What Happened?

A number of stocks fell in the afternoon session after investors took profits following a significant rally the previous day. Software stocks pulled back after one of the sharpest sector recoveries on record. 

The iShares Expanded Tech-Software ETF gained 15% across the prior three sessions — its best such run ever — while ServiceNow completed a nearly 40% rally in just four sessions from its April lows. With gains of that magnitude in that timeframe, profit-taking is the natural response. The S&P 500 software and services sector fell approximately 3.78% on the day. 

Critically, the broader market provided no significant selling pressure as the S&P 500 was essentially flat, the Nasdaq barely changed, and the Dow edged marginally higher. This was sector-level digestion, not a broad risk-off move. Salesforce surrendered nearly half of the previous day's 10%-plus surge as worries about Anthropic's upcoming IPO and Google's $80 billion equity raise added pressure to the rerating. CrowdStrike slipped as pre-earnings caution set in ahead of the June 3 print — the stock rose approximately 70% year-to-date as options markets priced in a 9.5% swing on the result. 

The sector's underlying thesis remained intact: the SaaSpocalypse narrative broke, and many names continued to trade well below their 52-week highs. The pullback was the market catching its breath before the next round of data, not reversing course.

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:

• Sales Software company Freshworks (NASDAQ: FRSH) fell 5.9%. Is now the time to buy Freshworks? Access our full analysis report here, it’s free.
• Customer Experience Software company Sprinklr (NYSE: CXM) fell 5.9%. Is now the time to buy Sprinklr? Access our full analysis report here, it’s free.
• Marketing Software company Braze (NASDAQ: BRZE) fell 5.8%. Is now the time to buy Braze? Access our full analysis report here, it’s free.

Zooming In On Sprinklr (CXM)

Sprinklr’s shares are quite volatile and have had 15 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 23 hours ago when the stock gained 5.7% on the news that software stocks extended their rally, carrying momentum from one of the sharpest sector reversals of 2026. 

The iShares Expanded Tech-Software ETF closed May up 21%, its best monthly performance since October 2001, after Snowflake's Q1 results and Dell's Q1 print over two consecutive evenings combined to break the "SaaSpocalypse" narrative that had driven enterprise software stocks 20-40% below their highs. Snowflake's revenue grew 34% to $1.39 billion, AI accounts jumped from 9,100 to 13,600 in a single quarter, and Dell confirmed $16.1 billion in AI server revenue (up 757%) against a $51.3 billion committed backlog. The combined message was that AI is accelerating enterprise software demand, not displacing it. 

Nvidia CEO Jensen Huang's Computex keynote in Taipei framed agentic AI (autonomous systems executing tasks across enterprise infrastructure) as the defining platform shift ahead, directly validating the demand case for the software layer that governs, secures, and orchestrates those agents. ServiceNow rose 10%, bringing its two-session gain to 26% from the May 28 close of $108. Okta held its 30% post-earnings surge, with its identity platform increasingly positioned as infrastructure for enterprise AI agent deployment. MongoDB sustained its post-Q1 momentum after 25% revenue growth and a fourth consecutive quarter of Atlas growth at or above 29%. CrowdStrike held near its 52-week high of $731 ahead of its June 3 earnings.

Sprinklr is down 23.2% since the beginning of the year, and at $5.62 per share, it is trading 39.9% below its 52-week high of $9.35 from July 2025. Investors who bought $1,000 worth of Sprinklr’s shares at the IPO in June 2021 would now be looking at an investment worth $319.37.

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