What happened?
A number of stocks fell in the morning session after software stocks extended the selloff from the previous session as investors continued to reprice valuations amid mounting artificial intelligence capital expenditure concerns and decelerating software bookings.
Oracle filed to raise $20 billion in debt and equity, reigniting concerns over soaring artificial intelligence spending and cash burn. The selloff deepened after quarterly reports from Alphabet and Amazon highlighted soaring data-center outlays that compressed free cash flows, as reported by Bloomberg. That spending concern triggered the tech-heavy Nasdaq's drop the previous week, cementing its steepest monthly decline in over a year, according to The Wall Street Journal.
Within cybersecurity, Check Point Software slid in the morning session after third quarter sales missed expectations and warned its recovery is taking longer than anticipated, per Reuters, reinforcing worries that enterprise firewall refreshes and security budgets could remain sluggish. That weakness compounded disappointing bookings from Fortinet earlier in the previous week, with Bloomberg Intelligence data showing only 70% of S&P 500 software companies beat revenue forecasts this reporting season.
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:
- Identity management company Okta (NASDAQ: OKTA) fell 4.8%. Is now the time to buy Okta? Access our full analysis report here, it’s free.
- Network security company Zscaler (NASDAQ: ZS) fell 4%. Is now the time to buy Zscaler? Access our full analysis report here, it’s free.
- Vulnerability management company Qualys (NASDAQ: QLYS) fell 2.7%. Is now the time to buy Qualys? Access our full analysis report here, it’s free.
- Vulnerability management company Rapid7 (NASDAQ: RPD) fell 5.7%. Is now the time to buy Rapid7? Access our full analysis report here, it’s free.
- Endpoint security company SentinelOne (NYSE: S) fell 4%. Is now the time to buy SentinelOne? Access our full analysis report here, it’s free.
Zooming in on Rapid7 (RPD)
Rapid7’s shares are extremely volatile and have had 57 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 12 days ago when the stock gained 5% on the news that sentiment across the broader software and cybersecurity space continued to improve amid receding fears of artificial intelligence disruption. As detailed by CNBC, investors are continuing to reallocate capital away from semiconductor companies and into software equities amid growing market caution regarding the sustainability of massive infrastructure capital spending and elevated debt financing costs for hardware builders.
Rapid7 is up 10.8% since the beginning of the year, but at $15.82 per share, it is still trading 15.3% below its 52-week high of $18.68 from November 2025. Despite the year-to-date gain, investors who bought $1,000 worth of Rapid7’s shares 5 years ago would now be looking at only $128.52.
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