US tech stocks set for rebound, Microsoft rumoured to be eyeing up TikTok, Rentokil boosted by US progress, Wickes on the comeback trail, Pets at Home rescued by vets business and Foxtons shines

“Panic on Wall Street sent US tech stocks into a deep slump yesterday and prompted a big debate about whether the AI infrastructure winners will now be dethroned,” says Russ Mould, Investment Director at AJ Bell.

“Nvidia crashed by nearly 17% which sounds dramatic but only pulled the stock back to October 2024 levels. Someone who has owned Nvidia shares since before summer last year should still be sitting on decent gains, even after yesterday’s pullback.

“It looks like the Wall Street bloodbath was short-lived as Nvidia’s shares are trading 1.4% higher in pre-market trading and futures prices point to small gains for both the Nasdaq and S&P 500 today.

“The DeepSeek shock has reminded investors they cannot be complacent when trying to play the AI trend. Stocks do not travel in unison and neither do they always travel upwards. Sometimes it’s good to be reminded of this. Valuations have been getting lofty in the tech space and investors need to appreciate that richly priced stocks can fall hard on the slightest bit of bad news.

“The FTSE 100 continued to be an island of calm, pushing ahead by 0.3% as investors lapped up its plethora of defensive stocks. Utilities and healthcare were in demand, implying that investors were keen to ensure portfolios had some support in case of another tech-related wobble.”

Microsoft

“Microsoft potentially buying TikTok makes sense given it would give the tech giant a stronger foothold in the social media platform market.

“To date, Microsoft has only dipped its toe into the water through the acquisition of LinkedIn, and that site is arguably niche as it is mainly used for people to talk about their jobs or look for new ones.

“Owning TikTok would give Microsoft significantly greater reach among the general public and an opportunity to apply existing capabilities or develop new tools to learn about the user base and monetise that information. That might include advertising-related analytics and creative services.

“It’s uncertain whether any deal would involve just the US arm of TikTok or the whole business, but it looks like the former is more plausible.

“Elon Musk might aspire to own TikTok given it is considerably more successful than X, which he bought in 2022, and would play to his ego. Musk could potentially lean on his close relationship with the new president to strike a deal and he’s certainly not short of a few dollars to pay for such an acquisition. However, there would be an uproar if Musk did buy the platform as it would look like favouritism.

“Alphabet might also have a desire to own TikTok as it is another tech giant with inroads into the social media space. Its YouTube platform is gaining momentum from a strategic and financial perspective and adding TikTok to its portfolio would make Alphabet a significantly stronger competitor to Meta, which owns Facebook and Instagram.”

Rentokil

“After a torrid time for Rentokil, investors will be relieved about its in-line trading update and increase in organic growth across the Atlantic.

“The integration of its Terminix acquisition has been a pest for Rentokil so news of an improving picture will be positively received by investors.

“The departure of its North American boss just at the point things seem to be stabilising is not ideal but an experienced candidate has been found internally to replace him.

“Rentokil operates in an industry which should be relatively unaffected by the ups and downs of the economy but it has not delivered the kind of steady performance investors would hope for.

“Chief executive Andy Ransom has been in place for well over a decade and will be under pressure to show the recent improvement in fortunes is not just a flash in the pan, and that the business is now clear of the bugs which have held back its progress.”

Wickes

“Green shoots of a recovery in trading have put a rocket underneath Wickes’ share price.

“The DIY sector has suffered the mother of all hangovers after the home improvement industry went through a glorious period during Covid lockdowns and then slumped afterwards.

“Wickes seems to be making good headway with trade customers which is an interesting development as it has historically been retail-focused, losing out on trade business to arch-rival B&Q.

“In a more difficult market, homeowners are looking for cheaper options to do home improvement work and tradesmen have been turning to Wickes to help keep costs as low as possible.

“Small signs of improvement have fired up the market but considerable headwinds remain. Consumer and business sentiment is looking patchy and there are fears the UK’s economy won’t grow as much as previously feared. The arrival of a recession would be terrible for Wickes just at the point where its turnaround efforts were gaining traction. All it can do is plough ahead and hope for the best.”

Pets at Home

“Britons love their pets but that doesn’t mean they aren’t prepared to economise on behalf of their furry and feathered friends. It’s clear Pets at Home is finding it tricky to get customers through the doors.

“Non-specialist retailers, including the supermarkets, will often be able to outcompete Pets at Home on price and people are also less likely at the moment to splash out on anything other than the essentials for their animal companions.

“The veterinary side of the business is coming to the rescue to some extent – with an increase in subscriptions providing the company with a steady stream of income.

“However, Pets at Home and others are nervously awaiting the outcome of a probe by the competition authorities into practices in the vet industry.

“This investigation could drag on until November, meaning Pets at Home may not get much credit for how the best performing part of its business is doing until after that deadline.”

Foxtons

“London-based estate and lettings agent Foxtons and its brightly lit outlets stacked with drinks fridges and minimalist furniture were synonymous with the boom and bust in the London property market.

“The biggest pipeline of properties under offer since before the Brexit vote is a significant milestone. Whether the momentum can be sustained is open to question, given it is driven by first-time buyers looking to get in before an increase in stamp duty rates.

“In the here and now, the trading update demonstrates the company’s ability to take market share. It is also notable Foxtons has been feeling confident enough to make acquisitions.

“Chief executive Guy Gittins’ background, starting his career at Foxtons in the early noughties, means he has a good understanding of the business. Having helped execute a turnaround at rival agent Chestertons, Gittins seems to be doing a good job with the recovery plan at his current charge.”

These articles are for information purposes only and are not a personal recommendation or advice.