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Publication Date: 2026-07-07 07:00:00
What Happened?
A number of stocks jumped in the afternoon session after investors continued to rotate out of high-flying semiconductors into beaten-down software stocks.
DigitalOcean’s blowout preliminary results also supported the improved appetite as it showed proof that AI demand is converting into real, contracted revenue.The clearest signal is at the index level: the iShares software ETF (IGV) climbed roughly 7% over eight sessions even as the semiconductor SOXX fell ~8.5%. Microsoft rose ~3% on the week (after launching its $2.5B “Frontier” AI-services unit). ServiceNow and Salesforce each gained around +4%.DigitalOcean pre-announced that remaining performance obligations (RPO) would exceed $800M, more than 10x year-over-year and up over $550M in the quarter, driven by multiple new nine-figure AI inference contracts, with average contract life stretching from 1.6 to over three years. Revenue growth was guided to accelerate to ~29% (from a prior 24–25% guide), and margins to the high end. Coming after Q1’s 221% jump in AI-customer ARR, it’s hard evidence that AI spend is landing as durable, contracted backlog, not just usage that can evaporate.
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:
Zooming In On Nutanix (NTNX)
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