What Happened?
A number of stocks jumped in the morning session after a string of impressive earnings reports from industry leaders pointed to resilient growth.
Leading the charge was Microsoft, which neared a $4 trillion valuation after reporting booming sales in its Azure cloud division and forecasting record spending. This positive momentum was echoed elsewhere in the sector. PTC Inc. shares jumped on a 24% revenue increase driven by its AI-powered portfolio and raised its full-year outlook. Similarly, F5 Networks and BigCommerce both surpassed analyst expectations for revenue and earnings. The optimism extended to ad-tech, where AppLovin gained on investor confidence in its AI-driven advertising solutions, showcasing broad strength in specific software niches.
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:
- Cloud Monitoring company PagerDuty (NYSE:PD) jumped 3%. Is now the time to buy PagerDuty? Access our full analysis report here, it’s free.
- Design Software company Unity (NYSE:U) jumped 3%. Is now the time to buy Unity? Access our full analysis report here, it’s free.
- HR Software company Asure (NASDAQ:ASUR) jumped 3.3%. Is now the time to buy Asure? Access our full analysis report here, it’s free.
- Content Delivery company Cloudflare (NYSE:NET) jumped 3.5%. Is now the time to buy Cloudflare? Access our full analysis report here, it’s free.
- Lending Software company Upstart (NASDAQ:UPST) jumped 3%. Is now the time to buy Upstart? Access our full analysis report here, it’s free.
Zooming In On Cloudflare (NET)
Cloudflare’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 previous big move we wrote about was 6 days ago when the stock gained 4.1% as the stock continued its upward momentum following a week of positive analyst commentary and strong performance.
The positive momentum appeared to be a continuation of bullish sentiment from earlier in the week. On July 21, the stock reached a new 52-week high of $198.57, reflecting strong investor confidence. This rally was supported by favorable analyst commentary, including a decision by Wells Fargo to raise its price target on the company to $225 from $200 while maintaining an "Overweight" rating. The firm’s outlook was reportedly based on Cloudflare's solid fundamentals, which included strong revenue growth and high gross profit margins.
Cloudflare is up 85.2% since the beginning of the year, and at $208.40 per share, has set a new 52-week high. Investors who bought $1,000 worth of Cloudflare’s shares 5 years ago would now be looking at an investment worth $5,007.
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