What Happened?
A number of stocks fell in the morning session after markets became increasingly wary of high valuations following a significant AI-driven rally.
The tech-heavy Nasdaq fell approximately 1.4% as a wave of caution swept through the market. A key example of this trend is Palantir Technologies, which saw its shares drop around 7% despite reporting record quarterly results that surpassed analyst estimates and raising its full-year revenue outlook. This seemingly contradictory movement highlighted a broader sentiment shift. Investors appeared to be engaging in profit-taking, concerned that the recent surge in AI-related stocks had led to stretched valuations. This broader market caution affected high-growth technology companies that had previously surged on AI optimism but faced increased scrutiny, signaling a potential cooling-off period for the sector. Adding serious weight to this caution, leadership at both Goldman Sachs and Morgan Stanley highlighted the possibility of a correction in the equity markets over the next couple of years. Despite the euphoria driven by AI optimism and the promise of future rate cuts, these banks viewed this cooling-off period not as a disaster, but as a necessary and healthy feature of a long-term bull 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:
- Data Infrastructure company Teradata (NYSE: TDC) fell 2.5%. Is now the time to buy Teradata? Access our full analysis report here, it’s free for active Edge members.
- Banking Software company nCino (NASDAQ: NCNO) fell 3.1%. Is now the time to buy nCino? Access our full analysis report here, it’s free for active Edge members.
- Automation Software company Appian (NASDAQ: APPN) fell 3.5%. Is now the time to buy Appian? Access our full analysis report here, it’s free for active Edge members.
- E-commerce Software company Wix (NASDAQ: WIX) fell 3.6%. Is now the time to buy Wix? Access our full analysis report here, it’s free for active Edge members.
- Data Storage company Commvault (NASDAQ: CVLT) fell 3.6%. Is now the time to buy Commvault? 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 19 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 6 days ago when the stock dropped 6.9% on the news that the company's stock fell as negative sentiment persisted from its second-quarter earnings report and analysts lowered their price targets. The decline extended a sharp drop from the previous trading session, which occurred after the data protection company reported its financial results. While Commvault's revenue grew 18% year-over-year to $276.2 million, beating expectations, its earnings did not meet forecasts. The company posted an adjusted earnings per share of $0.91, which was just shy of the $0.94 Wall Street had hoped for. Investors focused on the profitability miss, suggesting the company's growth was less profitable than anticipated. Adding to the pressure, analysts at both Cantor Fitzgerald and RBC lowered their price targets on the stock, reinforcing investor concerns following the earnings announcement.
Commvault is down 10.4% since the beginning of the year, and at $136.26 per share, it is trading 30.3% 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 $3,174.
P.S. In tech investing, "Gorillas" are the rare companies that dominate their markets—like Microsoft and Apple did decades ago. Today, the next Gorilla is emerging in AI-powered enterprise software. Access the ticker here in our special report.
