What Happened?
A number of stocks fell in the afternoon session after software stocks declined for a second consecutive session, extending the profit-taking that began earlier in the week.
The broader market was essentially flat when the correction started the previous day: the S&P 500 was unchanged, the Nasdaq barely moved, confirming this was sector-level digestion, not broad risk-off selling. To understand the pullback, you need to understand the depth of what preceded it. In a 48-hour span in early February 2026, roughly $285 billion was wiped from software stock valuations after Anthropic's Claude Cowork platform raised genuine fears that AI agents could make per-seat SaaS licensing obsolete, a moment the market called the "SaaSpocalypse."
Over the following months, the IGV fell more than a third from its September 2025 peak, hitting a 52-week low on April 10. At that point, approximately 75% of software stocks were screening as technically oversold. The recovery was fast. The IGV rose 21% in May alone, its best monthly performance since October 2001, and gained approximately 40-44% from the April low. By June 2, it had crossed back into positive YTD territory for the first time, sitting approximately 11% below its all-time peak. Strong results from Snowflake and MongoDB gave the rebound fundamental cover. But the final push was options- and retail-driven, not institutional. On June 2, call volumes in the IGV outpaced puts, and Oracle options saw billions in premium trade with a three-to-one call-to-put ratio. That is the key to understanding why portfolio managers are likely not defending these levels.
Most institutional managers who cut software exposure during the SaaSpocalypse would have faced a recovery that moved faster than their mandates allowed for rebuilding positions. Rather than chase, watching for a pullback and a better entry might be better. For those already positioned from the early recovery, the rational move was to let names reset before adding.
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:
- Cloud Monitoring company PagerDuty (NYSE: PD) fell 8.6%. Is now the time to buy PagerDuty? Access our full analysis report here, it’s free.
- Marketing Software company Braze (NASDAQ: BRZE) fell 7.8%. Is now the time to buy Braze? Access our full analysis report here, it’s free.
- Project Management Software company Asana (NYSE: ASAN) fell 7.9%. Is now the time to buy Asana? Access our full analysis report here, it’s free.
Zooming In On PagerDuty (PD)
PagerDuty’s shares are very volatile and have had 28 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 5 days ago when the stock gained 30.9% on the news that the company reported first-quarter results that beat Wall Street expectations and raised its full-year profit forecast. While revenue was flat year-over-year at $121 million, it still surpassed analysts' projections. The company's profitability was a key highlight, with its adjusted profit of $0.33 per share coming in 33.2% above consensus estimates. PagerDuty also demonstrated significant operational efficiency, as its operating margin improved to 7.6%, a stark contrast to the -8.6% margin in the same quarter last year. Further boosting investor confidence, the company raised its full-year adjusted earnings per share guidance to $1.30 at the midpoint.
PagerDuty is down 25.7% since the beginning of the year, and at $9.21 per share, it is trading 46.4% below its 52-week high of $17.17 from September 2025. Investors who bought $1,000 worth of PagerDuty’s shares 5 years ago would now be looking at only $226.56.
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