What happened

Okta (OKTA 0.45%) investors beat the market on Monday, as the software-specialist's stock gained 6% by 3:15 p.m. ET. That result easily passed the 0.7% gain in the S&P 500. It continued a positive trend for Okta's stock over the last few weeks, although shares remain lower by almost 70% so far in 2022.

Monday's jump appeared to be driven by a boost in sentiment around tech stocks and Okta's short-term earnings prospects.

So what

The main factor pushing shares higher was the rise in the Nasdaq index, home to many beaten-down tech stocks, like Okta. Other notable software specialists moving higher included Microsoft -- the company's shares were up 2% by 3:15 p.m.

Okta is also still enjoying the benefit of rising optimism in the wake of its late-November earnings report. The company announced a 37% sales increase in that report, which still implies that the business has work to do to fully recapture its prior momentum. Yet the management team raised their earnings outlook significantly, thanks to efforts to make the business more efficient.

Now what

Okta executives say they're bracing for the selling environment to potentially worsen before stabilizing over the next few quarters. Information technology (IT) budgets might become further constrained, leading to slower growth in 2023.

Okta's digital identity-management and cybersecurity niches will likely fare better than other, more discretionary software categories. Success on that score would lay the groundwork for significant earnings growth, given recent cuts to its cost burden.

The other big question around the stock is the integration of the Auth0 business. To date, it has been more challenging than management initially had hoped. Those risks help explain why Okta's stock is still down in 2022, even though its short-term operating outlook is improving right now.