What Happened?
A number of stocks fell in the afternoon session after sentiment continued to weaken as tech stocks faced a dual headwind of deteriorating macro conditions and an unwinding of retail leverage.
The fundamental pressure stems from a sudden oil shock. A reinstated U.S. naval blockade on Iran pushed Brent crude past $85 a barrel, raising expectations that the Federal Reserve will hold rates in the 3.50%–3.75% range. For the software sector, this higher cost of capital could drive stricter scrutiny of AI investments. Investors might be hesitant to fund massive, margin-dilutive infrastructure buildouts without a clear timeline for returns.
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:
- Video Conferencing company Zoom (NASDAQ: ZM) fell 2.5%. Is now the time to buy Zoom? Access our full analysis report here, it’s free.
- Advertising Software company AppLovin (NASDAQ: APP) fell 2%. Is now the time to buy AppLovin? Access our full analysis report here, it’s free.
- Healthcare And Life Sciences Software company Doximity (NYSE: DOCS) fell 2.3%. Is now the time to buy Doximity? Access our full analysis report here, it’s free.
Zooming In On Zoom (ZM)
Zoom’s shares are somewhat volatile and have had 14 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 16 days ago when the stock gained 5.4% on the news that Guggenheim's John DiFucci upgraded both Salesforce and ServiceNow to Buy, arguing the AI-disruption fear that gutted the software sector during the year had pushed valuations too low.
This was a valuation call from a skeptic, not an AI endorsement. DiFucci wrote he is "not upgrading because we see [ServiceNow] as an AI beneficiary," calling near-term AI monetization "unlikely to materialize" and AI risks "very real," while arguing the darkest scenario was already priced in (CRM at ~3.7x EV/recurring revenue; NOW's $125 target at 7.5x EV/NTM recurring revenue).
The read-through was what lifted the group. When a previously cautious, highly ranked analyst flips to Buy on the two enterprise-SaaS bellwethers purely on valuation, it signals the "SaaSpocalypse" repricing overshot, de-risking the whole complex and inviting bargain-hunting across peers. Oracle's ~2% bounce added an independent second leg, driven by inclusion on William Blair's July Analyst Conviction List, a new AI product, and oversold conditions after the previous disclosure of a $40 billion AI-infrastructure raise. Together they extended a multi-week recovery.
Zoom is up 8.9% since the beginning of the year, but at $90.72 per share, it is still trading 18.9% below its 52-week high of $111.88 from June 2026. Despite the year-to-date gain, investors who bought $1,000 worth of Zoom’s shares 5 years ago would now be looking at only $256.12.
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