What Happened?
Shares of cloud communications provider 8x8 (NASDAQ:EGHT) jumped 20.5% in the morning session after the company reported third-quarter 2025 results that surpassed analyst expectations. The cloud communications provider announced revenue of $184.1 million and adjusted earnings of $0.09 per share, beating Wall Street's estimates of $178.5 million and $0.07 per share, respectively. The 1.7% year-over-year revenue growth represented a positive turn for the company, which had seen its sales decline over the past two years. Furthermore, 8x8 slightly raised its revenue guidance for the full year, signaling confidence in its near-term outlook. The positive investor reaction was also fueled by the company significantly outperforming Wall Street's estimates for billings and EBITDA (earnings before interest, taxes, depreciation, and amortization).
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What Is The Market Telling Us
8x8’s shares are extremely volatile and have had 44 moves greater than 5% over the last year. But moves this big are rare even for 8x8 and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 1 day ago when the stock dropped 4.8% 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.
8x8 is down 19.5% since the beginning of the year, and at $2.14 per share, it is trading 38.3% below its 52-week high of $3.47 from February 2025. Investors who bought $1,000 worth of 8x8’s shares 5 years ago would now be looking at an investment worth $116.30.
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