What Happened?

A number of stocks jumped in the afternoon session after a soft Producer Price Index (PPI) print reassured investors, countering fears of an industry-wide budget squeeze sparked by IBM a day earlier.

June wholesale inflation fell 0.3% against expectations for a flat reading, layering on top of the previous session's surprisingly sharp 0.4% decline in consumer prices. This consecutive confirmation of cooling inflation shifted market focus away from IBM's warning that clients are engaged in "capex reprioritization"—exhausting their IT budgets to secure supply-constrained AI servers and high-bandwidth memory instead of software. 

Lower inflation data directly reduces Treasury yields by taking pressure off the Federal Reserve to hold interest rates high. This provides a mechanical valuation lift to growth stocks, whose valuations rely heavily on future cash flows.

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:

• Document Management company DocuSign (NASDAQ: DOCU) jumped 3%. Is now the time to buy DocuSign? Access our full analysis report here, it’s free.
• Data Infrastructure company Oracle (NYSE: ORCL) jumped 3.3%. Is now the time to buy Oracle? Access our full analysis report here, it’s free.

Zooming In On Oracle (ORCL)

Oracle’s shares are extremely volatile and have had 34 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 23 days ago when the stock dropped 5% on the news that a confluence of high-profile AI talent departures from Alphabet, and a regulatory overhang pulled the entire communication-services and software complex lower. 

Alphabet fell roughly 6%. Microsoft slipped as well. When the two largest software-adjacent megacaps decline together, the sector indices follow mechanically given their index weight. But the deeper driver was the market's persistent fear that AI agents would erode the subscription model that underpins traditional enterprise software economics. That fear had been compounding all year. Salesforce trades around $152, down roughly 43% year-to-date and near its 52-week low. Adobe fell approximately 49% over the past year and has not traded this cheap on earnings in over a decade. 

The previous week's Accenture collapse, a near-20% single-day drop after the consulting giant cut its growth outlook and explicitly cited AI compressing demand for traditional IT services acted as a fresh confirmation of the thesis. If the largest IT services firm in the world is signaling that AI is eating its billable hours, investors extend the same logic to the software vendors whose products those hours configure. 

The counterargument is that the selling has become indiscriminate. Salesforce is a Rule-of-40 company retiring 10% of its shares through a $25 billion buyback, carrying the largest AI revenue line in the category, and it is acquiring usage-based billing platforms like m3ter precisely to monetize AI agent actions rather than seats. Monness upgraded the stock to Buy the previous week on valuation. The market is pricing the cannibalization as if it already happened; the income statements might be indicating otherwise. But until these companies can prove that AI revenue scales faster than it erodes the legacy subscription base, software might remain in the penalty box even on days when the rest of tech (especially chip stocks) is celebrating.

Oracle is down 32.2% since the beginning of the year, and at $132.66 per share, it is trading 59.6% below its 52-week high of $328.33 from September 2025. Despite the year-to-date decline, investors who bought $1,000 worth of Oracle’s shares 5 years ago would now be looking at an investment worth $1,538.

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