What Happened?

A number of stocks fell in the morning session after a broad sell-off swept through the software sector, driven by growing concerns about the impact of artificial intelligence. This led to institutional repositioning as traders pivot away from traditional SaaS providers in favor of companies with more defensible, AI-integrated moats. The tech-heavy Nasdaq Composite index declined by 0.8%, while the broader S&P 500 also slipped.

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:

• Automation Software company Pegasystems (NASDAQ: PEGA) fell 8.4%. Is now the time to buy Pegasystems? Access our full analysis report here, it’s free.
• Design Software company Cadence Design Systems (NASDAQ: CDNS) fell 8.1%. Is now the time to buy Cadence Design Systems? Access our full analysis report here, it’s free.
• Endpoint Security company Varonis Systems (NASDAQ: VRNS) fell 8.3%. Is now the time to buy Varonis Systems? Access our full analysis report here, it’s free.

Zooming In On Pegasystems (PEGA)

Pegasystems’s shares are quite volatile and have had 16 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 12 days ago when the stock gained 4.1% on the news that reports of easing geopolitical tensions in Greenland boosted investor sentiment. The relief rally saw major indices, including the S&P 500 and the tech-heavy Nasdaq Composite, rebound as investors moved back into riskier assets. This positive shift was reflected across the technology landscape, with all of the Magnificent Seven tech firms seeing their shares climb. The easing of international friction reduced market uncertainty, which often encourages investment in growth-oriented sectors like technology. The move was part of a broader market upswing, with the Dow Jones Industrial Average adding 500 points, signaling increased investor confidence.

Pegasystems is down 29% since the beginning of the year, and at $39.80 per share, it is trading 40.3% below its 52-week high of $66.64 from October 2025. Investors who bought $1,000 worth of Pegasystems’s shares 5 years ago would now be looking at an investment worth $591.03.

While Wall Street chases Nvidia at all-time highs, an under-the-radar semiconductor supplier is dominating a critical AI component these giants can’t build without. Click here to access our full research report, it’s free.