What Happened?
A number of stocks jumped in the afternoon session after investors continued to rotate out of high-flying semiconductors into beaten-down software stocks.
DigitalOcean's blowout preliminary results also supported the improved appetite as it showed proof that AI demand is converting into real, contracted revenue. The clearest signal is at the index level: the iShares software ETF (IGV) climbed roughly 7% over eight sessions even as the semiconductor SOXX fell ~8.5%. Microsoft rose ~3% on the week (after launching its $2.5B "Frontier" AI-services unit). ServiceNow and Salesforce each gained around +4%. DigitalOcean pre-announced that remaining performance obligations (RPO) would exceed $800M, more than 10x year-over-year and up over $550M in the quarter, driven by multiple new nine-figure AI inference contracts, with average contract life stretching from 1.6 to over three years. Revenue growth was guided to accelerate to ~29% (from a prior 24–25% guide), and margins to the high end. Coming after Q1's 221% jump in AI-customer ARR, it's hard evidence that AI spend is landing as durable, contracted backlog, not just usage that can evaporate.
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:
- Data Analytics company Amplitude (NASDAQ: AMPL) jumped 3.1%. Is now the time to buy Amplitude? Access our full analysis report here, it’s free.
- Cloud Monitoring company Nutanix (NASDAQ: NTNX) jumped 3.4%. Is now the time to buy Nutanix? Access our full analysis report here, it’s free.
Zooming In On Nutanix (NTNX)
Nutanix’s shares are very volatile and have had 25 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 8 days ago when the stock gained 3.6% on the news that the United States and Iran agreed to halt their tit-for-tat military exchanges, easing fears of a wider Middle East conflict that had rattled markets over the weekend.
The relief lifted the whole risk complex. The pre-existing trigger was the chip-to-software rotation, sparked by a June 25 report that OpenAI may delay its IPO, which softened the "SaaSpocalypse" fear that AI labs would quickly cannibalize incumbent SaaS. The Iran news matters for software through the rate channel. Lower oil eases the inflation impulse that had pushed traders to price in a Fed rate hike later in the year, and falling rate-hike odds disproportionately help long-duration, high-multiple growth software exactly the cohort hit hardest in 2026. So, the de-escalation removed a macro overhang, at the same moment the micro narrative (OpenAI's constraints) reduced the existential AI-disruption fear.
Nutanix is up 6.3% since the beginning of the year, but at $53.77 per share, it is still trading 33.7% below its 52-week high of $81.12 from September 2025. Investors who bought $1,000 worth of Nutanix’s shares 5 years ago would now be looking at an investment worth $1,437.
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