What Happened?
A number of stocks jumped in the afternoon session after a drop in Treasury yields and growing concerns over the artificial intelligence investment cycle improved the market's appetite for enterprise software.
Global chipmakers suffered a sharp selloff tied to anxieties over lofty valuations, the sustainability of AI infrastructure spending, and intensifying competitive threats from China. Crucially, the decline in interest rates provided a macro tailwind for long-duration Software-as-a-Service valuations, acting as a catalyst for the software sector's rebound.Alongside the relief from lower rates, software appeared to benefit from capital reallocation.
As portfolio managers trim their chip exposure and lock in profits, they are likely to seek refuge in other sectors, especially established enterprise names.With the top 25 semiconductor and hardware companies hitting a combined market capitalization of approximately $22 trillion, even a fractional shift from this group can move the needle for software equities. Consequently, the sector experienced a broad lift, with many enterprise firms posting gains.
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:
- Network Security company Zscaler NASDAQ:ZS jumped 3.3%. Is now the time to buy Zscaler?
- E-commerce Software company Shopify NASDAQ:SHOP jumped 2.8%. Is now the time to buy Shopify?
- Design Software company PTC NASDAQ:PTC jumped 2.5%. Is now the time to buy PTC?
Zooming In On Zscaler (ZS)
Zscaler’s shares are very volatile and have had 27 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 14 days ago when the stock gained 8.8% on the news that U.S. and international security agencies issued a joint warning about Russian state-sponsored cyber threats targeting critical infrastructure.
The Cybersecurity and Infrastructure Security Agency (CISA), in collaboration with the National Security Agency (NSA) and the FBI, released an advisory warning that Russian cyber actors are exploiting vulnerable networking devices and routers. The advisory highlighted that sectors such as communications, energy, government, and healthcare were being targeted globally. Such high-level alerts about cyber threats often increase investor interest in cybersecurity companies, as they underscore the growing need for advanced security solutions to protect essential services and infrastructure.
Zscaler is down 31.4% since the beginning of the year, and at $151.37 per share, it is trading 55% below its 52-week high of $336.27 from November 2025. Investors who bought $1,000 worth of Zscaler’s shares 5 years ago would now be looking at only $639.11.
ALSO WORTH WATCHING: Nvidia’s Quiet Partner. Nvidia’s chips cost a hundred grand. The connectors that make them work cost even more. One company makes them all.
Every AI server needs specialized infrastructure the chip companies don’t make. High-speed cables. Power connectors. Thermal sensors. This 90-year-old company built a monopoly on it. The AI boom just started. This stock is still flying under the radar.