8 Key Items Shaping the Stock Market Wednesday
Earnings from Nvidia and Salesforce, Axon more than delivers, M&A prospects and other headlines are moving stocks this morning.
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These are the early headlines and other items poised to influence the market at the start of trading Wednesday. As we share this collection of market drivers, while off their lows last night and early this morning, U.S. equity futures point to a higher market open.
1. All eyes will be on Nvidia's earnings due after markets close on Wednesday, with AI investors seeking evidence that the chipmaker's profits are growing on the back of Big Tech's $630 billion capital spending budget for 2026. (Reuters)
Quarterly results from Nvidia (NVDA) will be one of the big focal points after today’s market close. Nvidia is expected to report January-quarter EPS of $1.54 on revenue of $66.23 billion and guide its April quarter to EPS of $1.68 on revenue of $72.0 billion. Those sales figures are up more than 60% year over year, which alone makes them impressive, but we’ve seen Nvidia shares plagued by sky-high whisper numbers.
The significant ramp in hyperscaler capex and more recent Nvidia specific deals, like the one it inked with Meta (META) for “millions of chips,” should result in robust guidance. However, given the stock price surge of more than 10% leading into tonight’s report, it’s fair to say expectations are running high. This suggests Nvidia will need to deliver sizable beats for both the January quarter and its guidance. And with Nvidia’s GTC 2025 set for March 16-19, it is possible the company leaves something in the tank for that event.
2. Salesforce’s earnings, due after the market closes on Wednesday, could help make investors more positive about software companies, or keep shareholders on the sidelines. It comes down to how its main AI product is selling. (Barron’s)
Salesforce (CRM) results and guidance will be the other big focal point after today’s market close. Amid the market’s worries over “seat deflation,” which refers to fewer users of software, and AI, Salesforce’s performance and metrics will seek to reset the tone for enterprise software stocks. During yesterday’s Anthropic event, it announced new tools that work with Salesforce as well as other software companies, suggesting the AI fear-led selloff was overblown. Granted, Workday (WDAY) forecasting software subscription revenue of $2.34 billion for the current quarter, up 13% year over year, but slightly below the $2.35 billion Wall Street consensus, puts greater pressure on Salesforce’s results, guidance, and comments. Our focus, among others, will be on remaining performance obligations, which stood at $59.5 billion exiting the prior quarter, and what is said about Agentforce adoption.
3. Axon Enterprise stock jumped on Wednesday, as the maker of Taser stun guns said its efforts at providing artificial intelligence-driven services to law enforcement clients have led to bookings. Axon reported adjusted earnings of $2.15 a share on 39% sales growth to $797 million, far exceeding the FactSet-compiled earnings estimate of $1.60 in earnings per share on sales of $756 million. The company reported $7.4 billion in annual bookings last year, up 46% year-on-year and it credited what it calls its AI Era Plan with generating $750 million of that. The AI services help officers draft report narratives based on audio transcripts, translate conversations and streamline evidence review. (MarketWatch)
We’ll have more detailed comments on Axon’s (AXON) earnings last night, but if the multi-year guidance and AI Era Plan comments weren’t enough, the company’s future contracted bookings stood at $14.4 billion exiting 2025, up from $11.4 billion at the end of the September quarter and $10.1 billion at the end of 2024. While some of the post-earnings pop will be due to short-covering, as 2.39 million shares were short at the end of January per data from Nasdaq, the strength of the business is likely to lead to higher price targets. Again, we’ll have more to say on this later.
4. Warner Bros. Discovery said Tuesday it has received a revised offer from Paramount to buy the entire company for $31 a share, up from its previous per-share purchase price of $30. It’s Paramount’s latest effort to derail rival bidder Netflix, which has a deal to buy the company’s prized studios and HBO Max streaming service. Warner said in a statement its board of directors determined Paramount’s revised bid “could reasonably be expected to lead” to a proposal superior to Netflix’s signed agreement. (WSJ)
The key to the above is that Warner's (WBD) board has yet to say if it has determined the revised Paramount (PSKY) proposal is superior to the merger terms with Netflix (NFLX) . Warner did say that its directors will engage further, which makes sense given the proposed structures are different. Should Warner decide Paramount’s offer is better, Netflix has the right to match it, with a four-day window to make that revised offer. What makes this extra interesting if the timing of Warner’s quarterly earnings report — before the market open tomorrow, Thursday, February 26.
5. PayPal Holdings was one of the few stocks to have a good day on Monday, surging after a report that the payments company was attracting takeover interest. Wall Street is split on whether interested parties would be buying low, or taking over a flailing asset… An outright sale of PayPal is unlikely, said Raymond James analyst Madison Suhr. A takeout could cost upward of $50 billion, leaving a handful of megacap technology names as the most feasible suitors. But interest in certain high-growth assets like Venmo may be real, Suhr said. (Barron’s)
PayPal’s (PYPL) stock down 19% year to date and more than 80% over the past five years, so it’s not surprising M&A talk is happening. We’ve had our concerns over the increasing number of ways to render payments and how that intensifying competition could hit PayPal, but savvy companies are on the lookout for ways to fill product, technology, customer, or geographic holes in the line-up. Maybe a deal for PayPal or some of its parts may emerge, but we could also see a larger M&A effort come about as companies that are having their businesses disrupted, in some cases by AI, are revealed.
6. At least three Federal Reserve officials are slated to speak throughout the day as investors hunt for clues on the future monetary policy path. Two Fed officials speaking on Tuesday signaled no near-term appetite to change the setting of central bank interest rate policy. (Reuters)
Given the lack of fresh data so far this week, we rather doubt today’s Fed speakers will be breaking new ground. However, as you can see below, we have little new data today, and that could mean a market looking to focus on something may scrutinize the Fed speakers more closely. Friday, we get the January PPI report, but to us it will be the much fresher February facing data we get next week, including ISM’s February PMI reports, that will be more insightful about the inflation and the pace of job creation.
7. Economic data today per TipRanks: MBA Mortgage Application Index (Weekly), EIA Crude Oil Stocks (Weekly).
8. Companies reporting today per TipRanks: Bloomin’ Brands (BLMN) , Clear Secure (YOU) , Dine Brands (DIN) , Lowe’s (LOW) , Photronics (PLAB) , Steve Madden (SHOO) , TJX (TJX) ; BJ Restaurants (BJRI) , Chime (CHYM), GoodRx (GDRX) , NerdWallet (NRDS) , Nvidia (NVDA) , Paramount Skydance (PSKY) , Salesforce (CRM) , Snowflake (SNOW) , Trade Desk (TTD) , Urban Outfitters (URBN) , Veeco Instruments (VECO) .
At the time of publication, TheStreet Pro Portfolio was long AXON, NVDA and TJX.
