Wild swings across software shares highlighted investor anxiety over how AI may reshape SaaS economics, even as strong results from Atlassian and Twilio revived parts of the sector.
Datadog shares closed 19.03% lower at $229.29 on Thursday after the software company said its largest customer would reduce usage starting in the third quarter, overshadowing a strong quarter and raised full-year guidance. The drop came during a volatile week for software stocks, as investors weighed whether AI coding tools and models are eroding the value of traditional software products. HubSpot also tumbled after earnings, while Airtable agreed to be acquired by Bending Spoons for less than $1.3 billion, roughly one-tenth of its nearly $12 billion peak valuation in 2021. By the end of the week, sentiment improved after quarterly results from Atlassian and Twilio triggered gains of more than 20%, and Cloudflare rose 5.6%, underscoring that investors are differentiating more sharply within the sector rather than abandoning software altogether.