What Happened?
A number of stocks jumped in the afternoon session after investor confidence rebounded as markets softened their view on the existential threat AI poses to traditional software companies.
After a period of significant underperformance, dubbed the "SaaS Rout of 2026," where software stocks traded at a discount to the S&P 500, the prevailing fear that AI would completely disrupt and replace traditional Software-as-a-Service (SaaS) companies began to subside.
Experts noted that these companies possess significant advantages, including established enterprise relationships, vast amounts of proprietary data, and deep integration into customer workflows, which AI is unlikely to erase overnight. This changing perspective suggests a potential re-rating for the sector as investors realize these companies may be well-positioned to integrate and leverage AI rather than be replaced by it.
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:
- Developer Operations company GitLab (NASDAQ: GTLB) jumped 4.8%. Is now the time to buy GitLab? Access our full analysis report here, it’s free.
- Sales Software company HubSpot (NYSE: HUBS) jumped 4.6%. Is now the time to buy HubSpot? Access our full analysis report here, it’s free.
- Compliance Software company Workiva (NYSE: WK) jumped 4.8%. Is now the time to buy Workiva? Access our full analysis report here, it’s free.
Zooming In On GitLab (GTLB)
GitLab’s shares are extremely volatile and have had 37 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 3 days ago when the stock gained 5.7% after President Trump's state visit to Beijing lifted market sentiment across tech, with the S&P hitting a record high above 7,500.
While the Trump-Xi summit produced fewer concrete deals than investors had hoped for, the general mood around US-China trade relations shifted from confrontational to cautiously constructive and for a sector as globally exposed as software, that reduction in uncertainty was enough to drive buyers back in.
Adding to the positive sentiment, Figma posted 46% revenue growth with early AI monetisation showing genuine traction, and ServiceNow announced a multi-year AI partnership with Experian. Each print reinforced the same thesis: that enterprise software companies are successfully embedding AI into their products and charging for it, rather than being disrupted by it a concern that had weighed heavily on the sector earlier in the year.
GitLab is down 31.3% since the beginning of the year, and at $24.86 per share, it is trading 51.3% below its 52-week high of $51.04 from November 2025. Investors who bought $1,000 worth of GitLab’s shares at the IPO in October 2021 would now be looking at an investment worth $239.27.
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