Salesforce Faces Questions: 8 Key Items Shaping the Stock Market Wednesday
These are the early headlines and other items poised to influence the market at the start of the trading day. As we share this collection of market drivers, U.S. equity futures point to a positive start to the trading day when U.S. equity markets open.
1. President Trump will meet with his Cabinet on Wednesday at a precarious moment for talks aimed at ending the war with Iran, just days after insisting his administration and Tehran had “largely negotiated” a settlement but with the negotiations still in a state of flux. (CBS News)
The cabinet meeting is slated to kick off around 11 a.m. ET, which means we are likely to hear from President Trump later on Wednesday. Based on comments from U.S. Secretary of State Marco Rubio that “a few more days” may be needed to reach a potential peace deal, we could see Trump renew threats to make a deal “or else.”
Potentially complicating U.S.-Iran peace talks, Israel has stepped up attacks on Lebanon with ground forces would move further into the country. Israeli Prime Minister Benjamin Netanyahu sharing troops will be “seizing dominant terrain” in southern Lebanon.
2. Goldman Sachs has raised its 2026 year-end forecast for the S&P 500 index to 8,000 from 7,600, citing continued strength in corporate earnings… The brokerage also raised its S&P 500 earnings-per-share forecasts to $340 for 2026, implying 24% year-on-year growth, and to $385 for 2027, a further 13% increase. Goldman’s move adds to a growing wave of bullish calls from brokerages, with UBS the latest to lift its outlook last week, citing robust AI-driven earnings that could help offset inflationary pressures and supply risks from the Iran conflict. The brokerage said AI infrastructure beneficiaries are set to drive about half of the index’s earnings growth this year, adding that while weak consumer spending and elevated costs pose risks, strong AI investments would offset these pressures. (Reuters)
Goldman’s ($GS) new S&P 500 forecast for this year is above the market consensus of $334.73 exiting last week per data published by FactSet. Based on the preliminary tally of $80.36 in Q1 2026 EPS, Goldman’s implied year over year EPS growth for the balance of the year is around 25% — a smidge slower than the 26% reported in Q1 2026. Given the impact of the U.S.-Iran war during Q1 2026, and what we’re likely to see in the current quarter that 25% figure seems rather aggressive.
Goldman’s view also speaks to the increasingly bifurcated nature of the market between AI and what can be called “everything else.” That suggests to us that there are opportunities being overlooked. However, with Tuesday night’s market close, the relative strength index levels for both the S&P 500 and the Nasdaq Composite indicate they have re-entered overbought territory.
3. ByteDance Ltd., the developer of TikTok and a leading force in artificial intelligence, is considering increasing its capital spending to more than double last year’s in a bid to lead the Chinese AI market and challenge the top US players abroad… The Beijing-based social media leader is discussing expenditures of as much as $70 billion this year as it builds out data centers and other AI infrastructure… ByteDance has discussed boosting its capital spending to roughly $100 billion next year if economic and business conditions are favorable, said the people. Its capital expenditures last year were about $25 billion… (Bloomberg)
A reminder that the AI arms race isn’t only centered around the big four hyperscalers or only unfolding in the U.S. Tencent has vowed to at least double its AI investments to more than 36 billion yuan ($5.3 billion) this year, while Alibaba maintains a rolling target of more than $50 billion over three years. We see this keeping demand levels high for AI and data center chips as well as networking ones but also fostering more multi-year ties ups and needs to address capacity constraints.
And with that in mind…
4. Samsung Electronics plans to invest 39 trillion dong ($1.5 billion) in Vietnam to build a semiconductor testing plant, its proposal document showed, an expansion that will help ease a global shortage of memory chips driven by surging AI demand. The new factory, for which construction has already begun in an industrial park 60 kilometres (37 miles) north of Hanoi, is slated to start operations in November 2027… The new plant would have annual capacity to deliver 153.3 billion gigabits (Gb) of dynamic random-access memory (DRAM) chips and another 255.6 billion Gb of NAND memory chips… (Reuters)
Another confirmation point for chip industry tightness that is constraining supplies to industries such as smartphones, laptops and automobiles. It’s also bringing more support for the Portfolio’s position in Applied Materials ($AMAT). Applied management presents tomorrow at the Bernstein Strategic Decisions Conference and next week at the BofA Securities Global Technology Conference.
