Software Stocks Plunge: Figma and Axon Present Buying Opportunities
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 6 days ago
0mins
Should l Buy MSFT?
Source: Yahoo Finance
- Market Turmoil in Software Stocks: As of February 25, the iShares Expanded Tech-Software Sector ETF (IGV) has dropped 24% year-to-date, reflecting investor concerns over high valuations in software-as-a-service (SaaS) stocks, leading to a wave of selling that has impacted overall confidence in the software industry.
- Figma's Performance Recovery: Figma's stock has plummeted 74% since its IPO, yet the company reported a 40% revenue growth in Q4, reaching $303.8 million, indicating strong growth potential in its AI products, particularly through partnerships with Anthropic, which may enhance its competitive edge in the market.
- Strong Growth for Axon: Axon Enterprise's revenue increased by 39% to $797 million, with adjusted EBITDA rising 46% to $206 million, underscoring its leadership position in law enforcement technology and ongoing market demand for its products.
- Optimistic AI Investment Outlook: Axon has introduced the generative AI tool Draft One to improve the efficiency of law enforcement reports and forecasts $8 billion in revenue by 2028, implying an annual growth rate of about 30%, demonstrating its proactive strategy in the AI sector and future growth potential.
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Analyst Views on MSFT
Wall Street analysts forecast MSFT stock price to rise
34 Analyst Rating
32 Buy
2 Hold
0 Sell
Strong Buy
Current: 403.930
Low
500.00
Averages
631.36
High
678.00
Current: 403.930
Low
500.00
Averages
631.36
High
678.00
About MSFT
Microsoft Corporation is a technology company that develops and supports software, services, devices, and solutions. Its Productivity and Business Processes segment consists of products and services in its portfolio of productivity, communication, and information services, spanning a variety of devices and platforms. It comprises Microsoft 365 Commercial products and cloud services; Microsoft 365 Consumer products and cloud services; LinkedIn, and Dynamics products and cloud services. The Intelligent Cloud segment consists of its public, private, and hybrid server products and cloud services. It comprises server products and cloud services, including Azure, and enterprise and partner services, including Enterprise Support Services. Its More Personal Computing segment primarily comprises Windows and Devices, including Windows OEM licensing; Gaming, including Xbox hardware and Xbox content; Search and news advertising, comprising Bing and Copilot, Microsoft News, and Microsoft Edge.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Increased Quantum Investment: Microsoft is heavily investing in its quantum computing ecosystem, introducing the Majorana 1 quantum processor aimed at enhancing computational stability and reducing errors, laying the groundwork for future commercialization.
- Data Center Expansion: The company added nearly 1 gigawatt of data center capacity in Q2 to address the challenge of Azure service demand exceeding supply, demonstrating its ongoing investment and strategic positioning in cloud infrastructure.
- Rapid AI Application Adoption: Microsoft’s Copilot user base surged over 160% year-over-year to 15 million paid users, showcasing its ability to successfully leverage AI in enterprise workflows, further driving revenue growth.
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- High-Yield Savings Accounts: Currently offering interest rates around 5%, high-yield savings accounts are ideal for building an emergency fund or for near-term goals, and they are FDIC-insured up to $250,000, providing a safe investment option.
- Advantages of Roth IRA: A Roth IRA allows investments with after-tax dollars, offering tax-free growth and withdrawals in retirement, making it possible to invest $1,000 in stocks, mutual funds, or ETFs while ensuring principal accessibility without penalties.
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- Rising Electricity Pressure: Average residential electricity prices in the U.S. increased by 6% in 2025, contrasting Trump's promise to halve prices during his term, highlighting the government's challenges in controlling energy costs, which could impact his support in the midterm elections.
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- Defense Contract Implications: Major defense contractors like Lockheed Martin are expected to remove Anthropic's technology from their supply chains, which could lead to a decline in Anthropic's market share within the defense sector and adversely affect future revenue growth.
- Legal Response Possibility: Anthropic has indicated it may appeal the supply chain risk designation through legal channels, although no formal action has been taken yet; if the designation becomes official, it would restrict the use of Claude in defense contracts, potentially affecting its business with other clients.
- Market Reaction and Alternatives: Several defense tech firms are proactively transitioning their workforce away from Claude to other models, and while Anthropic's product is regarded as excellent, the reliance on it for defense contracts is now under scrutiny, posing challenges for its continued use in sensitive environments.
See More
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- Significant Cloud Growth: In Q2 of fiscal 2026, Microsoft reported a 16.7% year-over-year revenue increase to $81.3 billion, with cloud services contributing $51.5 billion, up 26%, indicating strong market demand and sustained growth potential.
- Increased Quantum Investment: Microsoft is heavily investing in its quantum computing ecosystem, introducing the Majorana 1 quantum processor aimed at enhancing computational stability and reducing errors, laying the groundwork for future commercialization.
- Data Center Expansion: The company added nearly 1 gigawatt of data center capacity in Q2 to address the challenge of Azure service demand exceeding supply, demonstrating its ongoing investment and strategic positioning in cloud infrastructure.
