Market Overview - U.S. stock markets are closed on February 16, 2026, for Presidents' Day, providing a breather after a volatile week marked by record highs in blue-chip stocks and a correction in the technology sector [1] - Major indexes showed mixed performance before the long weekend, with the Dow Jones Industrial Average (DJIA) gaining 51 points (0.10%) to close at 49,500.93, while the S&P 500 (SPX) rose 0.05% to 6,836.17, and the Nasdaq Composite (IXIC) fell 0.22% to 22,546.67 [2] Sector Performance - Defensive sectors and financials are gaining interest as investors rotate out of high-valuation technology stocks, with Nike (NKE) and UnitedHealth (UNH) leading the rally, rising 3.18% and 3.16% respectively [3] - The technology sector is experiencing challenges, particularly due to "AI fatigue," with Nvidia (NVDA) and Apple (AAPL) seeing declines of 2.21% and 2.27% respectively, contributing to a nearly 8% weekly decline for some megacap companies [3] Corporate News and AI Sentiment - The market narrative is shifting regarding Artificial Intelligence, with skepticism growing over the immediate returns on significant capital expenditures, affecting companies like Microsoft (MSFT) and Google (GOOGL) [4] - Despite the volatility, AppLovin (APP) saw a surge of 6.4% as analysts noted its potential in leveraging AI for advertising disruption, while Tesla (TSLA) is under scrutiny due to changing consumer demand and global competition [5] Upcoming Market Events - The week ahead is filled with significant events, including the Federal Reserve's release of January policy meeting minutes, which may provide insights into the pause in the rate-cutting cycle despite a drop in the Consumer Price Index (CPI) to 2.4% [6] - Corporate earnings reports are set to dominate headlines, with Walmart (WMT), Palo Alto Networks (PANW), Deere & Company (DE), and Booking Holdings (BKNG) expected to report, which will be crucial for assessing the sustainability of the recent sector rotation into "value" stocks [7] - The advance estimate of fourth-quarter 2025 GDP and the Core PCE Price Index will be released on Friday, with analysts predicting GDP growth around 3.0%, a decrease from the previous quarter's 4.4% [8]

Core Viewpoint - HubSpot Inc. is currently experiencing a stock price of $245.00, reflecting a slight increase of 0.47%, but has seen a significant decline of 19.99% over the past month and 69.65% over the past year, raising questions about its valuation despite current performance [1]. Group 1: Company Performance - The stock price of HubSpot Inc. is currently at $245.00, with a recent increase of 0.47% [1]. - Over the past month, HubSpot's stock has decreased by 19.99%, and over the past year, it has fallen by 69.65% [1]. Group 2: Valuation Metrics - The P/E ratio is a critical metric for long-term shareholders to evaluate HubSpot's market performance against historical earnings and industry standards [2]. - HubSpot Inc. has a P/E ratio of 266.22, which is significantly higher than the aggregate P/E ratio of 65.35 in the Software industry, suggesting that shareholders may expect better performance or that the stock could be overvalued [3]. Group 3: Investment Considerations - While the P/E ratio is a useful tool for assessing market performance, it should be interpreted cautiously as a low P/E may indicate undervaluation or weak growth prospects [4]. - Investors should consider the P/E ratio alongside other financial metrics, industry trends, and qualitative factors for a comprehensive analysis of HubSpot's financial health [4].

Company Overview - Five9 is a leading provider of cloud software for contact centers, focusing on scalable, multi-channel customer engagement solutions [6] - The company serves various sectors including banking, healthcare, technology, and education, utilizing advanced technologies like natural language processing and automatic speech recognition [9] Financial Performance - For the trailing twelve months (TTM), Five9 reported revenue of $1.1 billion and a net income of -$31.3 million [4] - The market capitalization of Five9 is $1.30 billion, with shares priced at $16.57 as of February 12, 2026, reflecting a 59.8% decline over the past year [4][8] Recent Developments - Gagnon Advisors, LLC increased its holdings in Five9 by 168,891 shares, valued at approximately $3.58 million, raising its stake to 4.28% of reportable assets under management (AUM) [2][8] - Following the transaction, the valuation of Gagnon’s position in Five9 increased by $2.69 million due to additional shares and market price changes [2] Market Sentiment - Despite a negative sentiment surrounding Five9, the company reported record third-quarter revenue of $285.8 million, an 8% year-over-year increase, with adjusted EBITDA reaching $71.7 million, resulting in a 25.1% margin [10] - Operating cash flow for the quarter was $59 million, up from $41.1 million a year earlier, indicating improved operational efficiency [10]

Core Viewpoint - Q2 Holdings (QTWO) has been upgraded to a Zacks Rank 1 (Strong Buy) due to an upward trend in earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system is based on changes in earnings estimates, which are closely correlated with near-term stock price movements [4][6]. - Institutional investors utilize earnings estimates to determine the fair value of stocks, leading to buying or selling actions that affect stock prices [4]. Business Outlook for Q2 Holdings - The upgrade indicates a positive outlook for Q2 Holdings' earnings, suggesting that the company's underlying business is improving [5][10]. - Analysts have raised their earnings estimates for Q2 Holdings, with the Zacks Consensus Estimate increasing by 5.1% over the past three months [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [7]. - Only the top 5% of Zacks-covered stocks receive a "Strong Buy" rating, indicating superior earnings estimate revisions [9][10].

Gagnon Advisors disclosed a sale of 564,879 shares of Freshworks (NASDAQ:FRSH), an estimated $6.67 million trade based on quarterly average pricing, in its February 12, 2026, SEC filing. What happened According to a February 12, 2026, SEC filing, Gagnon Advisors, LLC cut its position in Freshworks by 564,879 shares. The estimated transaction value was $6.67 million, calculated using the average closing price during the fourth quarter of 2025. At quarter end, the Freshworks stake was valued at $6.92 milli ...

