What Happened?
A number of stocks fell in the afternoon session after investor caution spread amid concerns that the rally in artificial intelligence stocks might have created a bubble. After a fantastic run, many of those high-flying AI and technology stocks saw investors take profits: selling shares to lock in their gains. This is often called a "market rotation." Money is moving out of the red-hot tech sector (which some worry has become too expensive) and into other parts of the market that investors may currently deem more stable or reasonably-priced. There's a secondary reason for the cautious mood: The long government shutdown came to an end. Though it's typically interpreted as good news, it also means a flood of delayed economic reports will be released. For weeks, investors were "flying blind" without key updates on the economy's health, like inflation data and the jobs report. In typical "sell the news" fashion, investors may also be taking profits and selling in anticipation that the new data would potentially give the Federal Reserve reasons to slow or even pause future rate cuts.
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:
- Automation Software company Pegasystems (NASDAQ:PEGA) fell 3.3%. Is now the time to buy Pegasystems? Access our full analysis report here, it’s free for active Edge members.
- Content Delivery company Fastly (NYSE:FSLY) fell 3.2%. Is now the time to buy Fastly? Access our full analysis report here, it’s free for active Edge members.
Zooming In On Pegasystems (PEGA)
Pegasystems’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 22 days ago when the stock gained 14.4% on the news that the company reported third-quarter results that significantly surpassed Wall Street's expectations. The low-code automation software company announced adjusted earnings of $0.30 per share on revenue of $381.4 million, representing 17.3% year-over-year growth. These figures comfortably beat analyst forecasts, which called for earnings of $0.20 per share and revenue of $351.6 million. Beyond the top-line beat, the company demonstrated improved profitability. Its operating margin expanded to 3.8%, a significant turnaround from negative 3.6% in the same quarter last year, suggesting greater efficiency in its operations.
Pegasystems is up 22.8% since the beginning of the year, but at $57.07 per share, it is still trading 14.4% below its 52-week high of $66.64 from October 2025. Investors who bought $1,000 worth of Pegasystems’s shares 5 years ago would now be looking at an investment worth $944.40.
While Wall Street chases Nvidia at all-time highs, an under-the-radar semiconductor supplier is dominating a critical AI component these giants can’t build without. Click here to access our full research report.
