What Happened?

A number of stocks jumped in the afternoon session after the software sector caught a massive tailwind, fueled by easing geopolitical tensions and a fresh wave of AI-driven M&A. 

Over the weekend, President Trump abruptly called off a planned military offensive against Iran. Yielding to pressure from Gulf allies, the administration shifted toward diplomatic talks to reopen the Strait of Hormuz. This critical de-escalation relieved pressure on global energy markets and inflation expectations, accelerating a drop in Treasury yields. 

For software, this shifting macro backdrop is the perfect catalyst. Lower interest rates reduce the discount rate applied to expected future cash flows, driving capital back into growth-oriented tech equities. Furthermore, a lower-yield environment provides cheaper borrowing costs to fund ongoing AI development and the aggressive acquisitions currently sweeping the industry. 

Strategic dealmaking continues to accelerate. Yellow.ai, a global leader in enterprise agentic AI, announced a $550 million SPAC merger with Bluerock Acquisition Corp to go public under the ticker "YAI." Meanwhile, financial automation leader AutoRek acquired Grath to integrate its AI-driven reconciliation and compliance technology.

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 Asana (NYSE: ASAN) jumped 4.1%. Is now the time to buy Asana? Access our full analysis report here, it’s free.
• Data Storage company Snowflake (NYSE: SNOW) jumped 7.5%. Is now the time to buy Snowflake? Access our full analysis report here, it’s free.
• Project Management Software company Atlassian (NASDAQ: TEAM) jumped 3.4%. Is now the time to buy Atlassian? Access our full analysis report here, it’s free.
• Vertical Software company Guidewire Software (NYSE: GWRE) jumped 2.8%. Is now the time to buy Guidewire Software? Access our full analysis report here, it’s free.
• Design Software company Adobe (NASDAQ: ADBE) jumped 1.5%. Is now the time to buy Adobe? Access our full analysis report here, it’s free.

Zooming In On Snowflake (SNOW)

Snowflake’s shares are very volatile and have had 26 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 biggest move we wrote about over the last year was 2 months ago when the stock gained 38.8% on the news that it added more than $20 billion in market cap following its impressive Q1 earnings, warranted by what was genuinely a turning-point quarter having been written off as an AI casualty. The headline numbers were strong on their own. Revenue grew 33% to $1.39 billion, beating the $1.32 billion consensus, while adjusted EPS of $0.39 crushed the $0.32 estimate by 22%. But the figure that mattered was product revenue growth accelerating to 34% year-over-year (up from 30% last quarter and 26% a year ago). The reason for the acceleration is specific and consequential: Cortex Code (internally called "CoCo"), Snowflake's AI coding agent, went live in February and spent Q1 in the hands of customers for the first time. By quarter-end it had 7,100 active accounts. Notably, CFO Brian Robins confirmed that CoCo was "the largest driver" of the full-year guidance raise to $5.84 billion in product revenue (up from $5.66 billion. Layered on top of the earnings, Snowflake announced a $6 billion multi-year infrastructure commitment to Amazon Web Services, including use of AWS's custom AI chips. This cements Snowflake's relationship with its most critical go-to-market partner and signals confidence in its own future workload volumes at a scale that is hard to fake. In short: the growth was accelerating when investors expected deceleration, the AI products are now contributing real revenue, the full-year guide went up by $180 million, and a $6 billion strategic deal with AWS was announced on the same night.

Snowflake is up 44.4% since the beginning of the year, and at $313.01 per share, it has set a new 52-week high. Investors who bought $1,000 worth of Snowflake’s shares 5 years ago would now be looking at an investment worth $1,100.

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