Should You Consider Selling Your Position in SPS Commerce (SPSC)?

Conestoga Capital Advisors, an asset management company, released its first-quarter 2026 investor letter. A copy of the letter can be downloaded here. The first quarter of 2026 began with optimism about the domestic economy and attractive Small Cap valuations, but was impacted by volatility from Middle East geopolitical unrest and changing interest rate expectations. This unrest drove energy prices up and created cautious global markets. Energy, Basic Materials, and Industrials performed well, while software companies faced challenges due to AI disruption concerns. Market sensitivity to geopolitical events, energy prices, and inflation remains high. The Conestoga Small Cap Composite fell 5.01%, underperforming the Russell 2000 Growth’s -2.81% return. The decline was driven by negative stock selection and headwinds in Technology and Health Care, with sector allocation benefits insufficient to offset losses. In addition, please check the Strategy’s top five holdings to know its best picks in 2026.

In its first-quarter 2026 investor letter, Conestoga Capital Advisors highlighted stocks like SPS Commerce, Inc. (NASDAQ:SPSC). SPS Commerce, Inc. (NASDAQ:SPSC) is a cloud-based software company that provides supply chain management solutions. On April 27, 2026, SPS Commerce, Inc. (NASDAQ:SPSC) closed at $54.88 per share. One-month return of SPS Commerce, Inc. (NASDAQ:SPSC) was -1.42%, and its shares lost 61.35% over the past 52 weeks. SPS Commerce, Inc. (NASDAQ:SPSC) has a market capitalization of $2.05 billion.

Conestoga Capital Advisors stated the following regarding SPS Commerce, Inc. (NASDAQ:SPSC) in its Q1 2026 investor letter:

“SPS Commerce, Inc. (NASDAQ:SPSC) provides cloud-based supply chain management software that standardizes data exchange between retailers and suppliers. Despite a beat on Q4 2025 earnings, management issued a softer 2026 outlook, projecting revenue growth to decelerate to 7%—a notable step down from its historical mid-teens trajectory. This slowdown, combined with sequential declines in their 3P customer segment and lengthening sales cycles, affirmed concerns we have about the company’s remaining total addressable market and its ability to sustain growth.”

SPS Commerce, Inc. (NASDAQ:SPSC) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 30 hedge fund portfolios held SPS Commerce, Inc. (NASDAQ:SPSC) at the end of the fourth quarter, compared to 33 in the previous quarter. SPS Commerce, Inc. (NASDAQ:SPSC) reported a strong Q4 2025, with revenue rising 13% year-over-year to 192.7 million. While we acknowledge the potential of SPS Commerce, Inc. (NASDAQ:SPSC) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.