What Happened?
A number of stocks fell in the afternoon session after markets 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.
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 ZoomInfo (NASDAQ: GTM) fell 3.5%. Is now the time to buy ZoomInfo? Access our full analysis report here, it’s free for active Edge members.
- Endpoint Security company SentinelOne (NYSE: S) fell 4.6%. Is now the time to buy SentinelOne? Access our full analysis report here, it’s free for active Edge members.
- Data Infrastructure company Confluent (NASDAQ: CFLT) fell 4.9%. Is now the time to buy Confluent? Access our full analysis report here, it’s free for active Edge members.
- Data Storage company Commvault (NASDAQ: CVLT) fell 6.5%. Is now the time to buy Commvault? Access our full analysis report here, it’s free for active Edge members.
- Design Software company Procore Technologies (NYSE: PCOR) fell 4.2%. Is now the time to buy Procore Technologies? Access our full analysis report here, it’s free for active Edge members.
Zooming In On Commvault (CVLT)
Commvault’s shares are quite volatile and have had 18 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 19 days ago when the stock gained 3% on the news that investors scooped up equities, shaking off the initial concerns inferred from the Fed's dot plot, with tech stocks leading the charge.
As a reminder, the Federal Reserve cut its benchmark interest rate by 25 basis points the previous day and signaled that more reductions could come before year-end and beyond. Initially when the cut was announced and Fed Chair Powell held his press conference, there was a pullback in the market as the Fed's "dot plot" revealed that only one cut was likely for 2026. This was below the three cuts that had been priced into the markets. This was the first interest rate cut of 2025, a move investors had widely anticipated. In response to the decision, stocks rose significantly, positioning major indexes like the S&P 500 and Nasdaq to open at record levels.
The Fed's decision was influenced by signs of a weakening labor market. Lower interest rates are generally seen as positive for stocks because they reduce borrowing costs for businesses and make fixed-income investments like bonds less attractive by comparison, driving capital into the equity market. While Fed Chair Powell noted the path forward has risks, the prospect of looser monetary policy has fueled optimism on Wall Street.
Commvault is up 9.2% since the beginning of the year, but at $166.18 per share, it is still trading 15% below its 52-week high of $195.41 from September 2025. Investors who bought $1,000 worth of Commvault’s shares 5 years ago would now be looking at an investment worth $3,912.
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