What Happened?
A number of stocks fell in the afternoon session after President Trump declared the Iran ceasefire "over" and threatened renewed strikes, sending oil higher and bond yields up in a session that punished high-multiple tech.
Software companies are quintessential long-duration growth stocks, valued on cash flows expected far into the future, which makes them acutely sensitive to interest rates. When a crude spike revives inflation fears and pushes government bond yields higher, as it did, the discount rate applied to those distant earnings rises and rich software valuations compress fastest.
The move was amplified by a risk-off rotation: with geopolitical tensions flaring, investors rotate out of the market's most expensive, momentum-driven corner and into energy and defensives. Though software has little direct exposure to oil as an input, its valuation math and its role as a funding source when investors de-risk make it a casualty of these shocks.
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:
- Project Management Software company Atlassian (NASDAQ: TEAM) fell 3.2%. Is now the time to buy Atlassian? Access our full analysis report here, it’s free.
- Endpoint Security company Varonis Systems (NASDAQ: VRNS) fell 3%. Is now the time to buy Varonis Systems? Access our full analysis report here, it’s free.
- Advertising Software company PubMatic (NASDAQ: PUBM) fell 3%. Is now the time to buy PubMatic? Access our full analysis report here, it’s free.
Zooming In On Atlassian (TEAM)
Atlassian’s shares are extremely volatile and have had 37 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 about 22 hours ago when the stock gained 3.8% on the news that 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.
Atlassian is down 44.7% since the beginning of the year, and at $85.64 per share, it is trading 61.2% below its 52-week high of $220.89 from July 2025. Investors who bought $1,000 worth of Atlassian’s shares 5 years ago would now be looking at only $321.16.
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