What happened?

A number of stocks fell in the morning session as Democratic victories in the U.S. midterm elections continued to fuel investor concerns that tighter regulatory scrutiny will slow data-center expansion, CNBC reported. 

The policy headwinds intensified broader unease over heavy capital spending across the technology sector. Tandem Investment Advisors portfolio manager Jordan Watson noted in comments carried by CNBC that the rotation reflects a demand for discipline regarding whether massive infrastructure investments will ultimately yield expected returns.

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:

• Content delivery company Cloudflare (NYSE: NET) fell 11.1%. Is now the time to buy Cloudflare? Access our full analysis report here, it’s free.
• Cloud monitoring company Datadog (NASDAQ: DDOG) fell 6.7%. Is now the time to buy Datadog? Access our full analysis report here, it’s free.
• Data infrastructure company Elastic (NYSE: ESTC) fell 5.2%. Is now the time to buy Elastic? Access our full analysis report here, it’s free.
• Data analytics company Palantir Technologies (NASDAQ: PLTR) fell 9.2%. Is now the time to buy Palantir Technologies? Access our full analysis report here, it’s free.
• Network security company Zscaler (NASDAQ: ZS) fell 7.1%. Is now the time to buy Zscaler? Access our full analysis report here, it’s free.

Zooming in on Cloudflare (NET)

Cloudflare’s shares are extremely volatile and have had 43 moves greater than 5% over the last year. But moves this big are rare even for Cloudflare and indicate this news significantly impacted the market’s perception of the business.

The previous big move we wrote about was 1 day ago when the stock dropped 2.9% on the news that Datadog projected fourth-quarter revenue that implied flat sequential growth, triggering read-through concerns across infrastructure peers. In a company press release, Datadog reported third-quarter revenue rose 35% year over year to $1.20 billion, topping consensus estimates of $1.15 billion, while adjusted earnings per share reached $0.81. However, the company guided fourth-quarter revenue to between $1.19 billion and $1.20 billion, representing 25% to 26% annual growth but signaling a pause in sequential expansion. Datadog's consumption model functions as a barometer for enterprise cloud activity. When a high-multiple cloud bellwether guides to flat sequential revenue, this could raise concerns regarding a moderation in enterprise AI and cloud adoption.

Cloudflare is up 23.7% since the beginning of the year, but at $241.43 per share, it is still trading 33.1% below its 52-week high of $360.93 from October 2026. Investors who bought $1,000 worth of Cloudflare’s shares 5 years ago would now be looking at an investment worth $1,229.

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