, has set a new 52-week high. Investors who bought $1,000 worth of Viasat’s shares 5 years ago would now be looking at an investment worth $1,529.
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