Here are the 4 big things we’re watching in the stock market in the week ahead
Earnings season isn’t over yet. There will also be many important updates this week, from influential technology conferences to business data and milestones. Let’s dive into it all. 1. Earnings: Quarterly earnings are always a big and exciting focus for us as a Club. As we come to the end of this earnings season, we have three Club names to report this week and they are important names. First, Palo Alto Networks will report its results after the close on Tuesday. Then, on Wednesday evening, CrowdStrike and Broadcom come into play. We’ll start with our cybersecurity plays on Palo Alto Network and CrowdStrike. Fortunately, the market has finally come around to our view that AI is a significant tailwind for security providers; It’s not the headwind the market was pricing in when these stocks were left for dead earlier this year. Their remarkable returns pose a challenge to earnings. This doesn’t mean we believe companies can’t meet Wall Street’s forecasts. The problem is that the bar for earnings has risen on deals that are both trading at all-time highs and significantly above their previous records before this year’s AI-driven sell-off. As a result, this is the absolute minimum we should see an increase in reported figures. More important will be management’s near-term outlook and its commentary on investors’ call for cybersecurity demand to be on a definite upswing now that AI is embedded in every aspect of the business. Beyond the numbers and demand commentary, we’ll be interested to hear what both Palo Alto Networks and CrowdStrike have to say about their trends starting with the April launch of Project Glasswing, the security initiative associated with the Claude Mythos model. Anthropic organized this effort due to the belief that its yet-unreleased AI model poses a major risk to the world’s technology infrastructure due to its incredible ability to find bugs in software. In April, CrowdStrike unveiled its own industry coalition called Project QuiltWorks to close what it calls “the AI vulnerability gap for every organization.” As of Friday, the Street expects Palo Alto to report earnings of 80 cents per share on revenue of $2.94 billion, according to estimates compiled by LSEG. Estimates for CrowdStrike are for earnings of $1.07 per share and revenue of $1.36 billion. .SPX CRWD,PANW YTD mountain Annual performance of the S&P 500 against CrowdStrike and Palo Alto Networks. Broadcom is also coming into print hot, closing Friday at a record high. Faced with leftist expectations, Broadcom will have to do more than just make headlines. We need to see continued momentum in AI revenue from both networking and the custom semiconductor business that co-designs chips for tech companies like Google. More importantly, management needs to provide guidance that makes clear that demand for AI offerings will not only continue but strengthen in the back half of the year. Will CEO Hock Tan announce that Broadcom has signed a new custom chip customer? In its March earnings call, Tan said the number of customers was at six, which includes Meta and Anthropic. Tan’s comments on customers’ spending intentions will be watched closely over the next 12 to 18 months. On Friday, Broadcom is expected to report earnings of $2.42 per share on sales of $22.48 billion, according to LSEG data. 2. Conference presentations: Club names like Nvidia, Arm and Microsoft are attending tech conferences this week, and what else will they be discussing there? – artificial intelligence. Nvidia and Arm are based at the influential Computex in Taiwan, the epicenter of the semiconductor supply chain. Nvidia chief executive Jensen Huang is scheduled to give a keynote speech at 11 a.m. Taipei time on Monday (11 p.m. New York time on Sunday). Investors want detailed information about the “surprise new product” Huang introduced last week. A growing number of signs on social media point to these products being personal computers running on Windows. Currently, you can buy consumer Windows laptops that include Nvidia’s graphics processing units (GPUs) paired with central processing units (CPUs) designed by other companies, such as Intel. There is no computer on the market with both an Nvidia GPU and a CPU. Arm CEO Rene Haas has a keynote on Tuesday. Arm’s stock is on fire, and we’ll be looking for fresh commentary on demand regarding its new in-house data center CPU and supply chain capacity, as well as its broader role in enabling robotics. If the rumors come true and Nvidia unveils its CPU for PCs, it will likely increase royalty revenues based on Arm’s instruction set. Microsoft kicked off its Build developer conference in San Francisco on Tuesday; here we hope to encourage updates to the company’s internally developed AI tools and products. Our frustrations with Microsoft include the belief that its AI innovations lag far behind OpenAI, Anthropic, and Alphabet’s Google. Featuring a keynote from CEO Satya Nadella, this conference is an opportunity to evolve the narrative. A new coding model in particular may be on the way, tech-focused publication The Information reported Thursday. 