What Happened?
A number of stocks fell in the morning session after the May jobs report showed a much larger-than-expected increase in payrolls, fueling concerns that the Federal Reserve will keep interest rates elevated for a longer period.
The Broadcom earnings overhang, which recalibrated expectations for the pace of AI chip revenue acceleration, carried into the day. Then a payrolls print of 172,000, more than double the 80,000 consensus, sent the 10-year yield above 4.5% and put rate hike expectations on the table. High-multiple hardware names carry the most valuation risk when the discount rate rises unexpectedly.
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:
- Hardware & Infrastructure company Dell (NYSE: DELL) fell 3.5%. Is now the time to buy Dell? Access our full analysis report here, it’s free.
- Hardware & Infrastructure company NetApp (NASDAQ: NTAP) fell 4.3%. Is now the time to buy NetApp? Access our full analysis report here, it’s free.
- Hardware & Infrastructure company Everpure (NYSE: P) fell 3.8%. Is now the time to buy Everpure? Access our full analysis report here, it’s free.
Zooming In On NetApp (NTAP)
NetApp’s shares are not very volatile and have only had 6 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 7 days ago when the stock gained 26.4% on the news that it reported first-quarter 2026 financial results that surpassed Wall Street's expectations and provided strong forward guidance.
The company's revenue for the quarter grew 12.5% year-over-year to $1.95 billion, beating analyst estimates, while its adjusted earnings per share of $2.43 also came in higher than anticipated. Furthermore, NetApp issued an optimistic outlook, with its revenue guidance for the upcoming second quarter coming in 8.5% above consensus estimates. The company's profitability also showed significant improvement, with its adjusted operating margin increasing to 27.3% from 20.1% in the same quarter last year.
NetApp is up 59.6% since the beginning of the year, and at $169.88 per share, it is trading close to its 52-week high of $181.08 from June 2026. Investors who bought $1,000 worth of NetApp’s shares 5 years ago would now be looking at an investment worth $2,096.
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