Stocks slip as market awaits Nvidia, Salesforce earnings — here's what we expect

Ahead of major earnings reports from Nvidia and Salesforce, the stock market is slightly lower, potentially driven by profit-taking after the S&P 500's 2% rally on Tuesday following positive news regarding tariffs and consumer confidence. Broadcom received a price target increase from Melius Research, citing growth in custom AI accelerator clients and sustained spending from Alphabet and Meta Platforms; however, the CNBC Investing Club trimmed its Broadcom holdings, downgrading the stock to a '2' rating, indicating a buy on pullbacks.

Analysis

The stock market is exhibiting a slight downturn, indicative of potential profit-taking following the S&P 500's significant 2% rally on the preceding day, which was fueled by a pause in EU tariffs and strong consumer confidence data. Investor nervousness is apparent ahead of key earnings releases from Nvidia (NVDA) and Salesforce (CRM). For Nvidia, attention is focused on CEO Jensen Huang's forthcoming commentary regarding trade deals and the China market. Salesforce faces scrutiny over its core business growth, with concerns that CEO Marc Benioff's aggressive rollout of the Agentforce AI platform, not expected to generate material revenue imminently, might be overshadowing established revenue streams. This concern is reflected in a negative sentiment score of -0.6 for CRM. Conversely, Broadcom (AVGO) received a positive analyst revision, with Melius Research raising its price target from $198 to $283 and maintaining a buy rating, citing a more than doubling of its custom AI accelerator customers (from 3 to 7) and sustained spending from major clients like Alphabet and Meta Platforms. Despite this upgrade and a slightly positive sentiment (0.3), the CNBC Investing Club trimmed its AVGO position and downgraded its rating to a '2', signaling a strategy to buy on pullbacks. The 10-year Treasury yield remains under 4.5%, suggesting a relatively stable broader interest rate environment amidst these specific stock movements.

Key Decisions for Investors

• Investors should closely monitor the upcoming earnings reports from Nvidia and Salesforce, as these are pivotal events in a market exhibiting cautious sentiment and recent profit-taking.
• For Salesforce, particular attention should be paid to revenue growth from its core business and any tangible progress or outlook on the Agentforce platform, given expressed concerns about its current lack of material revenue contribution and the stock's negative sentiment.
• Regarding Broadcom, investors might consider the Melius Research upgrade and strong AI customer growth as positive long-term indicators, while acknowledging the CNBC Investing Club's tactical trimming, suggesting potential entry points on price weakness could be opportune.