5. Salesforce Inc. hasn’t benefited from the rebound in software stocks despite being up 8.6% since hitting a three-year low on April 10, and its stock has lost 32% this year. The company faces questions about its prospects due to competition from Anthropic and OpenAI, which could weaken demand and pricing power for its customer relationship management software. Salesforce is expected to post revenue growth of 11% in fiscal 2027… (Bloomberg)
Comments on AI adoption and how Salesforce ($CRM) is benefitting will be top of mind when the company reports after Wednesday’s market close. So too will be how its responds to reports OpenAI hired ServiceNow ($NOW) chief marketing officer Colin Fleming as CMO for its business unit, a move that signals the AI company is deepening its enterprise marketing as it looks to expand beyond its core AI products. Fleming spent two years at ServiceNow after 13 years at Salesforce. That move, along with OpenAI’s Development Company and Anthropic’s recent acquisition of Fractional AI, will renew concerns for software companies like Salesforce.
As we digest those comments, we’ll continue to size up remaining performance obligation (RPO) figures on both a year over year and sequential basis. At the end of Salesforce’s January 2026 quarter, its RPO stood at $72.4 billion and subscription revenue for that quarter tallied $10.7 billion.
6. Shares of Zscaler fell in the Wednesday premarket after fiscal third-quarter earnings and revenue surpassed Wall Street’s expectations but sales guidance fell short… Looking ahead to the fiscal fourth-quarter, Zscaler expects revenue between $875 million and $878 million, coming in below Wall Street’s $878.6 million estimate. The company sees fourth-quarter profit between $1.08 and $1.09 a share. Analysts peg fourth-quarter earnings at $1.03 a share, according to FactSet. (Barron’s)
Leading up to Zscaler’s ($ZS) earnings report on Tuesday night, shares of the company’s stock zoomed from a mid-April low near $120 to touch $190, a move of more than 58% in just over six weeks. The shares were also overbought based on their RSI figure near 74. Against that backdrop, it’s not surprising to see the modest revenue guidance miss weigh on the shares on Wednesday morning. Fortunately for the Pro Portfolio, on Tuesday, we took advantage of the dramatic move in the shares of the First Trust Nasdaq Cybersecurity ETF to take some chips off the table and lock in an outsized gain.
During Zscaler’s earnings call on Tuesday night, chairman and CEO Jagtar Chaudhry added to our thinking about the impact of bad actors leveraging AI to advance their cyberattacks:
Frontier models are multiplying these unremediated vulnerabilities by as much as 10x and even more powerful models that are currently being developed will undoubtedly make it worse. Enterprises don’t have the capacity to patch and update existing vulnerabilities…
While we bowed to portfolio discipline on Tuesday, we continue to see cybersecurity and the pain point it addresses as a key element in every investor’s portfolio.
7. Economic data today per TipRanks: MBA Mortgage Applications Index (Weekly), ADP Employment Change Report (Weekly), Richmond Fed Manufacturing Index (May), EIA Crude Oil Inventories (Weekly).
8. Companies reporting today per TipRanks: AM – Abercrombie & Fitch ($ANF), Capri Holdings ($CPRI), Dick’s Sporting Goods ($DKS), Dycom ($DY). PM – Agilent ($A), HP ($HPQ), Marvell ($MRVL), Salesforce ($CRM), Snowflake ($SNOW).
More Pro Portfolio
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- Weekly Roundup: Profiting From the Rally, But Not Letting Our Guard Down
At the time of publication, TheStreet Pro Portfolio was long AMAT and MVRL shares.