3. Division updates: We’re big fans of divisions in the club; This is when a company establishes an independent entity to house one (or more) of its business units, and shareholders receive proportionate ownership in the new firm. We explored this concept in depth a few years ago, but the idea is that creating more streamlined companies will result in better-run companies with better-performing stocks, rather than having entire businesses under one umbrella. It doesn’t always work out according to plan (J&J’s consumer-health divide comes to mind). But some recent success stories include General Electric’s three-way split (we now own a piece in GE Vernova) and DuPont, which spun off its electronics unit to Qnity last fall. Qnity is our third best stock this year; The remaining DuPont was also solid. The reason for this background: This week there will be two important updates for the upcoming spin-offs at Club holdings FedEx and Honeywell. On Monday, FedEx’s shipping business will begin trading on the New York Stock Exchange. The company, which provides less-than-truckload shipping services, will be known as FedEx Freight and will use the ticker symbol FDXF. The remaining FedEx, which hosts package and air freight distribution businesses, will continue to use the code FDX. The belief that this split would ultimately make more money for shareholders than keeping the companies together was one of the reasons we bought shares in FedEx on May 18. Honeywell will hold an investor day for Honeywell Aerospace on Wednesday, which is expected to officially end on June 29. Before Honeywell officially announced the split in February 2025, Jim had called for the conglomerate to break itself up, recognizing that its aviation division was the crown jewel of its portfolio. So we’ve waited a long time for this. We look forward to receiving Honeywell Aerospace’s management team plan for the independent company known for its electronics and cockpit systems. Anything management says, especially about supply chain constraints, will be noteworthy because this was a key point in its first-quarter results in April. Separately, the quantum computing firm in which Honeywell has a majority stake could go public later this week. 4. Jobs, jobs, jobs: The labor market dominates this week’s economic data. The Job Opportunities and Labor Turnover Survey (JOLTS) is the first of the surveys conducted on Tuesday morning. The report, called the JOLTS report, measures the stagnation in the labor market; It shows the number of jobs opened, hires and layoffs, layoffs and layoffs in a given month. A tight labor market can become a source of inflation as workers use their advantage to demand higher wages. That’s why economists, investors and central bankers are watching the issue closely. Note that the JOLTS data is from April, while the other two major reports (ADP’s private payroll survey and the Department of Labor’s official jobs report) are from May. Economists polled by FactSet as of Friday expected Wednesday’s ADP report to show the number of private sector jobs increased by 120,000 in May, up from a better-than-expected 109,000 in April. The consensus for Friday’s nonfarm payrolls report is for 105,000 new jobs to be added and the unemployment rate to remain steady at 4.3%. The April jobs report came in well ahead of consensus, reflecting the economy’s resilience in the face of rising oil prices and Iran war uncertainty. We will also follow the revisions to April data. Other metrics to watch besides headline numbers: labor force participation rate, average hourly earnings and hiring in the tech sector amid concerns of AI disruption. This will be Fed Chairman Kevin Warsh’s first business report leading the central bank. While the market would like to see the Fed lower interest rates, the war-related rise in inflation complicates those efforts, especially if the labor market continues to hold. Next week Monday, June 1 ISM manufacturing purchasing managers index (PMI) at 10 a.m. ET Before the bell: Science Applications (SAIC) After the bell: Hewlett Packard Enterprise (HPE) JOLTS report Tuesday, June 2 at 10 a.m. ET Before the bell: Dollar General (DG), Victoria’s Secret (VSCO), Donaldson (DCI), Signet (SIG) After the bell: Palo Alto Networks (PANW), ULTA Beauty (ULTA), PicPay (PICS) Wednesday, June 3 8:15 a.m. ET ADP private payrolls ET ISM services purchasing managers index (PMI) 10 a.m. ET Before the bell: MiniMed (MMED), Medtronic (MDT), Macy’s (M), THOR Industries (THO), Ollie’s Bargain (OLLI) After the bell: Broadcom (AVGO), CrowdStrike (CRWD), Veeva (VEEV), C3.ai (AI), Five Below (FIVE), ChargePoint (CHPT), PVH Corp (PVH), Petco (WOOF) Thursday, June 4 Initial jobless claims at 8:30 a.m. ET Before the bell: Ciena (CIEN), Toro (TTC) After the bell: lululemon (lulu), Docusign (DOCU), CooperCompanies (COO) Friday, June 5 Nonfarm payroll at 8:30 a.m. ET payroll report Before the bell: ABM Industries (ABM) (Jim Cramer’s Charitable Trust has long *** FILL IN*** See here for a complete list of stocks.) 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