What Happened?
A number of stocks fell in the afternoon session after investors grew increasingly concerned that the billions of dollars being invested into artificial intelligence may not generate sufficient profits. This sentiment fueled fears of a potential "AI bubble," leading to a significant downturn in the technology-heavy Nasdaq Composite index. The selloff was intensified after chipmaker Broadcom warned that increased sales of AI systems could lead to thinner profit margins, causing its stock to tumble. Subsequently, the broader market questioned whether the massive spending on chips and data centers would produce a worthwhile return on investment. This uncertainty caused a market recalibration, with investors rotating capital out of more speculative tech stocks and into more stable assets.
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:
- Marketing Software company Upland Software (NASDAQ: UPLD) fell 6.1%. Is now the time to buy Upland Software? Access our full analysis report here, it’s free for active Edge members.
- Developer Operations company JFrog (NASDAQ: FROG) fell 2.6%. Is now the time to buy JFrog? Access our full analysis report here, it’s free for active Edge members.
- Data Infrastructure company Elastic (NYSE: ESTC) fell 2.8%. Is now the time to buy Elastic? Access our full analysis report here, it’s free for active Edge members.
- Data Infrastructure company C3.ai (NYSE: AI) fell 3.6%. Is now the time to buy C3.ai? Access our full analysis report here, it’s free for active Edge members.
- Vulnerability Management company Tenable (NASDAQ: TENB) fell 5.6%. Is now the time to buy Tenable? Access our full analysis report here, it’s free for active Edge members.
Zooming In On Upland Software (UPLD)
Upland Software’s shares are extremely volatile and have had 52 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 5 months ago when the stock gained 20.2% on the news that the company announced it had successfully refinanced its debt. The AI-powered software provider entered into an agreement with Sound Point Capital for a new six-year, $240 million term loan, which extended its debt maturity to 2031. The deal also included a $30 million revolving credit facility that further enhanced the company's financial liquidity. Investors reacted positively to the news because the refinancing improved Upland's financial flexibility. The company stated this allowed for further investment into its AI-powered knowledge and content management solutions, signaling a focus on future growth and long-term value.
Upland Software is down 66% since the beginning of the year, and at $1.53 per share, it is trading 69.8% below its 52-week high of $5.05 from December 2024. Investors who bought $1,000 worth of Upland Software’s shares 5 years ago would now be looking at an investment worth $33.79.
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