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:
- Advertising Software company Zeta Global (NYSE: ZETA) fell 3.5%. Is now the time to buy Zeta Global? Access our full analysis report here, it’s free.
- Data Infrastructure company C3.ai (NYSE: AI) fell 3.5%. Is now the time to buy C3.ai? Access our full analysis report here, it’s free.
- Advertising Software company LiveRamp (NYSE: RAMP) fell 3.4%. Is now the time to buy LiveRamp? Access our full analysis report here, it’s free.
- Endpoint Security company Varonis Systems (NASDAQ: VRNS) fell 3.4%. Is now the time to buy Varonis Systems? Access our full analysis report here, it’s free.
Zooming In On C3.ai (AI)
C3.ai’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 25 days ago when the stock dropped 1.8% on the news that its Executive Chairman, Thomas M. Siebel, sold over $4.1 million worth of company stock, adding to investor concerns about weak financial performance.
The sale took place on April 13 and 14. The move followed a period of poor performance for the company, which had reported a 46% plunge in revenue to $53.3 million for its fiscal third quarter, missing its own projections.
Furthermore, C3.ai reduced its fiscal year 2026 revenue guidance by approximately $51 million, implying a troubling 36% negative growth rate. Analysts pointed to poor sales execution as a key issue. The company also reported a negative free cash flow of $56.2 million and forecasted a 54% year-over-year revenue decline for the fourth quarter, deepening worries about its financial stability.
C3.ai is down 31.1% since the beginning of the year, and at $9.47 per share, it is trading 67.5% below its 52-week high of $29.16 from July 2025. Investors who bought $1,000 worth of C3.ai’s shares 5 years ago would now be looking at only $172.97.
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