What Happened?

A number of stocks jumped in the afternoon session after President Trump's state visit to Beijing lifted market sentiment across tech, with the S&P hitting a record high above 7,500.

While the Trump-Xi summit produced fewer concrete deals than investors had hoped for, the general mood around US-China trade relations shifted from confrontational to cautiously constructive and for a sector as globally exposed as software, that reduction in uncertainty was enough to drive buyers back in. 

Adding to the positive sentiment, Figma posted 46% revenue growth with early AI monetisation showing genuine traction, and ServiceNow announced a multi-year AI partnership with Experian. Each print reinforced the same thesis: that enterprise software companies are successfully embedding AI into their products and charging for it, rather than being disrupted by it a concern that had weighed heavily on the sector earlier in the year.

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:

• Finance and Accounting Software company Workday (NASDAQ: WDAY) jumped 4.6%. Is now the time to buy Workday? Access our full analysis report here, it’s free.
• Network Security company Zscaler (NASDAQ: ZS) jumped 4.5%. Is now the time to buy Zscaler? Access our full analysis report here, it’s free.

Zooming In On Workday (WDAY)

Workday’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 2 days ago when the stock dropped 3.3% on the news that the April PPI report sent Treasury yields to 10-month highs, with the 10-year yield rising to 4.49%. 

This 'sticky and accelerating' inflation data effectively eliminated 2026 rate-cut hopes, raising the discount rate applied to long-duration growth earnings. BNN Bloomberg noted technology-related inflation was emerging as a structural concern, with computer software prices up year-over-year, potentially triggering a pullback in enterprise software spending. 

Software companies sell long-duration subscription revenue, recurring contracts whose value is heavily weighted toward future earnings. When Treasury yields rise, the discount rate investors apply to those future cash flows rises with them, which mechanically reduces the present value of the business and compresses the price-to-earnings multiple. Beyond the rate channel, the PPI print confirmed that software-specific inflation was running well above the headline rate. This 'sticky' pricing power for vendors is a double-edged sword: while it supports current revenue, it risks forcing enterprise customers to consolidate seats or delay new deployments to protect their own margins in a negative real-wage environment.

Workday is down 39.3% since the beginning of the year, and at $125.07 per share, it is trading 54.5% below its 52-week high of $274.71 from May 2025. Investors who bought $1,000 worth of Workday’s shares 5 years ago would now be looking at only $544.79.

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