What Happened?
A number of stocks fell in the afternoon session after investor fears over artificial intelligence disrupting the software industry sparked a broad sell-off.
The anxiety stemmed from the rapid adoption of new 'agentic AI' tools, which some investors believed could dismantle traditional Software-as-a-Service (SaaS) business models. This 'AI Panic' led to indiscriminate selling across the sector. The market move reflected growing concerns about the downside of the AI boom for established software companies.
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 8x8 (NASDAQ: EGHT) fell 6.5%. Is now the time to buy 8x8? Access our full analysis report here, it’s free.
- Data Analytics company Strategy (NASDAQ: MSTR) fell 3.5%. Is now the time to buy Strategy? Access our full analysis report here, it’s free.
- Data Storage company MongoDB (NASDAQ: MDB) fell 5.2%. Is now the time to buy MongoDB? Access our full analysis report here, it’s free.
- Content Delivery company Fastly (NASDAQ: FSLY) fell 3.9%. Is now the time to buy Fastly? Access our full analysis report here, it’s free.
- Tax Software company Intuit (NASDAQ: INTU) fell 5.2%. Is now the time to buy Intuit? Access our full analysis report here, it’s free.
Zooming In On 8x8 (EGHT)
8x8’s shares are extremely volatile and have had 45 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 5 days ago when the stock dropped 5.4% on the news that investors continued to distinguish between the winners and losers in the artificial intelligence boom, leading to a broad sell-off.
The Nasdaq fell 1.5%, while the S&P 500 and Dow Jones Industrial Average also saw significant declines. This market shift indicated that investors were becoming more selective, moving beyond the initial excitement surrounding AI. In addition, a stronger-than-expected U.S. jobs report dampened investor expectations for near-term interest rate cuts from the Federal Reserve. Data showed the U.S. labor market remained resilient, with non-farm payrolls indicating impressive job creation and falling unemployment. This positive economic signal led markets to re-evaluate the timeline for monetary policy easing, which is the process by which a central bank reduces interest rates to stimulate economic growth. Investors priced in the first potential rate cut for July, a shift from previous expectations of June. This delay created a headwind for growth-oriented sectors like software, as higher interest rates can reduce the present value of future earnings.
8x8 is up 33.6% since the beginning of the year, but at $2.53 per share, it is still trading 18.4% below its 52-week high of $3.10 from February 2025. Investors who bought $1,000 worth of 8x8’s shares 5 years ago would now be looking at an investment worth $71.07.
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