What Happened?
A number of stocks fell in the afternoon session after rising treasury yields and renewed Iran tensions hit the software sector.
The 10 year jumped to 4.4% as Trump rejected Iran's latest peace proposal, compressing the terminal value multiples (future cash flow discounted back to the present value) that high multiple SaaS names depend on. The real story was more thematic with 2026 being a difficult year for some software names as investors feared agentic AI would erode the traditional subscription model that powers enterprise software economics.
As a result, capital continued to flow into AI infrastructure names like Nvidia and Micron where capex is tangible and earnings visibility remained high. JP Morgan called the sell off "broken logic" while Morgan Stanley noted it was sentiment driven. However, until estimates stabilized, investors continued to grapple with uncertainty.
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:
- Sales Software company Freshworks (NASDAQ: FRSH) fell 3.3%. Is now the time to buy Freshworks? Access our full analysis report here, it’s free.
- Identity Management company Okta (NASDAQ: OKTA) fell 3.2%. Is now the time to buy Okta? Access our full analysis report here, it’s free.
Zooming In On Freshworks (FRSH)
Freshworks’s shares are somewhat volatile and have had 14 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 10 days ago when the stock gained 3.7% on the news that strong earnings and upbeat forecasts from several peers boosted the broader software sector.
The gains appeared driven by positive sentiment across the software-as-a-service (SaaS) space. For instance, enterprise software maker Atlassian saw its shares surge after lifting its annual forecast, which in turn lifted peers like Salesforce and ServiceNow.
Similarly, Twilio's stock jumped after it reported first-quarter revenue that beat estimates and raised its own forecast, with its CEO highlighting artificial intelligence as a catalyst. This positive news from peers helped create a favorable environment for software stocks, which some strategists noted had been underperforming the broader market and were potentially positioned for a comeback.
Freshworks is down 26.1% since the beginning of the year, and at $8.58 per share, it is trading 46.3% below its 52-week high of $15.98 from May 2025. Investors who bought $1,000 worth of Freshworks’s shares at the IPO in September 2021 would now be looking at an investment worth $180.34.
WHILE YOU’RE HERE: The Next Palantir? One satellite company captures images of every point on Earth. Every single day. The Pentagon wants it. Hedge funds are using it to beat earnings. You’ve probably never heard of it.
This is what the early days of Palantir looked like before it became a $437 billion giant. Same playbook. Different technology. If you missed Palantir, you need to see this. Claim The Stock Ticker for Free HERE.
