What Happened?

A number of stocks fell in the afternoon session after a broad sell-off in the software sector was triggered by mixed earnings from industry leaders SAP and ServiceNow. 

The negative sentiment across the industry was sparked after SAP's cloud backlog and its cloud revenue outlook fell short of some forecasts. Similarly, ServiceNow's stock dropped despite reporting better-than-expected results, fueling concerns that rising AI-related costs could pressure profits for enterprise software companies. The news sparked broader fears that AI was transforming the sector faster than companies could capitalize on it, leading the S&P 500 Software and Services Index to fall.

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:

• Design Software company Unity (NYSE: U) fell 4.1%. Is now the time to buy Unity? Access our full analysis report here, it’s free.
• Automation Software company Appian (NASDAQ: APPN) fell 4.7%. Is now the time to buy Appian? Access our full analysis report here, it’s free.
• Document Management company Box (NYSE: BOX) fell 4.3%. Is now the time to buy Box? Access our full analysis report here, it’s free.
• Data Analytics company Domo (NASDAQ: DOMO) fell 5.6%. Is now the time to buy Domo? Access our full analysis report here, it’s free.
• Network Security company Palo Alto Networks (NASDAQ: PANW) fell 4.9%. Is now the time to buy Palo Alto Networks? Access our full analysis report here, it’s free.

Zooming In On Domo (DOMO)

Domo’s shares are extremely volatile and have had 43 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 7 days ago when the stock gained 4.5% on the news that reports of easing geopolitical tensions in Greenland boosted investor sentiment. 

The relief rally saw major indices, including the S&P 500 and the tech-heavy Nasdaq Composite, rebound as investors moved back into riskier assets. This positive shift was reflected across the technology landscape, with all of the Magnificent Seven tech firms seeing their shares climb. The easing of international friction reduced market uncertainty, which often encourages investment in growth-oriented sectors like technology. The move was part of a broader market upswing, with the Dow Jones Industrial Average adding 500 points, signaling increased investor confidence.

Domo is down 28.8% since the beginning of the year, and at $5.91 per share, it is trading 67.5% 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 $93.23.

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