Merck & Co., Inc.

🇺🇸New York Stock Exchange
Back to all articles
Merck & Co., Inc. stock analysis MRK overview
Slightly Bullish +25

AI Rotation? Walmart, P&G, Merck Surge As Defensive Stocks Gain Traction Amid Chip Crash - NDTV Profit

📉 Global tech sell-off triggered by a 1.3% Nasdaq drop led to heavy pressure on semiconductor stocks including Micron (-12%), SanDisk (-11%), and Intel (-7%).

🛡️ Defensive stocks surged as investors rotated out of AI-linked names, with consumer staples and healthcare shares rising nearly 2%.

💊 Merck traded higher alongside Walmart, P&G, and Johnson & Johnson as part of the broader defensive sector rally.

📈 IBM jumped 4% after JPMorgan upgraded the stock to Overweight, contributing to the recovery in technology giants like Microsoft and Amazon.

⚠️ Analyst Chris Low of FHN Financial attributed the risk-off trade to fears that AI exuberance may be overdone.

🌏 The negative sentiment spread globally, with South Korea's Kospi Index falling nearly 10% and Japan's Nikkei 225 ending an eight-day winning streak.

Bullish Signals
  • Merck shares rose nearly 2% as part of a broader rally in defensive healthcare stocks seeking stable earnings.
  • IBM gained 4% following a JPMorgan upgrade to Overweight, signaling renewed confidence in specific technology names.
  • Microsoft and Amazon outperformed many technology peers, indicating that investors remain selective rather than abandoning the sector entirely.
Risk Factors
  • Semiconductor stocks faced heavy selling pressure with Micron down 12%, SanDisk down 11%, and Intel down 7%.
  • Analysts express fear that AI exuberance may be overdone, leading to a risk-off trade away from high-growth chip stocks.
  • Global tech weakness extended to Asia, where South Korea's Kospi Index fell nearly 10% weighed down by a plunge in memory chipmaker SK Hynix.
Full Analysis
US markets recovered from intraday lows on Tuesday as a rotation into defensive stocks offset weakness in the semiconductor sector. This shift occurred following a global technology sell-off that began with a 1.3% decline in the Nasdaq, driven primarily by losses in chipmakers like Alphabet and memory stock SK Hynix. Defensive sectors saw significant gains as investors moved away from high-growth AI-linked names amid concerns over lofty valuations and potential overdone AI exuberance. Consumer staples and healthcare shares rose nearly 2%, with specific standout performances from Walmart, Procter & Gamble, Johnson & Johnson, Merck, and Sherwin-Williams. Merck specifically benefited from the broader defensive rotation alongside other healthcare giants. The market dynamics highlighted a selective approach where investors sought stable earnings and cash flows, while technology giants like Microsoft and Amazon outperformed peers despite the sector-wide pressure on chip stocks.