What Happened?

A number of stocks fell in the morning session after markets became increasingly wary of high valuations following a significant AI-driven rally. 

The tech-heavy Nasdaq fell approximately 1.4% as a wave of caution swept through the market. A key example of this trend is Palantir Technologies, which saw its shares drop around 7% despite reporting record quarterly results that surpassed analyst estimates and raising its full-year revenue outlook. This seemingly contradictory movement highlighted a broader sentiment shift. Investors appeared to be engaging in profit-taking, concerned that the recent surge in AI-related stocks had led to stretched valuations. This broader market caution affected high-growth technology companies that had previously surged on AI optimism but faced increased scrutiny, signaling a potential cooling-off period for the sector. 

Adding serious weight to this caution, leadership at both Goldman Sachs and Morgan Stanley highlighted the possibility of a correction in the equity markets over the next couple of years. Despite the euphoria driven by AI optimism and the promise of future rate cuts, these banks viewed this cooling-off period not as a disaster, but as a necessary and healthy feature of a long-term bull market.

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:

• Automation Software company UiPath (NYSE: PATH) fell 8.5%. Is now the time to buy UiPath? Access our full analysis report here, it’s free for active Edge members.
• Developer Operations company GitLab (NASDAQ: GTLB) fell 7.1%. Is now the time to buy GitLab? Access our full analysis report here, it’s free for active Edge members.
• Data Storage company DigitalOcean (NYSE: DOCN) fell 6%. Is now the time to buy DigitalOcean? Access our full analysis report here, it’s free for active Edge members.
• Marketing Software company Braze (NASDAQ: BRZE) fell 5%. Is now the time to buy Braze? Access our full analysis report here, it’s free for active Edge members.
• Communications Platform company Twilio (NYSE: TWLO) fell 3.1%. Is now the time to buy Twilio? Access our full analysis report here, it’s free for active Edge members.

Zooming In On UiPath (PATH)

UiPath’s shares are very volatile and have had 27 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 11 days ago when the stock gained 8.4% on the news that the stock's positive momentum continued as UBS upgraded the company's stock from Sell to Neutral and raised its price target. The bank suggested that concerns over short-term risks from GenAI might have been overstated. The stock's move was also supported by a surge in bullish option activity, which signaled heightened market interest. This positive sentiment occurred during a broader market rally, as cooler-than-expected inflation data supported expectations for a potential Federal Reserve rate cut. The day's gain built on renewed investor interest in the company's use of artificial intelligence to reshape business productivity through its automation platform.

UiPath is up 10.7% since the beginning of the year, but at $14.32 per share, it is still trading 22.7% below its 52-week high of $18.51 from October 2025. Investors who bought $1,000 worth of UiPath’s shares at the IPO in April 2021 would now be looking at an investment worth $207.46.

While Wall Street chases Nvidia at all-time highs, an under-the-radar semiconductor supplier is dominating a critical AI component these giants can’t build without. Click here to access our full research report.