What Happened?

A number of stocks jumped in the afternoon session after confidence in the artificial intelligence market was renewed, pushing both the S&P 500 and Nasdaq to new all-time intraday highs. 

The rebound was led by chipmaker Nvidia, whose shares rose nearly 2% after its CEO confirmed that demand for computing has "gone up substantially" in recent months. These comments helped reassure the market that the AI boom is supported by genuine demand, calming fears that were sparked a day earlier by a report questioning the profitability of Oracle's cloud business. The rally was strong enough to put the information technology sector on pace for a fresh closing high. This upward momentum occurred despite potential headwinds from an ongoing U.S. government shutdown, which entered its second week.

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:

• Endpoint Security company CrowdStrike (NASDAQ: CRWD) jumped 4.6%. Is now the time to buy CrowdStrike? Access our full analysis report here, it’s free for active Edge members.
• Automation Software company UiPath (NYSE: PATH) jumped 4.3%. Is now the time to buy UiPath? Access our full analysis report here, it’s free for active Edge members.
• Communications Platform company Twilio (NYSE: TWLO) jumped 4.9%. Is now the time to buy Twilio? Access our full analysis report here, it’s free for active Edge members.
• Automation Software company Jamf (NASDAQ: JAMF) jumped 2.9%. Is now the time to buy Jamf? Access our full analysis report here, it’s free for active Edge members.
• Content Delivery company F5 (NASDAQ: FFIV) jumped 3.7%. Is now the time to buy F5? Access our full analysis report here, it’s free for active Edge members.

Zooming In On Twilio (TWLO)

Twilio’s shares are very volatile and have had 23 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 1 day ago when the stock dropped 3.7% as tech stocks pulled back as a report raised concerns about artificial intelligence demand and profitability. Oracle shares lost more than 5% following news of its cloud business generating lighter margins than expected. According to internal documents cited in the report, the gross profit margin for this business was only 14%, a figure much lower than what analysts had expected. This suggested that the high costs of running the advanced chip infrastructure were weighing on profitability. Compounding these worries was the ongoing U.S. government shutdown, in its second week, with no clear resolution in sight from Washington. These updates drove investors away from riskier assets and towards safe havens, a trend highlighted by gold futures hitting a record $4,000 per ounce for the first time.

Twilio is up 3.9% since the beginning of the year, but at $113.41 per share, it is still trading 23.6% below its 52-week high of $148.35 from January 2025. Investors who bought $1,000 worth of Twilio’s shares 5 years ago would now be looking at an investment worth $379.05.

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.