Why we're not discouraged by CrowdStrike and Broadcom selling. Context is everything

There is no denying that waking up Thursday morning to the post-earnings declines in CrowdStrike and Broadcom is painful. It was also painful to see a similar sell-off in Palo Alto Networks in the prior session. In fact, Palo Alto stock is now riding a three-session losing streak. Ultimately, all three companies reported solid quarterly results and forward guidance, and Wall Street analysts largely increased their price targets. We did, too. However, all three ran hot into their prints, and "solid" was not nearly good enough to meet the lofty expectations of an investor base that is looking for the next Snowflake, Hewlett Packard Enterprise or Dell , all of which exploded to the upside after their guides crushed estimates. What gives? We need to put these moves in context. Think back to the end of May, when Snowflake reported its quarter. Shares of the data storage and analytics provider rocketed to the upside, more than 36% on May 28, and kicked off an enterprise software rally that saw buyers rush into the IGV, the expanded tech-software ETF . The next day, Dell guided way above expectations and saw its stock rip nearly 33% higher. Fast forward to Tuesday, and HPE, like Dell, shot higher by more than 19% on a very strong guidance raise. So, what does that get us? The answer is momentum — a market driven more by "animal spirits" than anything else, especially when it comes to AI. …