What Happened?
Shares of cloud analytics platform Teradata (NYSE: TDC) jumped 6% in the morning session after the company entered into a settlement agreement with SAP, which agreed to pay $480 million to resolve all past and pending litigation.
Teradata had alleged that SAP misappropriated trade secrets. Following the agreement, Teradata expected the net cash benefit to be between $355 million and $362 million before taxes. This positive development followed the company's report of a strong conclusion to 2025, which included a 15% growth in Cloud Annual Recurring Revenue (ARR) and the generation of $285 million in free cash flow for the year.
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What Is The Market Telling Us
Teradata’s shares are somewhat volatile and have had 13 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 12 days ago when the stock dropped 10.5% on the news that investors continued to distinguish between the winners and losers in the artificial intelligence boom, leading to a broad sell-off.
The Nasdaq fell 1.5%, while the S&P 500 and Dow Jones Industrial Average also saw significant declines. This market shift indicated that investors were becoming more selective, moving beyond the initial excitement surrounding AI. In addition, a stronger-than-expected U.S. jobs report dampened investor expectations for near-term interest rate cuts from the Federal Reserve. Data showed the U.S. labor market remained resilient, with non-farm payrolls indicating impressive job creation and falling unemployment. This positive economic signal led markets to re-evaluate the timeline for monetary policy easing, which is the process by which a central bank reduces interest rates to stimulate economic growth. Investors priced in the first potential rate cut for July, a shift from previous expectations of June. This delay created a headwind for growth-oriented sectors like software, as higher interest rates can reduce the present value of future earnings.
Teradata is flat since the beginning of the year, and at $29.75 per share, it is trading 21.5% below its 52-week high of $37.88 from February 2026. Investors who bought $1,000 worth of Teradata’s shares 5 years ago would now be looking at an investment worth $681.09.
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