Salesforce, Box, Crowdstrike To Be Watched For AI Winners: US Earnings Week Ahead

Artificial intelligence continues to be the dominant theme of the earnings season with software companies.

The cloud-based software company’s efforts to integrate and monetize AI will also come under the spotlight, say Jefferies analysts. (REUTERS)

Artificial intelligence continues to be the dominant theme of the earnings season with software companies Salesforce, C3.ai and Box reporting in the wake of chipmaker Nvidia's consensus-smashing sales forecasts this week.

Keen to separate winners from losers in the early days of the AI arms race, investors will want to know just how well companies such Crowdstrike and MongoDB can capitalize on the accelerated demand for generative computing.

Elsewhere in the tech sector, HP and Dell Technologies could provide the market with a better read on whether demand for tech hardware will recover later this year when they post results next week.

Monday: Markets will be closed for Memorial Day holiday.

Tuesday: Just how much Box's (BOX US) latest AI-tool enhancements can help temper the effects of worsening demand remains to be seen. Consensus points to continued slowdown in Box's total billings and revenue growth, both expected to come in below 5% in the first quarter, reflecting the challenging macro conditions as suggested by the company's quarterly outlook released in March. Box reports after-market.

• Both HP (HPQ US), due after Tuesday's close, and Dell (DELL US), expected Thursday, are forecast to report year-over-year revenue slumps of over 20%. Those declines are seen narrowing in the subsequent quarter, signaling a possible bottoming-out of the PC market. With visibility on second-half demand still low, HP may maintain its cautious outlook, says Bloomberg Intelligence. A degree of circumspection may be warranted after Lenovo's first quarterly profit miss in more than six years.

Wednesday: Salesforce (CRM US), scheduled post-market, is set to report its slowest annual sales growth since going public, intensifying scrutiny of its margins and restructuring plans. The cloud-based software company's efforts to integrate and monetize AI will also come under the spotlight, say Jefferies analysts. Also reporting post-market is software upstart C3.ai (AI US), which faces questions over product delays and its management style. Recent short-seller critiques of the company may have been muted following the release of preliminary fourth-quarter sales figures that beat analysts' estimates. The healthy deal pipeline should bolster investor confidence that C3.ai is on track to reach its goal of profitability by end of fiscal 2024, D.A. Davidson says.

• CrowdStrike (CRWD US) should continue to see double-digit growth in annual recurring revenue when it reports post-market, although the key metric's expansion likely moderated from last year's levels of 50-60%. Despite the overall slowdown in enterprise IT expenditure, generative AI — with its threat of making cyberattacks more sophisticated — is aiding spending on cybersecurity, Bloomberg Intelligence observes. Robust results posted by others operating in the space — Palo Alto Networks, Fortinet and Zscaler — also bode well for SentinelOne (S US), reporting Thursday after the close.

Thursday: Margins at discount retailers Dollar General (DG US) and Five Below (FIVE US) likely saw further erosion during the quarter. Dollar General's profitability is seen crimped by “stubbornly elevated costs” and a shift in consumer spending from higher-margin merchandise to “needs-based consumables,” BI says. Meanwhile, first-quarter top-line gains at Five Below could exceed consensus, thanks to the retail chain's engaging store layouts and strong merchandising.

• First-quarter sales at Macy's (M US) likely slowed despite increased promotions, according to BI.
• MongoDB's (MDB US) customer net additions could come in below analyst expectations due to an extended sales cycle and increased competition, BI says. The emergence of new database management systems purpose-built for AI workloads could also weigh on the company's top-line momentum.