Core Insights - The software sector, valued at $450 billion, is facing potential disruption from AI technologies, as highlighted by Tom Lee from Fundstrat [2] - Despite current pressures, the global business software market is projected to grow significantly, reaching $737.3 billion by 2026 and $1.28 trillion by 2031, with a CAGR of 11.71% from 2026 to 2031 [3][4] Industry Growth Factors - Enterprises are increasingly adopting AI-enabled workflow automation, cloud-native deployment, and data-centric architectures, which are expected to drive growth in the software sector [4] - Additional growth drivers include rising demand for ESG reporting, the establishment of resilient regional supply chains, and the adoption of low-code development platforms [4] Investment Opportunities - A list of the 13 most profitable software stocks has been compiled, focusing on companies with market capitalizations over $2 billion and operating/net profit margins exceeding 20% [7] - The methodology for selecting these stocks included filtering for an upside potential of at least 5% and ranking them by trailing twelve-month net income [7] Company Highlights - F5, Inc. (NASDAQ:FFIV) reported a TTM net income of $705.99 million and has 40 hedge fund holdings. Analysts have raised price targets following a strong quarter, indicating an upside potential of 16.02% [9][10] - PTC Inc. (NASDAQ:PTC) has a TTM net income of $818.28 million and 51 hedge fund holdings. Despite a challenging macroeconomic backdrop, analysts remain optimistic about the company's long-term strategy and growth outlook [12][14]

Core Insights - The market has entered 2026 with instability, as the S&P 500 is breakeven for the year and the Magnificent 7 stocks have an average return of -7.3% [1] - Concerns are rising among investors regarding margin compression due to significant capital expenditures in AI by tech giants [2] Small-Cap Opportunity - Capital is shifting towards smaller companies that support AI development rather than the major tech leaders, with Franklin Templeton suggesting that suppliers and adopters may present better opportunities [3] - Small-cap teams are focusing on firms producing semiconductor components, power infrastructure, and engineering services related to data-center expansion, which are benefiting from increased spending but still have modest valuations compared to larger tech companies [4] AI-Resilient Group - Despite the selloff in large-cap software, JPMorgan believes that not all incumbents will be negatively impacted by AI, indicating that the recent market reaction has been overly broad and has created opportunities in "AI-resilient" companies [5] - The bank's strategist notes that the current market positioning is overly bearish, suggesting a potential for a rebound in these resilient names [5]

Company Overview - BILL Holdings, Inc. is a leading provider of cloud-based financial operations software, focusing on automating and simplifying back-office processes for small and midsize enterprises [6] - The company operates a software-as-a-service (SaaS) model, generating revenue primarily from subscription fees and payment transaction services [8] - BILL's market capitalization is $4.64 billion, with a trailing twelve months (TTM) revenue of $1.55 billion and a net income of -$24.21 million [4] Recent Developments - Barington Companies Management significantly increased its holding in BILL Holdings by purchasing 325,000 shares in the fourth quarter, valued at approximately $16.70 million [1][2] - This transaction increased Barington's quarter-end BILL position value by $17.83 million, reflecting both trading activity and price changes [2] - As of February 12, 2026, shares of BILL Holdings were priced at $46.37, representing a 24.1% decline over the past year, underperforming the S&P 500 by 37.0 percentage points [7] Financial Performance - BILL reported $414.7 million in second quarter revenue, marking a 14% year-over-year increase, with core revenue climbing 17% to $375.1 million [10] - Transaction fees grew by 20%, indicating strong platform engagement, while total payment volume reached $95 billion [10] - The company has provided guidance for full-year revenue between $1.63 billion and $1.65 billion, with non-GAAP EPS projected to be up to $2.41 [11] Investor Insights - The recent purchase by Barington, which now represents 13.96% of its reportable assets under management (AUM), indicates a strong belief in BILL's business potential [7] - The allocation towards BILL slightly shifts Barington's portfolio focus from consumer and retail names towards software and financial infrastructure [11]

Core Viewpoint - Hagens Berman is notifying investors about a pending securities class action against F5, Inc. due to allegations of misleading statements regarding the security of its BIG-IP products, which resulted in significant financial losses for investors [1][2]. Group 1: Allegations and Impact - The lawsuit claims that F5 executives misled the market about the security of its core products, particularly after a sophisticated nation-state threat actor allegedly accessed F5's systems and exfiltrated sensitive source code [2][4]. - Following the revelation of the security breach in October 2025, F5's market value dropped by over $2 billion due to a significant decline in stock price [2]. - The breach was disclosed on October 15, 2025, revealing that a nation-state actor had maintained long-term access to F5's systems, which included the BIG-IP product development environment [7]. Group 2: Financial Performance and Guidance - F5's disappointing 4Q FY25 results, released on October 27, 2025, indicated a significant reduction in expected sales and renewals, elongated sales cycles, and increased expenses due to ongoing remediation efforts [7]. - The stock price fell by $22.83, or 7%, the day after the poor performance announcement, which was compounded by several analyst downgrades [7]. - The class period for the lawsuit is defined as October 28, 2024, to October 27, 2025, with a lead plaintiff deadline set for February 17, 2026 [5].

Dynatrace logo over a blue stock chart with green upward arrows, suggesting software shares rising after buybacks. Key Points The massive decline in software stocks, dubbed the "SaaS Apocalypse," has left many names deeply in the red during 2026. However, three software names are expressing confidence going forward, increasing their buyback capacity. Two names now have buyback authorizations equal to 9% or more of their market caps. Interested in Shopify Inc.? Here are five stocks we like better. T ...