Cloud stocks rallied on Thursday, with more than a dozen vendors notching gains of 10% or more, as investors used an upbeat day on Wall Street to snap up shares of companies that have been beaten down the most in this year’s selloff.
UiPath, a provider of software for automating office tasks, led the charge, surging 17%. The company late Wednesday reported a narrower-than-expected loss for the first quarter, while revenue topped estimates. UiPath raised its revenue guidance for the full year, also surpassing analysts’ expectations.
Daniel Dines, UiPath’s CEO, started off the company’s earnings call by acknowledging the tough economic conditions that have pulled down valuations in 2022.
“Choppy macro environments typically reveal areas that can be improved,” Dines said. “To that end, the team is focused on simplifying our go-to-market approach, starting with an alignment that will result in better market segmentation, higher sales productivity and best-in-class customer experience and outcomes.”
Even after Thursday’s pop, UiPath has lost more than half its value this year. The WisdomTree Cloud Computing Fund, a basket of 76 cloud stocks, jumped 6.5% on Thursday for its fourth-best day of the year, but it’s still down 38% in 2022.
Because cloud stocks have sold off so dramatically this year, tech bulls are looking for every opportunity to call the bottom and get in at a discount. Forward revenue multiples for the basket of cloud stocks have contracted on average to about 8 from around 15 in September, according to Bessemer Venture Partners, whose cloud index forms the basis of the WisdomTree fund.