Stocks fell last week, as both the S&P 500 (^GSPC 0.03%) and the Dow Jones Industrial Average (^DJI -0.57%) shed roughly 2%. The indexes are still in positive territory for the year, but gains are at less than 2% in 2021.

Earnings season continues in the week ahead, with several top stocks set to announce fresh operating results. We'll look at the metrics that could send shares of Costco (COST 0.15%), Target (TGT 0.68%), and Ambarella (AMBA 0.45%) moving over the next few trading days.

An engineer works on a chip.

Image source: Getty Images.

Costco's renewal rates

Investors are expecting plenty of good news in Costco's Thursday report, which covers the peak holiday shopping season. That's partly because the bulk retailer already signaled strong sales for the period by revealing double-digit gains for both December and January. It's also thanks to the positive results that Walmart recently announced, showing accelerating growth in late 2020.

Costco will probably beat its rival on the sales growth front this week, but investors will also be watching customer traffic, which has risen through most of the year as shoppers have consolidated their trips during the pandemic. The warehouse giant will also announce its latest renewal rate, the single best metric to describe the health of the business. Assuming that rate holds at near-record highs of 91%, Costco will be in a strong position to continue winning market share in 2021 while considering another annual membership-fee hike.

Target's margin outlook

Target has been another big winner from pandemic-related spending shifts, and that has shareholders feeling optimistic heading into Tuesday's earnings report. Its holiday-season update already showed market-thumping sales growth of 17% in November and December, but this week we'll find out if the chain was able to hold pricing high in premium categories like home furnishings. That, plus increased demand for same-day fulfilment, should allow Target to post one of the biggest profitability improvements in the industry for the full 2020 year.

TGT Operating Income (TTM) Chart

TGT Operating Income (TTM) data by YCharts.

Investors are questioning whether the good times can last into 2021, though, especially after Walmart predicted several years of elevated spending and rising costs ahead. Target's continued stock-price rally might depend on its ability to keep boosting operating margin even as it invests in the business.

Ambarella's growth forecast

It's time for Ambarella to start showing concrete signs of a rebound. The video tech producer's stock has soared in recent weeks, thanks to optimism about its new line of artificial intelligence platforms. Ambarella's sales base shrank in each of the last two quarters, in fact, but is predicted to return to modest growth in Tuesday's earnings report.

That success would mark just the first step in a growth rebound that might be propelled by surging demand for computer-vision chips and video processing hardware in areas like industrial automation and self-driving vehicles. Ambarella faces steep competition in these niches, though, and so the pressure is on its design engineers to continue creating compelling platforms.

Accelerating sales growth is the best way to show that these products are resonating with suppliers. And rising profitability should follow any demand uptick, leading to impressive earnings growth over time. But heading into this report, both of these core ingredients are missing from Ambarella's investing story.