What Happened?
A number of stocks jumped in the afternoon session after positive news on corporate earnings, easing political and trade tensions, and optimism about future interest rate cuts all converged to lift investor sentiment.
The overall market, including the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite, climbed significantly. A major catalyst was Apple shares rising 4% after a firm upgraded its rating, citing improving iPhone demand and predicting a long growth cycle. More broadly, the third-quarter earnings season got off to a strong start, with 76% of the 58 S&P 500 companies beating expectations, lifting the market's mood.
Additionally, there were hope for an end to the ongoing U.S. government shutdown, which is seen as good for the economy. Investors also moved past recent fears over credit risks that had caused a sell-off the previous week, with shares of regional banks rebounding. Finally, signs that trade tensions with China were de-escalating, including expectations that new tariffs might be avoided, added to the overall positive momentum, leading traders to focus on more favorable factors like earnings and potential Federal Reserve rate cuts.
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:
- Project Management Software company Atlassian (NASDAQ: TEAM) jumped 3.9%. Is now the time to buy Atlassian? Access our full analysis report here, it’s free for active Edge members.
- Video Conferencing company RingCentral (NYSE: RNG) jumped 3.7%. Is now the time to buy RingCentral? Access our full analysis report here, it’s free for active Edge members.
- Automation Software company Jamf (NASDAQ: JAMF) jumped 3.4%. Is now the time to buy Jamf? Access our full analysis report here, it’s free for active Edge members.
- Video Conferencing company 8x8 (NASDAQ: EGHT) jumped 3.2%. Is now the time to buy 8x8? Access our full analysis report here, it’s free for active Edge members.
- Advertising Software company PubMatic (NASDAQ: PUBM) jumped 4.1%. Is now the time to buy PubMatic? Access our full analysis report here, it’s free for active Edge members.
Zooming In On PubMatic (PUBM)
PubMatic’s shares are very volatile and have had 27 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 gained 2.6% on the news that the company announced a partnership with MNTN to expand access to premium Connected TV (CTV) advertising for marketers. The deal gave MNTN's self-serve advertising platform direct access to PubMatic's network of top-tier streaming publishers, including major names like Paramount and NBCUniversal. Early results from the collaboration showed that publishers using PubMatic's platform experienced a 10% revenue increase, driven by 14% more unique advertiser demand. The partnership also created a new path for growth by connecting with advertisers new to CTV, as nearly all of MNTN's customers had not advertised in this space before. This move tapped into a growing market, with U.S. CTV ad spending projected to reach nearly $37 billion in 2025.
PubMatic is down 44.7% since the beginning of the year, and at $8.20 per share, it is trading 52.1% below its 52-week high of $17.14 from February 2025. Investors who bought $1,000 worth of PubMatic’s shares at the IPO in December 2020 would now be looking at an investment worth $278.50.
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.
