What Happened?
A number of stocks fell in the afternoon session after a wave of competitive anxiety hit the enterprise software sector sparked by a high-profile downgrade of Adobe, triggering a broader sell-off in high-valuation cloud stocks.
A major analyst at Oppenheimer downgraded the stock, warning that Adobe's AI tools aren't boosting sales as quickly as everyone hoped. Also, Snowflake took a direct hit after Barclays downgraded it to "Hold," citing intense pressure from heavyweights like Amazon and Oracle, who aggressively bundled their own AI data tools. Simultaneously, DocuSign and Asana struggled against the narrative that their core markets were becoming commoditized.
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:
- Data Analytics company Domo (NASDAQ: DOMO) fell 8.8%. Is now the time to buy Domo? Access our full analysis report here, it’s free.
- Data Analytics company Amplitude (NASDAQ: AMPL) fell 5.1%. Is now the time to buy Amplitude? Access our full analysis report here, it’s free.
- Advertising Software company LiveRamp (NYSE: RAMP) fell 5.6%. Is now the time to buy LiveRamp? Access our full analysis report here, it’s free.
Zooming In On Domo (DOMO)
Domo’s shares are extremely volatile and have had 37 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 4.4% on the news that a broader market rotation out of the technology sector led to profit-taking following a recent rally.
The move was part of a wider trend that saw high-growth technology stocks fall, with the Nasdaq experiencing the sharpest decline among the major indices. Multiple reports indicated that traders were locking in profits, particularly from the artificial-intelligence trade, which had previously seen a strong run-up. This market action represented a shift in investor focus, as money moved out of tech.
Defense stocks emerged as the primary beneficiary of this capital shift, surging after President Trump proposed a massive $1.5 trillion defense budget for 2027. Major contractors rallied on the news, with Northrop Grumman jumping over 10% and Lockheed Martin gaining nearly 8%, providing a counterbalance to the tech slump that kept the S&P 500 flat. The rotation into heavy industry was further supported by a stabilization in energy markets, as crude prices rebounded.
Domo is down 13.1% since the beginning of the year, and at $7.21 per share, it is trading 60.4% below its 52-week high of $18.20 from September 2025. Investors who bought $1,000 worth of Domo’s shares 5 years ago would now be looking at an investment worth $111.97.
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