US markets made new highs this week with the technology heavy Nasdaq Composite index leading the charge, posting nearly a 3% gain while the small cap Russell 2000 index lagged, falling nearly 2%.
Federal reserve chair Jerome Powell gave markets as spur after saying the economy was stronger than expected which means the central bank is not in a rush to lower interest rates.
On the data front the US services sector went off the boil in November according to the Institute for Supply Management after the services index reading came in short of expectations. Weekly jobless claims were slightly higher than economists had forecast.
The big datapoint for investors this week is the November non-farm payrolls report which will be released later today (6 Dec). Economists are looking for a bounce back in new jobs created to 200,000 after October’s storm and strike impacted 12,000 reading.
SALESFORCE
AI was the big driver of a grand week for cloud-based software outfit Salesforce (CRM:NYSE), which is starting to show that talk turning to profitable growth.
The customer relationship management gorilla unveiled third-quarter results which topped estimates and lifted guidance for the fourth quarter thanks in no small part to the impact of its new autonomous AI agent for business customers.
AgentForce.Salesforce reported Q3 adjusted EPS (earnings per share) of $2.41 on revenue of $9.44 billion, versus $2.44 EPS on $9.35 billion revenue forecast. ‘It’s quite a turn in fortune at Salesforce, showing much stronger deal momentum than in previous quarters,’ said Megabuyte analyst Sumitha
Pillay.AgentForce only launched in October, its automation platform featuring sales and service AI agents that automatically resolve customer enquiries, but it featured in 200 contracts secured during the quarter, taking AI-powered deals to more than 2,000 in the period.
That’s the sort of rapid payback optimists might have hoped for, but few would have anticipated, putting the company in a much stronger position for the beginning of 2025 than it was at the beginning of 2024.
INTEL
Markets have been left facing more unwanted upheaval after the unexpected retirement of CEO, Pat Gelsinger. Effective immediately, the decision marks a significant shake-up for the chip maker as it grapples with ongoing challenges and competitive pressures in the semiconductor industry.
Some have said Gelsinger was effectively forced out by the board which had become disillusioned with his business strategy and execution. The chipmaker should have been right out in front of the AI boom but somehow ended up on the back foot and attempts to claw back lost ground seem to have been beset with problems.
Under Gelsinger’s leadership, Intel stock has lost around 60% of its value, wiping more than $150 billion off the firm’s market cap. His departure has put the long-standing debate about the foundry business back on the table, with Citi analysts immediately calling for Intel to sell the business.
The bank sees a higher chance of this scenario, given that Gelsinger was a champion of the ailing foundry unit. Citi also noted that Gelsinger was a driving force of improving Intel’s overall manufacturing, and that the company could face ‘long-term pain’ if the new CEO did not share his technical expertise.
Uncertainty ahead for Intel is presumably why, after an initial bump, the stock gave back those gains and more over the past week.
Dollar Tree
In the doghouse with investors after a string of disappointing updates, Dollar Tree’s (DLTR:NASDAQ) shares rallied 5.5% to $73.8 this week after third quarter results (4 December) topped estimates and the dollar store chain narrowed its full year sales outlook.
The discount retailer is seeing the early fruits of its strategy to expand the goods and price points on offer to broaden its appeal to shoppers and arrest market share losses to Bentonville beast Walmart (WMT:NYSE), Target (TGT:NYSE) and Temu, the ecommerce platform owned by PDD Holdings (PDD:NASDAQ).
‘Our Dollar Tree and Family Dollar merchandising efforts produced tangible results, and our third quarter sales came in at the high end of our expected range,’ said Dollar Tree’s interim CEO Mike Creedon.
‘As an organisation, our top priorities remain accelerating the growth of the Dollar Tree segment, completing the Family Dollar strategic review process, and unlocking value for Dollar Tree shareholders.’ The company also announced the planned departure of CFO Jeff Davis, whose exit comes just weeks after the resignation of CEO Rick Dreiling.
