What Happened?

A number of stocks jumped in the afternoon session after investors appeared to rotate into oversold enterprise software names amid profit taking in chip stocks. While the Nasdaq retreated and semiconductor leaders like Micron (-4%) sold off, major SaaS incumbents caught a strong bid. 

ServiceNow (NYSE: NOW) surged 4.3%, and Salesforce (NYSE: CRM) climbed 2.4%. The divergence occurred against a backdrop of rising oil prices and geopolitical tensions in the Middle East that weighed on the broader indices. It seems the AI trade is rotating from the infrastructure layer to the application layer. After months of paying premium multiples for the chips required to build artificial intelligence, investors appeared to be shifting capital into the software companies that are actually monetizing it. Earlier in 2026, software stocks suffered a severe valuation compression, dubbed the "SaaSpocalypse", driven by fears that AI agents would destroy traditional per-seat software licensing models. Recent data points, including ServiceNow raising its Now Assist AI contract target to $1.5 billion and Salesforce scaling its Agentforce platform, revealed that incumbents can sell AI as a premium add-on rather than watching it cannibalize their core business. Because enterprise SaaS providers own the proprietary data and daily workflows, they are positioned as the control layer for AI deployment. With semiconductor valuations stretched to historic premiums, capital continued to hunt for the margin of safety found in quality software stocks with depressed forward multiples. However, risks remain: if macroeconomic pressures force enterprise CIOs to consolidate vendors further, second-tier software names without clear AI monetization could still struggle.

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:

• Project Management Software company monday.com (NASDAQ: MNDY) jumped 4.6%. Is now the time to buy monday.com? Access our full analysis report here, it’s free.
• Payments Software company Marqeta (NASDAQ: MQ) jumped 4.5%. Is now the time to buy Marqeta? Access our full analysis report here, it’s free.
• Developer Operations company GitLab (NASDAQ: GTLB) jumped 4.3%. Is now the time to buy GitLab? Access our full analysis report here, it’s free.

Zooming In On monday.com (MNDY)

monday.com’s shares are extremely volatile and have had 32 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 3.3% on the news that President Trump declared the Iran ceasefire "over" and threatened renewed strikes, sending oil higher and bond yields up in a session that punished high-multiple tech. Software companies are quintessential long-duration growth stocks, valued on cash flows expected far into the future, which makes them acutely sensitive to interest rates. When a crude spike revives inflation fears and pushes government bond yields higher, as it did, the discount rate applied to those distant earnings rises and rich software valuations compress fastest. The move was amplified by a risk-off rotation: with geopolitical tensions flaring, investors rotate out of the market's most expensive, momentum-driven corner and into energy and defensives. Though software has little direct exposure to oil as an input, its valuation math and its role as a funding source when investors de-risk make it a casualty of these shocks.

monday.com is down 39.9% since the beginning of the year, and at $86.26 per share, it is trading 70.5% below its 52-week high of $292.24 from July 2025. Investors who bought $1,000 worth of monday.com’s shares 5 years ago would now be looking at only $376.17.

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