Salesforce and Major Firms Set to Report Earnings This Week

Investors are gearing up for a significant week as major companies, including Salesforce (CRM), prepare to release their earnings reports. On Wednesday, December 6, 2023, Salesforce is expected to report earnings per share (EPS) of $2.86 on revenue of $10.27 billion. The focus will be on the company’s growth prospects, the impact of artificial intelligence (AI), and its competitive position amid a historically low valuation.

The retail sector is undergoing a transformation, heavily influenced by AI advancements. Recent data shows that U.S. retail site traffic surged by 805% year-over-year, while Black Friday online sales reached a record $11.8 billion, reflecting a 9.1% increase from the previous year. These trends suggest that consumers are increasingly relying on AI tools to enhance their shopping experiences.

Salesforce’s earnings report will be accompanied by disclosures from several other notable companies. On Monday, MongoDB (MDB) will report its figures, followed by CrowdStrike (CRWD), Marvell (MRVL), and GitLab (GTLB) on Tuesday. The following day, alongside Salesforce, Snowflake (SNOW), Dollar Tree (DLTR), and C3.ai (AI) will also release their earnings. The week concludes with reports from Kroger (KR), Ulta Beauty (ULTA), Hewlett Packard Enterprise (HPE), and Dollar General (DG) on Thursday, followed by Victoria’s Secret (VSCO) on Friday.

Investors are particularly attentive to Salesforce’s performance as they seek clarity on whether the company’s growth can overcome psychological barriers that are influencing market sentiment. Analyst Luca Socci from Seeking Alpha notes that the market is questioning Salesforce’s competitive moat and the long-term benefits of its Agentforce initiative. Yet, according to DM Insights, Salesforce’s current valuation is notably low, even below the S&P 500. They contend that the company’s predictable business model, combined with favorable AI trends, presents a compelling risk/reward scenario for investors.

On the economic front, the week will also feature a speech from Federal Reserve Chairman Jay Powell at a panel discussion at Stanford University. This comes as the Federal Reserve enters a blackout period ahead of its upcoming meeting. Markets are currently pricing in an 85% chance of a quarter-point rate cut on December 10, 2023, marking the highest likelihood since Powell’s last press conference, which leaned towards a hawkish stance.

Economic data will include core Personal Consumption Expenditures (PCE) inflation figures, although these will be from September. Traders and Fed officials are also looking forward to the preliminary Michigan sentiment figures for December, which are expected to provide insights into consumer expectations.

In retail news, Adobe has reported that Black Friday online sales reached an all-time high of $11.8 billion. During peak shopping hours from 10 a.m. to 2 p.m., consumers spent $12.5 million every minute online, with mobile devices accounting for 55.2% of total sales. The increase in AI-driven traffic to U.S. retail sites indicates that consumers are leveraging generative AI for shopping, particularly for video games, appliances, electronics, toys, personal care items, and baby products.

As the week progresses, other significant financial events include several companies going ex-dividend. Lockheed Martin (LMT) will go ex-dividend on Monday, with payouts scheduled for December 30, 2023. Likewise, McDonald’s (MCD) and Coca-Cola (COLA) will also go ex-dividend on Monday, with payouts on December 15. Upcoming ex-dividend dates for Goldman Sachs (GS), Home Depot (HD), and Qualcomm (QCOM) will also attract attention from income-focused investors.

As this week unfolds, the earnings reports from Salesforce and other major companies may provide vital insights into the current state of the market and the ongoing evolution of retail influenced by AI technologies.