What Happened?

A number of stocks jumped in the afternoon session after stocks extended their rebound, led by strong gains in the technology sector, as renewed optimism surrounding U.S.–China trade negotiations lifted investor sentiment.

Contributing to the bullish tone was a standout earnings report from enterprise software leader ServiceNow, which topped Wall Street's expectations on RPO, profit, and earnings. More importantly, the company's remaining performance obligations (RPO), a key forward-looking metric for future revenue, gave investors confidence that enterprise customers were not pulling back spending amidst uncertain macro. 

This optimism was further reinforced by solid results from Texas Instruments and Lam Research. Their performance was especially encouraging for semiconductor stocks, which had been under pressure due to their exposure to global trade tensions. These earnings results suggested that, despite macroeconomic uncertainties, demand in key tech verticals remained resilient.

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:

• Video Conferencing company RingCentral (NYSE: RNG) jumped 6.2%. Is now the time to buy RingCentral? Access our full analysis report here, it’s free.
• Advertising Software company The Trade Desk (NASDAQ: TTD) jumped 6%. Is now the time to buy The Trade Desk? Access our full analysis report here, it’s free.
• Video Conferencing company 8x8 (NASDAQ: EGHT) jumped 6.1%. Is now the time to buy 8x8? Access our full analysis report here, it’s free.
• Data Storage company DigitalOcean (NYSE: DOCN) jumped 5.9%. Is now the time to buy DigitalOcean? Access our full analysis report here, it’s free.
• Data Storage company Commvault Systems (NASDAQ: CVLT) jumped 5.7%. Is now the time to buy Commvault Systems? Access our full analysis report here, it’s free.

Zooming In On RingCentral (RNG)

RingCentral’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 biggest move we wrote about over the last year was 12 months ago when the stock gained 15.7% on the news that the company reported strong first quarter 2024 results that beat analysts' billings, revenue and EPS expectations. Its gross margin improved and free cash flow was solid. Looking ahead, revenue guidance for the next quarter came in roughly in line with Wall Street's expectations. Zooming out, we think this was a decent quarter, showing that the company is staying on target.

RingCentral is down 28.2% since the beginning of the year, and at $25.01 per share, it is trading 40.2% below its 52-week high of $41.82 from December 2024. Investors who bought $1,000 worth of RingCentral’s shares 5 years ago would now be looking at an investment worth $104.76.

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