Three Tech Stocks Vulnerable to Rising Interest Rates

The recent soft September jobs report and the Federal Reserve’s cautious stance on interest rates have brought financing conditions back into focus for growth investors. This shift is particularly impactful for large and mid-cap tech and communication services companies that rely heavily on favorable borrowing costs. Three companies stand out in this rate-sensitive landscape: Sanmina (SANM), Applied Digital (APLD), and Globalstar (GSAT).

Sanmina, a global contract manufacturer with a market cap of US$12.3 billion, designs and builds complex electronic hardware. Its capital-intensive operations make it highly sensitive to interest rate changes. The company is expanding into areas like AI racks and liquid cooling, but the success of these ventures hinges on stable financing conditions.

Applied Digital, valued at US$7.4 billion, specializes in high-performance computing and AI-focused data centers. Its growth depends on significant upfront capital investments, making it vulnerable to shifts in borrowing costs. The company has long-term leasing agreements totaling $7 billion in contracted revenue, but the valuation of these long-dated cash flows could be affected by tighter funding conditions.

Globalstar, with a market cap of US$10.8 billion, provides mobile satellite connectivity and IoT tracking services. The company is investing heavily in next-generation satellite infrastructure, which could strain cash flow if subscriber growth falls short of expectations. The interplay between its capital expenditures and interest rates will be critical in determining its long-term returns.