What Happened?
A number of stocks fell in the morning session after the April PPI report sent Treasury yields to 10-month highs, with the 10-year yield rising to 4.49%.
This 'sticky and accelerating' inflation data effectively eliminated 2026 rate-cut hopes, raising the discount rate applied to long-duration growth earnings. BNN Bloomberg noted technology-related inflation was emerging as a structural concern, with computer software prices up year-over-year, potentially triggering a pullback in enterprise software spending. Software companies sell long-duration subscription revenue, recurring contracts whose value is heavily weighted toward future earnings.
When Treasury yields rise, the discount rate investors apply to those future cash flows rises with them, which mechanically reduces the present value of the business and compresses the price-to-earnings multiple. Beyond the rate channel, the PPI print confirmed that software-specific inflation was running well above the headline rate. This 'sticky' pricing power for vendors is a double-edged sword: while it supports current revenue, it risks forcing enterprise customers to consolidate seats or delay new deployments to protect their own margins in a negative real-wage environment.
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:
- HR Software company Asure Software (NASDAQ: ASUR) fell 3.4%. Is now the time to buy Asure Software? Access our full analysis report here, it’s free.
- Payments Software company Flywire (NASDAQ: FLYW) fell 3.2%. Is now the time to buy Flywire? Access our full analysis report here, it’s free.
- Design Software company Procore Technologies (NYSE: PCOR) fell 3.8%. Is now the time to buy Procore Technologies? Access our full analysis report here, it’s free.
- Endpoint Security company Varonis Systems (NASDAQ: VRNS) fell 2.6%. Is now the time to buy Varonis Systems? Access our full analysis report here, it’s free.
- Content Delivery company Fastly (NASDAQ: FSLY) fell 3.4%. Is now the time to buy Fastly? Access our full analysis report here, it’s free.
Zooming In On Procore Technologies (PCOR)
Procore Technologies’s shares are quite volatile and have had 19 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 20 days ago when the stock dropped 7.2% on the news that quarterly results from two major companies raised fresh questions about AI's impact on the sector.
IBM declined about 10% after reporting slower Q1 revenue growth, with weakness in its software business. ServiceNow also fell after noting that delayed deals in the Middle East, tied to the Iran conflict, would affect its subscription revenue growth. NOW also expects recent investments in AI to weigh on margins in the near term. The sector-wide move reflected an ongoing debate. Some investors have questioned whether AI tools will reduce demand for traditional software or change existing license models.
The results were likely read through that lens, which contributed to selling across software names beyond the two companies that reported. Though neither cause was strictly about AI suggesting the contagion was thematic not fundamental. Also, given ServiceNow was viewed as AI-resilient, its miss weakened the "safe SaaS" case, causing some analysts to lower their estimates.
Procore Technologies is down 33.8% since the beginning of the year, and at $46.38 per share, it is trading 41.7% below its 52-week high of $79.60 from November 2025. Investors who bought $1,000 worth of Procore Technologies’s shares 5 years ago would now be looking at only $527.05.
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