CrowdStrike Is Set to Report Earnings. Can It End the Software Stock Slump?

CrowdStrike, a leading cybersecurity stock, is up 22% this year. (Adobe Stock)

Snowflake and CrowdStrike stocks will try to buck a software slump when they report earnings later this week.

Software stocks have been noticeably weak this summer, with the iShares Expanded Tech-Software Sector exchange-traded fund declining roughly 5% over the past month. The fund, which was trading down 0.2% at $106.53 on Tuesday, appears to be magnetically drawn toward the very round $100 level.

It’s not looking good. On the weekly chart, a double top formed alongside a bearish engulfing candle the week ended Aug. 1, as the stock fell nearly 4%. This was followed by two consecutive doji candles, which are adept at forecasting changes in the prevailing direction. Bulls might argue the fund is retesting a prior double bottom breakout, but in a worst-case scenario, the ETF could slide through $100 toward the round-number level near $90, which was the site of a former cup-with-handle breakout from a year ago.

CrowdStrike, a leading cybersecurity stock, is up 22% this year but has faced headwinds since mid-July, dropping on 21 of the last 33 trading sessions. The trouble began with a doji candlestick at the very round $500 level on July 8, correctly signaling a reversal.

As outlined in my early August commentary, this weakness may persist. CrowdStrike, which was down 0.1% at $418.46 midday Tuesday, now appears poised to test the $400 level, which notably corresponds with its 200-day simple moving average. This area also marks a retest of a former double bottom breakout that previously propelled the stock higher by $100. CrowdStrike reports earnings after the close on Wednesday and is heading into that event having recorded three consecutive down reactions in the 5% to 6% range.

Snowflake, a cloud-based data platform, has also had a decent year in 2025. It’s up 26% and outperforming the iShares Expanded Tech-Software Sector ETF, which is higher by 7%. The stock is set to report earnings after the market close on Wednesday. Its last three earnings reactions were positive, with significant jumps of 13.4% and 32.7% occurring on May 22 and Nov. 21, 2024, respectively.

Snowflake, which was trading down 0.2% at $194.27 on Tuesday, is now grappling with the very round $200 level after slicing below it on Aug. 8, when the stock dropped nearly 7%. Snowflake has a history of filling in gaps. Its early April lows filled the gap created by the earnings reaction in November 2024, and it is possible this pattern may repeat, potentially pushing the stock toward $184 to fill an earnings- related price gap from the May 20 session. This move would also coincide with a retest of a former bull flag breakout level.

Datadog, a software security play, has declined 10% this year and currently sits 25% below its 52-week high after a stagnant August that has seen it advance in just seven sessions so far this month. The stock has been under pressure since a bearish island reversal in early July, formed with the gap down on Jul. 8 following the gap up on Jul. 7.

Datadog, which was trading down 0.9% at $127.28, may now be attempting to carve out a low, holding near its 200-day simple moving average, similar to the action seen last October and November before the stock surged $50 into year-end. Two recent doji candles in the past nine days add conviction to a potential bullish reversal. One could enter here with a stop below $120. If momentum builds, a double bottom pattern with a pivot at $152.34 could be setting up into year end.

Will the dog of the software sector win out?

Write to Doug Busch at douglas.busch@barrons.com