These days, the moment you launch a trading app, you can sense the atmosphere changing. Everywhere is red. The kind of red that prompts people to shut down the tab and discreetly check their 401(k) balance after the kids have gone to sleep. Oil markets have been shaken by the Middle East conflict, and anything with a technological label appears to be selling off in sympathy, whether or not the reasoning makes sense. Figma is not working. Sea Limited is not operating. Palo Alto Networks is not operational. That is a fact. The selling has very little to do with the businesses themselves, which is interesting.
The odd one on the list is Figma. Its initial public offering (IPO) in July of last year was meant to be a triumph, the culmination of a convoluted and protracted period that began when Adobe attempted to acquire it, but regulators thwarted the transaction. On its first day, the stock flirted with $142 for a few hours. Then the real world arrived. The chart has been moving in the wrong direction ever since investors objected to the valuation. The stock is currently trading at about $19, an 85% cut from its peak close. When the macro turns, it’s difficult to ignore how quickly a cherished software company can go from darling to afterthought.
However, the story becomes uncomfortable for the bears when you consider the actual business. In 2025, revenue reached $1.06 billion, a 41% increase over the previous year. When you read the footnotes and see that nearly all of the $1.25 billion net loss came from stock-based compensation—the non-cash type that accountants care about more than cash flow—it becomes less concerning. In any case, Figma produced $243 million in free cash flow. Previously over 60, the price-to-sales ratio is currently close to 9. Growth has slowed to about 30%, which is a reasonable explanation for some decline. An 85% one isn’t.
The majority of American investors have never heard of Sea Limited and most likely never will. It operates Garena, the gaming division of Free Fire, Shopee, the leading e-commerce company in Southeast Asia, and Monee, a fintech company. Garena’s bookings fell 20% in the most recent quarter, and Monee’s credit losses increased as it pursued loan expansion—both of which are serious issues. Nevertheless, net income increased 260% to more than $1.6 billion in 2025, while consolidated revenue increased 36% to $22.9 billion. Since September, the stock has decreased by 57%. The P/E currently stands at about 33, which starts to look like something for a business expanding as quickly as Sea.
This leads us to the third name, which is the most noteworthy. The same software sell-off that affected Snowflake and Datadog has also affected Palo Alto Networks, as investors believe AI will somehow devastate the cybersecurity sector. In recent earnings calls, CEO Nikesh Arora has pushed back, claiming that AI increases the surface area that needs to be defended rather than replacing security. Until you look at the company’s numbers, it is simple to write off that argument as self-serving.
Revenue for the fiscal quarter increased by 15% to $2.6 billion. For the third consecutive quarter, operating margins exceeded 30%. The platform now includes identity and observability, two of the most difficult categories in enterprise software, thanks to the recently concluded CyberArk and Chronosphere agreements. In contrast to SentinelOne or CrowdStrike, Palo Alto actually makes money. Additionally, it trades at a lower multiple. As this develops, it seems that the sell-off has less to do with the company and more to do with a market that has momentarily lost the ability to distinguish between the essential and the vulnerable.
These stocks are not risk-free. Geopolitics may deteriorate. It is still possible for valuations to compress. However, there seems to be an exceptionally large gap between the narrative and the fundamentals at the moment, and these gaps seldom remain open for very long.
