What Happened?

A number of stocks fell in the morning session after a broader market rotation out of the technology sector led to profit-taking following a recent rally. 

The move was part of a wider trend that saw high-growth technology stocks fall, with the Nasdaq experiencing the sharpest decline among the major indices. Multiple reports indicated that traders were locking in profits, particularly from the artificial-intelligence trade, which had previously seen a strong run-up. This market action represented a shift in investor focus, as money moved out of tech. 

Defense stocks emerged as the primary beneficiary of this capital shift, surging after President Trump proposed a massive $1.5 trillion defense budget for 2027. Major contractors rallied on the news, with Northrop Grumman jumping over 10% and Lockheed Martin gaining nearly 8%, providing a counterbalance to the tech slump that kept the S&P 500 flat. The rotation into heavy industry was further supported by a stabilization in energy markets, as crude prices rebounded.

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:

• Data Infrastructure company Elastic (NYSE: ESTC) fell 2.8%. Is now the time to buy Elastic? Access our full analysis report here, it’s free for active Edge members.
• Project Management Software company Atlassian (NASDAQ: TEAM) fell 5.6%. Is now the time to buy Atlassian? Access our full analysis report here, it’s free for active Edge members.
• Design Software company Autodesk (NASDAQ: ADSK) fell 6.1%. Is now the time to buy Autodesk? Access our full analysis report here, it’s free for active Edge members.
• E-commerce Software company Commerce (NASDAQ: CMRC) fell 3.2%. Is now the time to buy Commerce? Access our full analysis report here, it’s free for active Edge members.
• Data Analytics company Domo (NASDAQ: DOMO) fell 4.4%. Is now the time to buy Domo? Access our full analysis report here, it’s free for active Edge members.

Zooming In On Autodesk (ADSK)

Autodesk’s shares are not very volatile and have only had 4 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.

The biggest move we wrote about over the last year was 4 months ago when the stock gained 7.5% on the news that the company reported second-quarter financial results that exceeded Wall Street expectations and raised its full-year guidance. 

For its second quarter, Autodesk announced revenue of $1.76 billion, a 17.1% increase year-over-year, which beat analyst estimates by 2.3%. The company's adjusted earnings per share of $2.62 also surpassed expectations by a strong 6.9%. 

A key highlight was the company's billings, a measure of cash revenue that shows money collected from customers, which surged 35.9% year-over-year to $1.68 billion. Looking ahead, Autodesk provided an optimistic outlook, raising its full-year revenue guidance to a midpoint of $7.05 billion and issuing a next-quarter revenue forecast that was 1.9% above consensus.

Autodesk is down 4.2% since the beginning of the year, and at $274.62 per share, it is trading 16% below its 52-week high of $326.79 from September 2025. Investors who bought $1,000 worth of Autodesk’s shares 5 years ago would now be looking at an investment worth $858.58.

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