What Happened?

A number of stocks jumped in the afternoon session after blockbuster quarterly results from tech titans Apple and Amazon boosted investor confidence, supported by impressive earnings from key cloud and crypto leaders, Cloudflare and Coinbase. 

Amazon's shares surged after reporting that its cloud computing division, Amazon Web Services (AWS), saw revenue jump 20% year-over-year to $33 billion. This accelerated growth is largely attributed to the high demand for computing power required for artificial intelligence applications. Apple also contributed to the positive sentiment, topping its own quarterly estimates and forecasting a record-breaking holiday quarter. The strong performance from these industry leaders has lifted the broader market. 

Impressive results from key cloud and crypto leaders, Cloudflare and Coinbase strongly supported the broader tech momentum. Cloudflare reported a "beat and raise" quarter with revenue soaring 30.7% year-over-year to $562 million and billings jumping nearly 40%, signaling strong future growth. Its non-GAAP operating margin expanded to 15.3%, and Free Cash Flow grew by nearly 60%, confirming management's efficient execution, leading the company to raise its full-year EPS guidance. Concurrently, Coinbase's third-quarter results also significantly topped estimates, driven by better-than-expected trading revenue and the increasing adoption of its stablecoin, USDC. The company reported $1.87 billion in revenue and an adjusted EPS of $1.44, while its strategic acquisition of Deribit advanced its "Everything Exchange" vision, resulting in over $840 billion in derivatives trading volume and aggressive expansion across the crypto 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:

• Video Conferencing company Five9 (NASDAQ: FIVN) jumped 4.5%. Is now the time to buy Five9? Access our full analysis report here, it’s free for active Edge members.
• Advertising Software company The Trade Desk (NASDAQ: TTD) jumped 2.5%. Is now the time to buy The Trade Desk? Access our full analysis report here, it’s free for active Edge members.
• Video Conferencing company 8x8 (NASDAQ: EGHT) jumped 2.7%. Is now the time to buy 8x8? Access our full analysis report here, it’s free for active Edge members.
• Endpoint Security company SentinelOne (NYSE: S) jumped 2.9%. Is now the time to buy SentinelOne? Access our full analysis report here, it’s free for active Edge members.
• Data Storage company DigitalOcean (NYSE: DOCN) jumped 4.3%. Is now the time to buy DigitalOcean? Access our full analysis report here, it’s free for active Edge members.

Zooming In On Five9 (FIVN)

Five9’s shares are very volatile and have had 22 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 2.7% on the news that a key inflation report came in cooler than anticipated, fueling hopes for a shift in the Federal Reserve's interest rate policy. The latest Consumer Price Index (CPI) report showed a 3.0% year-over-year increase, slightly below the 3.1% that analysts had expected. This moderation in inflation is a significant signal for investors, suggesting that price pressures may be easing. For the tech sector, which is often sensitive to interest rate changes, this news was particularly welcome. Softer inflation could give the Federal Reserve the flexibility to pause or even begin cutting interest rates. Lower rates reduce borrowing costs for growth-oriented tech companies and increase the present value of their future earnings, making their stocks more attractive to investors.

Five9 is down 40.3% since the beginning of the year, and at $24.16 per share, it is trading 44.3% below its 52-week high of $43.41 from December 2024. Investors who bought $1,000 worth of Five9’s shares 5 years ago would now be looking at an investment worth $167.56.

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