What Happened?
A number of stocks jumped in the afternoon session after markets continued to rally as investor optimism grew for a potential Federal Reserve interest rate cut in September. This optimism was largely fueled by a recent consumer price index report that showed inflation easing, along with public comments from Treasury Secretary Scott Bessent advocating for a significant 50-basis-point rate cut. The prospect of lower borrowing costs tends to boost rate-sensitive sectors like Business Services, as it can encourage companies to increase spending on consulting, IT projects, and staffing.
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:
- IT Services & Consulting company DXC (NYSE: DXC) jumped 4.3%. Is now the time to buy DXC? Access our full analysis report here, it’s free.
- IT Services & Consulting company Grid Dynamics (NASDAQ: GDYN) jumped 3.4%. Is now the time to buy Grid Dynamics? Access our full analysis report here, it’s free.
- Specialized Technology company PAR Technology (NYSE: PAR) jumped 4%. Is now the time to buy PAR Technology? Access our full analysis report here, it’s free.
- Professional Staffing & HR Solutions company Robert Half (NYSE: RHI) jumped 4.8%. Is now the time to buy Robert Half? Access our full analysis report here, it’s free.
- Digital Media & Content Platforms company Rumble (NASDAQ: RUM) jumped 6.1%. Is now the time to buy Rumble? Access our full analysis report here, it’s free.
Zooming In On Rumble (RUM)
Rumble’s shares are extremely volatile and have had 54 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 2 days ago when the stock gained 10.8% on the news that it announced its intention to acquire German AI cloud firm Northern Data in an all-stock deal valued at approximately $1.17 billion. This strategic move aims to expand Rumble's capabilities beyond its video-sharing platform and into the high-growth AI infrastructure market. The all-stock transaction would give Rumble control of Northern Data's Ardent data centers and its Taiga GPU-as-a-service business, which includes a significant inventory of over 20,000 highly sought-after Nvidia H100 GPUs. Under the proposed terms, Northern Data shareholders would receive 2.319 Rumble shares for each of their shares, resulting in them owning about a third of the combined company. The stock's surge came despite Rumble also reporting second-quarter results that missed revenue estimates and showed a decline in monthly active users, signaling that investors are focused on the transformative potential of the AI-focused acquisition.
Rumble is down 32.5% since the beginning of the year, and at $8.37 per share, it is trading 48.6% below its 52-week high of $16.27 from December 2024.
Today’s young investors won’t have read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.
