Fastly, which sells the content-delivery and edge-computing network that keeps websites loading fast and fending off attacks, jumped 25% in July. Elastic, maker of the Elasticsearch search software that companies use to hunt through logs and, increasingly, feed AI applications, rose 13%. Five9, which runs the call-center software agents use to field customer calls, climbed 17%. Q2 Holdings, whose software powers the online and mobile banking apps of regional banks and credit unions, gained 16%. GitLab, the platform where software teams store code and now attach an AI coding assistant called Duo, added 8%. Only Lightspeed, which sells point-of-sale and e-commerce software to independent retailers and restaurants, fell — down 6% — even though its own numbers improved.

That split matters because these six sit at the small end of software, the segment investors spent two years marking down as most vulnerable to both AI-driven disruption and takeover bids. The July rally raises the question of whether the group is genuinely re-rating on improving fundamentals or simply enjoying an earnings-season bounce that has, in a few cases, already run ahead of the businesses underneath it.

Where the business supports the tape. Elastic's most recent quarter showed net revenue retention holding at 112% and Elastic Cloud revenue up 22%, with the company reporting 470-plus customers now running AI workloads on its platform and acquiring Jina AI to deepen its vector-search technology. Its price-to-sales multiple still sits at 3.74x, the cheapest in the group. Fastly's revenue growth is accelerating — security revenue up 47%, its newer compute segment up 67% — and no evidence of a major customer loss surfaced in its latest results; its current 4.99x sales multiple is still below the 8.1x peak it hit in May, so the July move has not fully closed that gap. Q2 Holdings raised its full-year subscription guidance after a record bookings quarter and a 28.6% adjusted EBITDA margin — genuine improvement, though its trailing price-to-earnings ratio of roughly 51x on 10-11% revenue growth is still what the desk's own prior notes call stretched.

Where the tape has run ahead. GitLab's first-quarter results beat estimates and disclosed roughly $20 million in Duo AI consumption run-rate, a rare hard number behind the AI-attach story — but full-year guidance decelerated to 16-17% growth, and about 20% of annual recurring revenue remains under seat-contraction pressure from customer layoffs. Its forward sales multiple has jumped from 4.0x in May to 5.54x, a re-rating that has outpaced the slower guide, not confirmed it — a gap widened further by unconfirmed takeover chatter involving Datadog that neither company has verified. Five9's AI-specific revenue grew 68% year over year and now makes up 13% of subscription revenue, management said, a genuine counter to the fear that AI voice agents would gut its business — but its own sales multiple has nearly doubled, from 1.12x to 1.77x, since May, meaning much of that reassurance is already priced in.

The outlier. Lightspeed's fundamentals moved the opposite direction from its stock. The company completed a strategic review, stayed public, upsized its buyback, turned EBITDA positive and grew its core retail and hospitality segments 24% — yet shares fell 6% in July, the one clean divergence in the group and the cheapest stock on a sales-multiple basis at 1.15x.

The price data show why the technical picture is less settled than the month's returns suggest: Elastic, GitLab and Q2 Holdings all flipped from bearish to bullish trend readings only on the final trading day of July, with no multi-week confirmation yet, and Q2 Holdings whipsawed back into a strong-bearish reading as recently as June. Only Five9 and Fastly have held bullish trends since June.

The setup

Where it stands — Five of six names rallied on July earnings, but three flipped bullish only on the month's last trading day. Would confirm — Elastic, GitLab and Q2 Holdings hold bullish trend readings for three-plus consecutive weeks into September. Would invalidate — Those three revert to bearish trend readings before mid-August, repeating Q2 Holdings' June whipsaw. Watch next — GitLab's fiscal second-quarter report, expected September 2026, for Duo AI run-rate growth beyond $20 million. Valuation — GitLab trades at 5.54x forward sales versus 4.0x three months ago; Elastic trades at 3.74x, the group's low.