Three of our Club holdings — Salesforce (CRM), Nvidia (NVDA) and Qualcomm (QCOM) — will be hosting events this week that we believe have the potential to be catalysts for their stocks. Salesforce Ahead of its Dreamforce software conference this week — Tuesday, Wednesday and Thursday — we want to know if Salesforce can deliver a durable rate of revenue growth target while expanding operating margins. Co-CEOs Marc Benioff and Bret Taylor deliver the main keynote at 1 p.m. ET on Tuesday. While beating on revenue and earnings-per-share in its latest quarter, reported Aug. 24, Salesforce cut its current quarter and full-year outlook, saying customers began to take a more “measured approach” to their businesses. However, it did announce a new $10 billion repurchase program and reiterated a commitment to disciplined margin, cash flow, and revenue growth. In a research note, Morgan Stanley shared concerns over a possible short-term slowdown in information technology budget growth — but like the Club, analysts there believe Salesforce is well-positioned due to its exposure to digital transformation. “Investors are underestimating the level to which management remains committed to delivering on sustainable margin expansion,” the Morgan Stanley note explained. In a separate note, Raymond James said Salesforce shares could be at an inflection point, noting their surprise that the stock has underperformed since the company’s second quarter earnings given its steady margin guidance and $10 billion share repurchase authorization. The Club’s take: This year’s Dreamforce is a chance for Salesforce to repair investor confidence in the company’s assurance to deliver top-line durability and margin enhancement. Any color on the pace of its $10 billion buyback would also be welcome news for CRM stock, which has dropped 40% in 2022 but relatively flat since our latest purchase of 50 shares on Sept. 6 . Nvidia Nvidia faces a video gaming chip glut and new license requirements that could put China sales at risk. In light of these challenges, the company’s GTC Conference could help mitigate these factors with new product launches and how it plans to deal with China’s restrictions. GTC runs until Thursday, with CEO and founder Jensen Huang’s keynote address set for 11 a.m. ET on Tuesday. We got some updates on these fronts at Goldman Sachs’ Communacopia + Technology conference in San Francisco last week: Nvidia CFO Colette Kress indicated while gaming GPU sales are expected to remain flat in the short-term given the high channel inventories, they’re expected to normalize by the end of January. Nvidia is also working with its China customers to find alternatives to its A100 products in an effort to offset a $400 million revenue loss due to the U.S. government’s future export restrictions of Nvidia’s artificial intelligence chips to China. Tight chip supply is what Goldman analysts called a “constraining factor” for semiconductor companies, which is why the firm expects Nvidia to benefit as supply eases over time. The Club’s take: The new license requirements with China and the gaming inventory glut are two headaches that probably will not be going away anytime soon. But our focus at GTC will be on the future. In particular, we are excited to see Jensen Huang lay out more details of his vision for metaverse technologies and how artificial intelligence is driving radical improvements across many different industries. Qualcomm At Qualcomm’s auto investor day, scheduled for Thursday, we’re waiting to hear updates on the Snapdragon Digital Chassis, an integrated set of open, cloud platforms that let drivers connect their cars. SnapDragron, which was originally intended for mobile applications, could be a growth engine for Qualcomm. The company has already secured partnerships with BMW, Stellantis (STLA) and General Motors (GM) to use Snapdragon to power its advanced driver assistance system. Morgan Stanley thinks Qualcomm’s investor day will be a positive for the stock as the company talks about the opportunity it has with placing Snapdragon different markets, not just in auto. Outside automotive, we found out this weekend that a Qualcomm chip helps enable Apple’s newly announced ability in iPhone 14’s to connect directly to satellites in case of off-the-grid emergencies. Earlier this month, Qualcomm and Meta Platforms (META) said they’re teaming up to make custom chipsets that will be used for virtual reality (VR) products The Club’s take: A major reason for our Qualcomm investment is for its revenue diversification. Qualcomm’s chips have an edge because they can be used in phones and cars. Auto is a big part of that, so we want to see how SnapDragon technology can possibly be integrated into other applications and get a sense of how big this opportunity is for the company. (Jim Cramer’s Charitable Trust is long CRM, NVDA, QCOM and META. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. 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Source: Business - cnbc.com
