What Happened?
Shares of low-code automation software company Appian (NASDAQ: APPN) jumped 18.8% in the morning session after the company reported strong third-quarter 2025 financial results that surpassed analyst expectations and included an increased full-year forecast. The low-code software firm announced total revenue of $187 million, a 21.4% increase from the same period in the previous year, which comfortably beat Wall Street's estimates. The company also demonstrated a significant improvement in profitability, posting a positive operating margin of 7%, a stark contrast to the negative 4.6% margin in the prior year's quarter. On an adjusted basis, earnings per share came in at $0.32, substantially beating analyst expectations of $0.05. To top it off, Appian raised its full-year 2025 guidance for adjusted earnings per share, signaling management's confidence in its business outlook.
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What Is The Market Telling Us
Appian’s shares are very volatile and have had 21 moves greater than 5% over the last year. But moves this big are rare even for Appian and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 2 days ago when the stock dropped 3.5% on the news that 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.
Appian is up 14.7% since the beginning of the year, and at $38.08 per share, it is trading close to its 52-week high of $41.56 from November 2024. Investors who bought $1,000 worth of Appian’s shares 5 years ago would now be looking at an investment worth $420.40.
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