Technology and Cybersecurity Stocks Underperform in August Amid Earnings Misses and Weak Guidance
Five S&P 500 stocks, including The Trade Desk, Super Micro Computer, Gartner, Fortinet, and Coinbase Global, experienced significant declines in August 2025, largely driven by disappointing quarterly financial results, cautious outlooks, and specific operational challenges, highlighting sector-specific headwinds and re-evaluations of growth trajectories.
Technology and Cybersecurity Stocks Underperform in August Amid Earnings Misses and Weak Guidance
U.S. equities saw varied performance in August 2025, with certain technology and cybersecurity sectors experiencing notable downward pressure. Five S&P 500 constituents—The Trade Desk (TTD), Super Micro Computer (SMCI), Gartner (IT), Fortinet (FTNT), and Coinbase Global (COIN)—registered substantial declines ranging from 19% to 37%, largely influenced by recent quarterly earnings reports that fell short of investor expectations or presented cautious forward guidance.
The Event in Detail: Disappointing Earnings and Outlooks Drive Declines
The Trade Desk (TTD) shares plunged 39% on August 8, 2025, following its second-quarter earnings report. Despite reporting Q2 2025 revenue of $694 million—exceeding consensus estimates by $8 million and representing a 19% year-over-year increase—and meeting adjusted earnings per share (EPS) of $0.41, investor sentiment soured. The primary concern stemmed from the company's cautious Q3 2025 revenue guidance, projected at $717 million, indicating approximately 14% year-over-year growth, its slowest rate since its initial public offering (excluding a brief pandemic period). Further unsettling investors was the abrupt announcement of a Chief Financial Officer (CFO) change, with Laura Schenkein stepping down, raising questions given the lack of a clear rationale for her departure.
Super Micro Computer (SMCI) experienced a decline despite strong revenue growth. The company reported net sales of $5.8 billion for Q4 FY25, contributing to a full fiscal year 2025 net sales of $22.0 billion, a 47% increase year-over-year. However, a significant concern was the sharp drop in gross margin, which fell to 9.5% in Q4 FY25—its lowest point ever—from 10.2% in the prior year's quarter. This margin compression reflects a broader industry trend where the high cost of NVIDIA GPUs, which are central to AI servers, heavily impacts profitability for server manufacturers.
Gartner (IT) saw its stock fall sharply, including a 28% plunge on August 5, contributing to a nearly 50% loss of market value since early 2025. This downturn was largely attributed to the company significantly lowering its growth forecast for its core Insights business line, failing to provide a clear strategy for reviving growth. While Q2 2025 revenue of $1.7 billion and adjusted EPS of $3.53 exceeded targets, the full-year 2025 revenue forecast of $6.46 billion and adjusted EPS guidance of $11.75 both fell short of consensus estimates. Management cited macroeconomic pressures and client spending constraints, but investors expressed frustration over the perceived failure to address competitive disadvantages, particularly from AI-driven insights and peer review networks.
Fortinet (FTNT) shares plunged more than 19% on August 7, 2025, following its Q2 2025 results and cautious Q3 revenue guidance. Despite reporting Q2 revenue of $1.63 billion, matching estimates, and adjusted EPS of $0.64, surpassing expectations, analyst concerns over the company's firewall refresh cycle dominated investor sentiment. Analysts noted that Fortinet was already "40% to 50% of the way through its 2026 end-of-service refresh cohort" and "downticked" expectations for the 2027 cohort, suggesting a faster-than-anticipated progression through a critical revenue driver and a potential diminishing of this growth tailwind.
Coinbase Global (COIN) reported a mixed performance for its second quarter of 2025, leading to a significant drop in its stock price. The company reported total revenue of $1.5 billion, missing consensus estimates, and a substantial earnings per share (EPS) of $0.12, a considerable miss compared to analyst projections of $1.49 to $1.51. The primary driver of the revenue shortfall was a sharp 39% sequential decline in transaction revenue to $764.3 million, largely due to reduced market volatility and trading activity, which saw total trading volume plunge 40% to $237 billion. Operating expenses also surged 37% year-over-year, including a notable cybersecurity charge related to a data breach.
Analysis of Market Reaction: Growth Concerns and Strategic Re-evaluations
The market's reaction to these companies' reports underscores a heightened sensitivity to growth projections and profitability in the current economic environment. For The Trade Desk, the combination of a cautious revenue outlook and an unexpected CFO transition signaled potential headwinds for an otherwise robust ad-tech platform, triggering a reassessment of its high-growth expectations. The decrease in adjusted EBITDA margins from 41% in Q2 2024 to 39% in Q2 2025 further intensified concerns about operational efficiency and scalability. Bank of America, for instance, responded by reducing its price target for TTD from $130 to $50.
Super Micro Computer's situation highlights a key challenge in the rapidly expanding AI infrastructure market: the immense pricing power held by GPU manufacturers. Despite booming demand for AI servers, the significant cost of high-performance GPUs, predominantly from NVIDIA, compresses the profit margins of server assemblers. This "increasing revenue without increasing profit" trend led to its lowest-ever gross margin, overshadowing its substantial sales growth and indicating that while demand is strong, profitability is under pressure.
Gartner's significant stock decline reflects investor frustration with management's inability to articulate a clear path to renewed growth for its core business, especially in the face of evolving competitive landscapes. The market appears to be losing patience with explanations attributing slowdowns solely to macroeconomic factors, instead demanding proactive strategies to address the rising threat from AI-driven insights and alternative peer review networks.