- Rapid AI Application Adoption: Microsoft’s Copilot user base surged over 160% year-over-year to 15 million paid users, showcasing its ability to successfully leverage AI in enterprise workflows, further driving revenue growth.
See More
Investment Strategies Starting with $1,000
- Investment Fundamentals: Even a modest investment of $1,000 can grow significantly over time with the right strategies and the power of compounding interest, making it essential to prioritize paying off high-interest debt and establishing an emergency savings fund before investing.
- High-Yield Savings Accounts: Currently offering interest rates around 5%, high-yield savings accounts are ideal for building an emergency fund or for near-term goals, and they are FDIC-insured up to $250,000, providing a safe investment option.
- Advantages of Roth IRA: A Roth IRA allows investments with after-tax dollars, offering tax-free growth and withdrawals in retirement, making it possible to invest $1,000 in stocks, mutual funds, or ETFs while ensuring principal accessibility without penalties.
- Passive Investment Options: Utilizing robo-advisors like Betterment or Wealthfront can manage a $1,000 investment by providing a diversified portfolio with automated rebalancing and emotion-free decision-making, catering to investors seeking low-barrier diversification strategies.
See More
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- Self-Power Commitment: Trump is set to sign an agreement with major tech firms like Amazon, Google, and Meta, mandating them to supply their own power for AI data centers, addressing rising public anger over electricity prices, although the specifics of the commitment remain unclear.
- Rising Electricity Pressure: Average residential electricity prices in the U.S. increased by 6% in 2025, contrasting Trump's promise to halve prices during his term, highlighting the government's challenges in controlling energy costs, which could impact his support in the midterm elections.
- Implementation Challenges: The decentralized nature of electric grid regulations across states poses significant hurdles for the Trump administration in converting the pledge into actionable policy, with experts indicating that new federal legislation is necessary to address power supply shortages.
- Increased Political Pressure: Trump is leveraging his political influence to pressure tech companies into absorbing the costs associated with their data centers, despite the complexities arising from state-level regulation of power generation, which may complicate policy implementation.
See More
Nvidia Reports Strong Earnings but Stock Drops
- Strong Earnings Report: Nvidia reported an adjusted earnings per share of $1.62 and revenue of $68.1 billion for Q4 FY2026, both exceeding Wall Street's expectations of $1.53 and $66.2 billion, indicating robust market performance and profitability.
- Optimistic Guidance: The management guided for approximately $78 billion in revenue for the current quarter, significantly above the analyst consensus of $72.6 billion, showcasing the company's ongoing growth potential in the AI sector, although this does not include potential sales from China.
- Stable Gross Margins: Nvidia achieved a 75.2% adjusted gross margin in the recent quarter and expects about 75% for the full year, demonstrating strong pricing power and enhancing investor confidence in its profitability.
- Conflicted Market Reaction: Despite the strong performance, Nvidia's stock fell by 5.5% post-earnings, reflecting market uncertainty regarding future AI investment returns, particularly as major tech firms may slow capital expenditures amid rising costs and economic concerns.
See More
Geopolitical Instability Heightens Market Nervousness
- Market Tension Intensifies: Dan Ives from Wedbush Securities highlights that ongoing geopolitical instability has heightened market nervousness, particularly against the backdrop of concerns related to the AI Ghost Trade and Anthropic's recent tools, leading to a decline in investor sentiment.
- Resilient Tech Stocks: Despite recent sell-offs, Ives sees certain technology stocks as resilient, capable of maintaining stability amid current turmoil, showcasing their defensive advantages in uncertain environments.
- Defensive Tech Companies: Ives emphasizes 10 key tech companies on the X platform, including CrowdStrike, Palo Alto Networks, and Microsoft, which possess defensive advantages in cybersecurity and defense sectors, enabling them to withstand market volatility.
- Investor Focus: Companies like Apple and Salesforce have become focal points for investors due to their performance in turbulent markets, and are expected to attract more capital inflows to navigate future uncertainties.
See More
Anthropic Designated Supply Chain Risk by Trump Administration
- Supply Chain Risk Declaration: The Trump administration's designation of Anthropic as a supply chain risk has prompted 10 startups working with the Department of Defense to cease using its Claude model and seek alternatives, potentially impacting about 80% of Anthropic's enterprise revenue.
- Defense Contract Implications: Major defense contractors like Lockheed Martin are expected to remove Anthropic's technology from their supply chains, which could lead to a decline in Anthropic's market share within the defense sector and adversely affect future revenue growth.
- Legal Response Possibility: Anthropic has indicated it may appeal the supply chain risk designation through legal channels, although no formal action has been taken yet; if the designation becomes official, it would restrict the use of Claude in defense contracts, potentially affecting its business with other clients.
- Market Reaction and Alternatives: Several defense tech firms are proactively transitioning their workforce away from Claude to other models, and while Anthropic's product is regarded as excellent, the reliance on it for defense contracts is now under scrutiny, posing challenges for its continued use in sensitive environments.
See More
