Palantir Surges 30% While Datadog and Figma Slide in AI Earnings Season
TLDR
- Datadog and Figma shares fell over 15% after quarterly earnings disappointed investors on margins
- Palantir surged 30% after strong revenue growth, while Cloudflare and JFrog also posted gains
- Figma flagged rising AI inference costs eating into gross margins
- The iShares Expanded Tech-Software Sector ETF is up 35% from April lows but still down 3% year to date
- Investors are struggling to pick AI software winners as results vary widely across the sector
Software stocks had a rough session Thursday as earnings season exposed just how hard it is to pick winners in the AI software space. Datadog and Figma both fell more than 15% despite beating top and bottom line estimates.
The drops came down to margin concerns. Datadogโs adjusted gross margin came in at 80%, slightly below the analyst estimate of 80.7%. A small miss, but enough to spook investors who are already nervous about AI disrupting software business models.
Figma had a similar story. The design and collaboration platform beat on earnings but warned that rising AI inference costs are weighing on margins. Figma is currently absorbing the cost of running user prompts through AI models for beta products without charging customers for that usage.
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