Stock investors have grown impatient with the length of time they've had to endure the current bear market. With the Nasdaq Composite (^IXIC 0.10%) still down more than 25% from its all-time highs less than a year ago and broader market benchmarks also substantially lower, it's been hard for many investors to maintain confidence in their long-term strategies.
However, you can't afford to wait until stocks return to new highs before putting money to work in the market, and often, key companies give signs that business conditions are getting more favorable. Next week, tech company leaders Oracle (ORCL 0.22%) and Adobe (ADBE 0.89%) are set to report their most recent financial results. What the two software stocks say could move the entire market and potentially set the stage for an end to this months-long bear market.
Investors consult Oracle
Oracle is set to announce its fiscal first-quarter financial results after the close of regular trading on Monday afternoon. The tech giant's stock has been considerably less volatile than many of its peers', but nevertheless, Oracle shareholders have had to endure a decline of close to 30% since its best levels in December 2021.
Those following Oracle have high hopes that the company can continue its long track record of consistent growth. Most investors expect modest gains in earnings from year-ago levels, even though the period tends to be a seasonally slow one compared to other parts of the year. The average outlook for $1.08 per share would be about 5% higher year over year, with many having reined in their expectations over the past few months amid the turbulent market environment.
More important than the current numbers, though, will be news of how the integration of recently acquired Cerner is going. CEO Safra Catz was excited in last quarter's conference call about the prospects for boosting Oracle's exposure to the health information space, and clearly, spending $28 billion and incurring substantial additional debt reflects the optimism the tech giant has about the opportunity. However, Oracle has said the deal would be accretive to earnings by this quarter, so investors will want to see the company follow through.
Oracle is well regarded as a strong company, and how it performs could be a bellwether for large tech titans on the whole. An exceptional report could provide key support for investor sentiment.
Adobe looks for creative growth
Meanwhile, Adobe is set to report its fiscal third-quarter financial results on Thursday afternoon following the close of the regular trading session. The maker of creative software products has worked hard to make the transition to a more cloud-focused subscription business, and shareholders are looking for a payoff.
Yet expectations about Adobe's results in the coming quarterly report are reasonably modest. Investors generally anticipate earnings to come in around $3.33 per share, up from $3.11 per share in the year-ago period. Revenue of $4.43 billion would potentially keep Adobe on track to see full-year sales growth in the low teens on a percentage basis.
Adobe does need to reassure its shareholders that it can regain its former momentum in the years to come. After seeing huge gains in 2021 as the pandemic pushed creative professionals to get their own tools to keep doing their work, Adobe has understandably seen the pace of its growth moderate. The fear among Adobe investors is that future revenue gains won't be fast enough to justify a premium valuation for the stock.
Adobe shares climbed as high as $700 in late 2021, but they're below $400 now. That reflects investors' concerns, but it leaves room for upside if Adobe can reignite its growth engines. Moreover, what Adobe says about its software niche could bring greater optimism for tech stocks in general and lead a broader market rally.
