What Happened?
A number of stocks fell in the morning session after reports of a ceasefire breach in the Middle East spiked market volatility as fears grew that a fragile U.S.-Iran truce would unravel.
This tension was compounded by Anthropic’s launch of Managed Agents, autonomous AI systems that execute complex tasks. Traders were worried these would disrupt the traditional SaaS (Software as a Service) model, by replacing human-operated tools with more efficient AI workers. The sell-off intensified after short seller Michael Burry claimed (in a deleted social media post) Anthropic was "eating Palantir’s lunch." Burry’s comments highlighted the vulnerability of legacy platforms to Anthropic’s AI solutions.
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:
- Advertising Software company PubMatic (NASDAQ: PUBM) fell 3%. Is now the time to buy PubMatic? Access our full analysis report here, it’s free.
- Marketing Software company Braze (NASDAQ: BRZE) fell 3.7%. Is now the time to buy Braze? Access our full analysis report here, it’s free.
- Vertical Software company Alarm.com (NASDAQ: ALRM) fell 4.2%. Is now the time to buy Alarm.com? Access our full analysis report here, it’s free.
- Spend Management Software company American Express Global Business Travel (NYSE: GBTG) fell 3%. Is now the time to buy American Express Global Business Travel? Access our full analysis report here, it’s free.
- Automation Software company SoundHound AI (NASDAQ: SOUN) fell 3.7%. Is now the time to buy SoundHound AI? Access our full analysis report here, it’s free.
Zooming In On Alarm.com (ALRM)
Alarm.com’s shares are not very volatile and have only had 5 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 2 months ago when the stock dropped 5.1% on the news that fears of disruption from artificial intelligence spooked investors, leading to a broad-based sell-off.
The market witnessed a "basket-style reaction," a term for when investors reduce exposure to an entire segment without differentiating between individual company business models. The negative sentiment was widespread, pulling down all of the Magnificent Seven stocks and sending the S&P 500 Information Technology Sector down nearly 3%.
Alarm.com is down 15.7% since the beginning of the year, and at $43.21 per share, it is trading 28.8% below its 52-week high of $60.68 from May 2025. Investors who bought $1,000 worth of Alarm.com’s shares 5 years ago would now be looking at only $486.71.
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