What Happened?

A number of stocks fell in the afternoon session after fears of disruption from artificial intelligence spooked investors, leading to a broad-based sell-off. 

The market witnessed a "basket-style reaction," a term for when investors reduce exposure to an entire segment without differentiating between individual company business models. The negative sentiment was widespread, pulling down all of the Magnificent Seven stocks and sending the S&P 500 Information Technology Sector down nearly 3%.

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:

• Advertising Software company PubMatic (NASDAQ: PUBM) fell 7.4%. Is now the time to buy PubMatic? Access our full analysis report here, it’s free.
• Advertising Software company DoubleVerify (NYSE: DV) fell 7%. Is now the time to buy DoubleVerify? Access our full analysis report here, it’s free.
• Customer Experience Software company Sprinklr (NYSE: CXM) fell 7%. Is now the time to buy Sprinklr? Access our full analysis report here, it’s free.
• Data Infrastructure company Teradata (NYSE: TDC) fell 7.9%. Is now the time to buy Teradata? Access our full analysis report here, it’s free.
• Identity Management company Okta (NASDAQ: OKTA) fell 8.4%. Is now the time to buy Okta? Access our full analysis report here, it’s free.

Zooming In On Okta (OKTA)

Okta’s shares are somewhat volatile and have had 11 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 28 days ago when the stock gained 3.1% on the news that a broader market rally drove investor optimism in artificial intelligence and big tech stocks. 

The S&P 500, Dow Jones, and Nasdaq all pushed higher, approaching record levels set late last year. Much of the positive momentum was linked to the technology sector, with a particular focus on companies advancing artificial intelligence, a key theme at the annual CES trade show in Las Vegas. This continued a powerful trend from 2025, when AI-related developments were a primary catalyst for the market's bull run. The upbeat sentiment was further supported by hopes for easier monetary policy from the Federal Reserve following a weaker-than-expected US Services PMI reading.

Okta is down 2.6% since the beginning of the year, and at $81.45 per share, it is trading 36% below its 52-week high of $127.30 from May 2025. Investors who bought $1,000 worth of Okta’s shares 5 years ago would now be looking at an investment worth $294.84.

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.