What Happened?

Shares of work management software maker Asana (NYSE: ASAN) fell 8.4% in the morning session as markets continued to struggle following the broad selloff triggered by weak economic data in the previous week. On Friday, February 21, 2025, the S&P 500 dropped 1.7%, and the Nasdaq fell 2.2% after PMI numbers showed the U.S. services sector contracted, and the University of Michigan's consumer sentiment index came in below expectations. 

Adding to Wall Street's anxiety, rumors swirled that Microsoft is trimming some data center projects, raising concerns that AI-related investments may get a little too bloated. 

TD Cowen analyst Michael Elias flagged three key findings from his research. He noted that Microsoft "1) cancelled leases in the U.S. totaling 'a couple of hundred MWs' with at least two private data center operators, 2) has pulled back on the conversion of SOQ's to leases, and 3) has re-allocated a considerable portion of its international spend to the U.S." 

Jefferies analysts see this as more of a regional spending adjustment, adding that Microsoft executives "strongly refute" any major shift in their data center strategy. 

Investors' attention now turns to Nvidia's upcoming earnings report, a crucial barometer of AI infrastructure demand. The chip giant's Q4 2024 results and forward guidance will be closely scrutinized for signals on whether AI spending remains strong or is beginning to taper off. With so many moving pieces, investors are bracing for a volatile week ahead, while hoping for clarity.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Asana? Access our full analysis report here, it’s free.

What The Market Is Telling Us

Asana’s shares are extremely volatile and have had 31 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business. 

The previous big move we wrote about was 14 days ago when the stock gained 8.2% on the news that peer, Monday.com reported impressive fourth-quarter results that blew past Wall Street's expectations for some of the key metrics we track, including sales, profits, and EPS (profits on a per-share basis). The company's net revenue retention rate improved, and its sales guidance for the next quarter exceeded forecasts. MNDY's strong performance suggests sustained demand for project management software, which could also benefit competitors like Asana.

Asana is down 0.6% since the beginning of the year, and at $19.74 per share, it is trading 28.3% below its 52-week high of $27.52 from December 2024. Investors who bought $1,000 worth of Asana’s shares at the IPO in September 2020 would now be looking at an investment worth $685.42.

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