For Fortinet, the accelerated completion of its firewall refresh cycle, a crucial revenue driver, coupled with a pessimistic outlook for future cycles, directly impacted its growth narrative. Analysts noted that the underlying product revenue growth, excluding the refresh benefit, was "flat-to-down year-on-year," indicating a structural challenge to its top-line expansion once the current refresh tailwind diminishes. This prompted several downgrades, including KeyBanc Capital Markets lowering its rating from "overweight" to "sector weight."
Coinbase Global's performance reflects the ongoing volatility and maturation of the cryptocurrency market. The sharp decline in transaction revenue underscores its heavy reliance on trading fees, which are directly impacted by market activity and volatility. While the company recorded substantial net income, its dependence on non-recurring gains for much of this figure, coupled with rising operating expenses including a significant cybersecurity charge, revealed underlying profitability challenges in its core operations. This highlights the precarious nature of crypto-centric businesses in a "crypto winter" environment.
Broader Context and Implications: Sector-Specific Challenges and AI's Dual Impact
The underperformance of these five S&P 500 companies, while distinct in their immediate catalysts, collectively points to a broader market re-evaluation of growth stocks, particularly those facing sector-specific or execution challenges. The ad-tech, IT advisory, cybersecurity, and cryptocurrency sectors are grappling with unique headwinds, ranging from macroeconomic pressures and competitive shifts to evolving technological landscapes and regulatory uncertainties.
For The Trade Desk, the situation underscores how even a market leader can be vulnerable to cautious outlooks and internal transitions in a sensitive economic climate, especially when valuations reflect high growth expectations. Its Price-to-Earnings (P/E) ratio of 65.34 and EV/Revenue ratio of 9.00 reflect high growth expectations that are quickly challenged by any signs of deceleration.
Super Micro Computer exemplifies the dual impact of AI on the technology sector. While AI-driven demand is fueling unprecedented revenue growth, the concentration of profitability within core component manufacturers like NVIDIA is squeezing margins for system integrators. This trend could lead to a bifurcation within the AI supply chain, where hardware manufacturers with unique component advantages capture a disproportionate share of profits. Conversely, the article highlights Super Micro Computer's AI-driven demand as a potential bright spot that could see a significant rebound if gross margins improve, setting a positive precedent for AI infrastructure investment.
Fortinet's experience emphasizes the critical importance of recurring revenue streams and predictable growth drivers for hardware-centric technology companies. The market's swift reaction to the accelerating refresh cycle completion and the anticipated slowdown for 2027 signals a potential re-evaluation of valuation multiples as a key growth tailwind diminishes. This situation, combined with investigations into potential securities law violations, adds further scrutiny for the company.
Coinbase's quarter reflects the ongoing struggle of crypto platforms to diversify revenue streams beyond volatile trading fees. While the "crypto winter" narrative may be premature, the financial results underscore the need for greater stability and less reliance on market sentiment. The company's strategic focus on stablecoins, institutional services, and regulatory alignment indicates a recalibration for long-term resilience amidst a volatile crypto landscape.
Expert Commentary
Analyst reactions provided crucial insights into the market's concerns. Following The Trade Desk's report, Bank of America, Citi, and Wedbush all downgraded the stock, with Bank of America notably slashing its price target. For Fortinet, analysts expressed significant worry. KeyBanc Capital Markets downgraded its rating, noting that the progression through the refresh cycle was "more rapid than anticipated" and underlying product revenue growth was "flat-to-down year-on-year in the first half of 2025, which was worse than expected." Piper Sandler also lowered its rating to "neutral," stating that disclosures on the refresh cohort would "likely do much to shake investor confidence." Morgan Stanley further downgraded Fortinet, reducing its price target and citing concerns that 2026 and 2027 estimates could face pressure if the refresh cycle proves smaller than anticipated.
Looking Ahead
Investors will closely monitor several key factors in the coming weeks and months. For The Trade Desk, attention will be on its ability to navigate macroeconomic challenges, manage competitive pressures, and demonstrate continued growth in key areas like Connected TV (CTV) despite the cautious guidance. The transition of its CFO will also be a point of focus, as stakeholders look for stability in leadership and financial strategy.
Super Micro Computer's future performance will heavily depend on its ability to improve gross margins. While the demand for AI solutions remains strong, the company will need to demonstrate effective cost management and potentially diversify its supply chain to mitigate the impact of high component costs. Its strategic initiatives, such as the new Datacenter Building Block Solutions (DCBBS), will be crucial to securing larger enterprise clients and capitalizing on AI infrastructure build-outs.
Gartner faces the immediate challenge of restoring investor confidence by providing a more compelling growth strategy for its Insights business, particularly how it plans to compete against emerging AI-driven solutions and address internal cultural issues. Future performance will hinge on its ability to demonstrate adaptability and innovation in its core offerings.
For Fortinet, the critical factor will be whether its long-term growth trajectory can be sustained beyond the accelerated refresh cycle. The company will need to assuage analyst and investor concerns about future refresh cohorts and demonstrate alternative growth drivers to compensate for a potential slowdown in this key area. The ongoing investigations into potential securities law violations will also remain a watch point.
Coinbase Global will be observed for its progress in diversifying revenue streams beyond transaction fees, with a focus on stablecoin-related income, staking, and institutional services. Its strategic initiatives, such as the "Everything Exchange" platform and regulatory compliance efforts, are vital for long-term stability in the evolving digital asset landscape. The company's ability to maintain profitability amidst market volatility and manage operational expenses, particularly cybersecurity-related costs, will be key to its future valuation.
