Cloud stocks rallied Thursday as more than a dozen companies made gains of 10% or more. Investors looking to buy up beaten down stocks dove in on an upbeat day, leading some analysts to ask if b=perhaps the tech sector had hit its bottom.
Uipath was at the front of the pack, driving up 17%. The company provides software for automating office tasks. On Wednesday it reported a smaller than expected loss in the first quarter, as revenues beat estimates. Uipath then raised its revenue estimates for the rest of the year, exceeding analyst expectations.
Daniel Dines, UiPath’s CEO, began the company’s earnings call noting the tough economic conditions the company faced and how it had driven valuations down in 2022.
He said, “Choppy macro environments typically reveal areas that can be improved. To that end, the team is focused on simplifying our go-to-market approach, starting with an alignment that will result in better market segmentation, higher sales productivity and best-in-class customer experience and outcomes.”
UiPath has still lost more than half its value this year, despite Thursday’s rise.
Meanwhile, the WisdomTree Cloud Computing Fund, a group of 76 cloud stocks, jumped 6.5% on Thursday – its fourth-best day of the year. However it is still down 38% in 2022.
After selling off so dramatically this year, Cloud stocks have appeared a particularly attractive discount opportunity to tech bulls who think the tech sector has bottomed.
Thursday’s, rebound happened in the face of Microsoft’s announcement that foreign exchange rates would eat into its earnings, forcing it to trim quarterly guidance.
Top performers in the cloud group Thursday included Elastic, which helps companies embed search in their apps, which rose 19%, and analytics company DataDog which rose 13%. Additionally, Asana, Veeva and GitLab all jumped at least 14%. Other notable double-digit percentage gainers were Okta, Monday.com and Shopify. All of those companies are still down for the year between 25% (Veeva) and 71% (Shopify).
On Wednesday, Elastic reported quarterly revenue that exceeded analysts estimates, but predicted a wider loss than predicted for the new fiscal year. The stock had its best day since its 2018 public offering.
