Salesforce.com NASDAQ: CRM, Adobe NASDAQ: ADBE, and Advanced Micro Devices NASDAQ: AMD have multiple tailwinds in common that could see their shares rocket higher in Q3. Among them is the shift to AI, a shift that is underpinning the results and outlook. Other factors include an outlook for growth, margin expansion, and bullish analysts driving the respective markets higher.
The next catalysts for these stocks will be the earnings reports due in late summer and early fall. Until then, traders and investors should keep these names high on their watch lists, looking for potential entry points.
Salesforce.com Is Force To Be Reckoned With
Salesforce.com will be the first to report, with its next due out at the end of August. The company is expected to report a double-digit increase in YOY revenue with wider margins driven by higher prices. The company recently announced the first price increase in years and new AI-powered services that will underpin the results.
Adjusted earnings are expected to grow by 42%, leading the analyst to raise earnings and stock price targets. Thirty-seven analysts have raised their revenue and earnings targets over the past 2 months, and none have lowered 1.
Salesforce.com has 38 analysts covering it, and they’ve been active. The stock is #20 on Marketbeat’s Most Upgraded Stock List and is regularly found on the Trending List. The analysts have the stock firmly pegged at Moderate Buy, which has held steady for over a year.
The consensus price target assumes only 6% of the upside relative to recent price action, but this is a cautious target. The price target is down compared to last year but up solidly over the past quarter, with the freshest targets ranging from $250 to $270. That’s about 20% above the current action.
Shares of Salesforce bottomed, reversed, broke to new highs, and signaled a continuation of an uptrend earlier this year. The market has since returned to solid support levels where the next rally may form.
Adobe: Raising Guidance With The Help Of AI
Adobe emerged as an unlikely AI winner due to its ubiquitous interface, data-centric model, lean into the cloud, and use of AI-powered services. Ultimately, it is a natural pure-play on everything AI because it hosts the data needed to train the models and connects the cloud, and its client base will benefit greatly from AI services.
The company is slated to report Q3 results in mid-September and is another likely candidate for outperformance. The analysts have only raised their revenue and earnings targets since the Q2 report, but even the new consensus may be cautious. Analysts expect revenue growth in the range of 10%, with wider margins driving a 17% increase in earnings.
The analysts' activity is also promising. Adobe’s 28 analysts have it in the #6 spot for Most Upgraded Stocks, and the sentiment is up to Moderate Buy from Hold. The price target is trending higher than last year, last quarter, and last month but sees the stock as fairly valued.
Even so, the freshest targets range from $550 to $650 compared to the $518 consensus and are likely to move higher later this year.
Advanced Micro Devices Gets Mixed Reviews From The Analysts
Advanced Micro Devices got mixed reviews from the analysts after a meh quarter, but there are some interesting takeaways from their activity. First, the consensus rating held firm at Moderate Buy but the price target trended higher. The consensus is more than 20% above the current action and is trending higher compared to last year, last quarter, and last month which is a sign of momentum.
The freshest targets also lead the market, with the range issued following the Q2 release running from the consensus $135 up to $200. Potential catalysts for this stock within the earnings report are the normalization of core business and strength in AI. AMD is #11 on the Most Upgraded Stocks list.
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