What Happened?

A number of stocks jumped in the afternoon session after MongoDB reported impressive earnings. 

The data analytics company saw its shares jump nearly 40% after announcing much stronger-than-expected results, including a revenue beat and an optimistic outlook for the upcoming quarter. This performance suggested robust demand for its cloud-based database services, leading investors to believe the broader data storage and SaaS sectors are experiencing similar health. The positive sentiment created a ripple effect, with peers like DigitalOcean and Snowflake also seeing significant gains and outperforming the general market.

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:

• Sales Software company Freshworks (NASDAQ: FRSH) jumped 3.3%. Is now the time to buy Freshworks? Access our full analysis report here, it’s free.
• Finance and Accounting Software company BILL (NYSE: BILL) jumped 3.2%. Is now the time to buy BILL? Access our full analysis report here, it’s free.
• Automation Software company Appian (NASDAQ: APPN) jumped 4.4%. Is now the time to buy Appian? Access our full analysis report here, it’s free.
• Document Management company DocuSign (NASDAQ: DOCU) jumped 3.1%. Is now the time to buy DocuSign? Access our full analysis report here, it’s free.
• Marketing Software company Sprout Social (NASDAQ: SPT) jumped 3%. Is now the time to buy Sprout Social? Access our full analysis report here, it’s free.

Zooming In On Appian (APPN)

Appian’s shares are very volatile and have had 21 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 7 days ago when the stock dropped 3.3% on the news that the major indices continued to pull back, with technology stocks accounting for most of the market's largest decliners. 

A key reason for this trend is that much of the recent market gains were concentrated in the "AI trade," which includes these large technology and semiconductor companies. So this could also mean that some investors are locking in some gains ahead of more definitive feedback from the Fed. 

Despite the downturn, some analysts viewed this as an opportunity to own some of the "Core AI winners." Dan Ives of Wedbush Securities commented, "In our view, the tech bull cycle will be well intact for at least another 2-3 years, given the trillions being spent on AI infrastructure/software/chips/power/apps looking ahead. This remains our tech playbook and investor roadmap." Additionally, mixed earnings reports from retailers, such as Target, have added to the market's weakness. Investors are closely monitoring these reports for insights into the broader economic health and the potential impact of new tariffs on inflation.

Appian is down 11.1% since the beginning of the year, and at $29.50 per share, it is trading 29% below its 52-week high of $41.56 from November 2024. Investors who bought $1,000 worth of Appian’s shares 5 years ago would now be looking at an investment worth $514.30.

Unless you’ve been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) semiconductor stock benefiting from the rise of AI. Click here to access our free report on our favorite semiconductor growth story.