Earnings Watch: More retailers, CrowdStrike, Nvidia – and the ‘most important tech earnings in years?’

By Bill Peters

Nvidia reports amid AI bubble concerns. Nordstrom and Gap report as the bargain hunt separates the big chains from the little.

Some Wall Street analysts say that Target Corp.’s stronger quarterly results last week were a sign that shoppers were turning to mass retailers for their discretionary spending – that is, things like clothing and home decor. If that’s the case, where does that leave the Nordstroms, Gaps and Abercrombies of the world?

We’ll find out this week, those chains and other smaller retailers start to report results.

Elsewhere during the week, CrowdStrike Holdings Inc. reports in the wake of last month’s infrastructure-hobbing software meltdown. And a little $3 trillion company known as Nvidia Corp. also has earnings due, as questions intensify about the state of the artificial-intelligence boom that has sustained technology stocks and the broader market for nearly two years.

In a note on Thursday, Wedbush analysts, led by Daniel Ives, called Nvidia’s results the “most important tech earnings in years.” And following the market’s dyspepsia this month and the Federal Reserve’s increasingly likely plans to cut interest rates, they also said the week ahead could be “the most important week for the stock market this year.”

The results from retailers, at least, will arrive as big-box chains like Walmart Inc. (WMT) and Target (TGT) show signs of putting the retail industry’s current problems behind them. Meanwhile, executives at some of their less gargantuan peers, like Macy’s Inc. (M) and Urban Outfitters Inc., (URBN) have warned of continued consumer avoidance as higher prices for groceries and other necessities take a bigger bite out of personal bank accounts.

On Tuesday, Nordstrom Inc. (JWN) and PVH Corp. (PVH) – the maker of Calvin Klein and Tommy Hilfiger – report results. On Wednesday, earnings are due from Bath & Body Works Inc. (BBWI), Foot Locker Inc. (FL), Kohl’s Corp. (KSS), Chewy Inc. (CHWY), Abercrombie & Fitch Co. (ANF), Five Below Inc. (FIVE) and Victoria’s Secret & Co. (VSCO).

And on Thursday, we’ll get results from Duluth Holdings Inc. (DLTH), Burlington Stores Inc. (BURL), Dollar General Corp. (DG), Best Buy Co., American Eagle Outfitters Inc. (AEO), Ulta Beauty Inc., Ollie’s Bargain Outlet Holdings Inc. (OLLI) and Gap Inc. (GAP).

Demand for things like clothing, sneakers and linens has been strained for the past two years, although UBS analysts last week predicted a “decent” back-to-school shopping season. While some retailers have called out beauty products as a bright spot – and Warren Buffett’s Berkshire Hathaway Inc. (BRK.A) (BRK.B) recently disclosed new a stake in Ulta Beauty (ULTA) – that industry has faced greater competition and bigger risks of a slowdown.

Elsewhere, customers are getting choosier about pet food and other pet supplies. Best Buy (BBY) has said laptop demand has been alright, but it has been waiting for a firmer rebound in electronics. Some analysts said the company could get one, as people replace and upgrade their devices and the housing market improves.

And even as people continue to seek out bargains, discount retailers have occasionally noted that the pain has been particularly pronounced among their lower-income shoppers.

This week in earnings

Salesforce (CRM), HP Inc., (HPQ), Box Inc. (BOX), Autodesk Inc. (ADSK), Marvell Technology Inc. (MRVL) and Dell Technologies Inc. (DELL) also have results upcoming. So to Malibu Boats Inc. (MBUU) and Campbell Soup Co. (CPB).

The call to put on your calendar

CrowdStrike: A month ago, the blue screen of death took over millions of the world’s computer screens, hobbling air travel, hospitals and routine aspects of daily life. At the heart of it? A faulty software update from cybersecurity company CrowdStrike (CRWD) for Microsoft Windows devices. More detail on the fallout could come when CrowdStrike reports quarterly results on Wednesday.

Since the meltdown, CrowdStrike’s stock has plummeted and, to a lesser degree, rebounded. It has caused a fight between Delta Air Lines Inc. (DAL), which was a particularly hard hit by the outage, and Microsoft. Lawmakers are demanding answers. Someone on Wall Street have said to buy the dip. But others have said the incident certainly won’t be the last, as cyberattacks get big enough to reach Main Street, and as tech companies get bigger and more AI-driven and leave more security gaps in the process.

The numbers to watch

Nvidia results: Markets have gotten more nervous about when the tech world’s plunge into AI will pay off, as the biggest companies plow their cash into new learning models and assistants, and questions increase about their overall quality. When Nvidia (NVDA) – the chipmaker at the center of the AI boom – reports on Wednesday, those anxieties will be tested yet again.

Heading into the results, expectations are, as usual, high. As usual, Wall Street analysts think the company can beat them.

“In a nutshell, we expect another drop-the-mic performance from Nvidia, as right now Jensen & Co. are the only game in town with $1 trillion of AI capex on the way for the next few years, with Nvidia’s GPUs the new oil and gold in this world,” Ives said in Thursday’s note, referring to Nvidia Chief Executive Jensen Huang.

“While the Tokyo Black Monday growth scare a few weeks ago was a historical blip on the radar, the bulls needs to see enterprise demand on AI carry the torch to move this market higher led by tech and it all starts with Nvidia,” he continued .

-Bill Peters

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08-25-24 1811ET