Breakfast News: Softer Salesforce Guidance

Breakfast News: Softer Salesforce Guidance

1. CRM Drops Over 5% on Underwhelming Outlook

Rule Breakers recommendation Salesforce (CRM -0.53%) fell more than 6% in pre-market trading following soft guidance released as part of quarterly results, suggesting its AI product isn't offering the scale of commercial returns investors were hoping for.

• "Our results are absolutely fantastic and our guidance is ... always appropriately conservative": CEO Marc Benioff defended the results, where it beat estimates on revenue and earnings, adding the AI offering is allowing clients to fundamentally transform their business.
• "Investors will have to look at the qualitative Agentforce numbers and wait for the Dreamforce conference next month": Raimo Lenschow, an analyst at Barclays (BCS -0.34%), pointed to October where developments around the platform can be scrutinized further beyond pure financials.

2. After-Hours Movers: GTLB and FIG Fall, AEO Soars

Hidden Gems rec Gitlab (GTLB -2.11%) dropped over 8% following the closing bell after revenue estimates for the coming quarter disappointed investors, despite growing customers generating more than $100k by 25% year over year.

• "In just six weeks, the campaign has generated unprecedented new customer acquisition": American Eagle Outfitters (AEO -0.76%) CMO Craig Brommers pointed to the Sydney Sweeney campaign as a key driver behind a spike in sales, with the stock up 25% following the release of the results.
• Quarterly sales jumped 41% versus the same period last year: Figma (FIG -3.03%) sank 14% after the market closed due to sales forecasts for the full year falling short of expectations, although large investments in AI technology were outlined.

3. Trump Asks Supreme Court to Rule on Tariffs

President Trump has asked the Supreme Court to quickly rule on his bid to overturn lower-court decisions that found his tariffs not to be legal, saying the U.S. could suffer greatly if trade deals have to be unwound.

• "If we don't win that decision, you'll see a reverberation like maybe you've never seen before": The federal appeals court has allowed the tariffs to remain in place while the case moves through the legal system, which could take until next summer before an ultimate decision is made.
• The ruling "gravely undermines the president's ability to conduct real-world diplomacy": Treasury Secretary Scott Bessent said the economy could be impacted. If an eventual ruling comes in June 2026, an estimated $750 billion to $1 trillion in levies could have been collected according to filings.

4. Nike Eyes Growth With WNBA Deals

Nike (NKE 6.17%) is pushing for more activation in women's sports, highlighted with a new shoe pending for WNBA superstar Caitlin Clark, as CEO Elliott Hill continues to pivot from the overreliance on the retro streetwear strategy.

• "It makes sense that they are going after this, especially given the explosion in popularity that the WNBA has experienced": Beth Goldstein, a footwear industry analyst at Circana, sees women's sports as a clear growth opportunity.
• Deal with Clark the most sought-after in WNBA history: Clark is seen as the icon of the sport, although critics wonder if Nike will stick to allocating budget to this segment if the financial benefits aren't clearly seen.

5. Next Up: Tech and Retail Earnings

Braze (BRZE -1.05%) reports after the closing bell, with the market looking for a bounce-back in the net retention rate – which slowed last quarter – along with guidance on growth prospects for the full year.

• Only missing analyst revenue expectations once in the past two years: DocuSign (DOCU -4.41%) will announce results after the market closes, too, with an update on the product roadmap important given the questions around growth last quarter.
• From software solutions to soft pants: Broadcom (AVGO 1.18%) and Lululemon (LULU -0.16%) will also report after the closing bell, with Endava (DAVA 2.31%) posting earnings before the market opens, as we mentioned on Tuesday.

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