From Wall Street to Main Street
Highlights from the past week
Market / Macro Economic Summary This past week saw minimal economic data or company earnings reports, but we did get a weaker-than-expected August jobs report leading to a mixed performance across the major indexes. While the Dow Jones Industrial Average saw a slight decline of -0.3%, the S&P 500 gained 0.4% and the Nasdaq Composite advanced 1.2%. The weak jobs data—which included a rise in the unemployment rate—was largely interpreted by investors as a signal that the Federal Reserve may be more likely to cut interest rates, a prospect that generally boosts stock valuations, particularly for the growth-oriented tech sector. Despite the weekly fluctuations, it's important to remember that all three indexes remain in a strong position for the year, with year-to-date returns of 8.0% for the Dow, 11.2% for the S&P 500, and 12.9% for the Nasdaq. Our focus remains on your long-term plan and navigating these market shifts with a steady hand. I have seen some broadening of the market performance, which is typically a good thing. However, my main concern is that we’ve had some odd types of stocks that have rallied as of late… we’ve seen a small rotation from technology towards lower quality names like Dollar General, Royal Caribbean and companies that aren’t even generating profits. Stocks like Nvidia, Broadcom, AMD have all fallen despite great earnings reports and I believe the market is wrong and patience here is warranted. Company Specific / Micro Economic Summary Zscaler (ZS) Shares jumped 2% as the company reported its fiscal fourth-quarter earnings, showcasing a strong performance that exceeded analyst expectations on both the top and bottom lines. The company's adjusted earnings per share (EPS) came in at $0.89, comfortably beating the consensus estimate of $0.80. Similarly, Zscaler's revenue was $719.2 million, surpassing the analyst forecast of approximately $707 million and representing a 21% increase year-over-year. Management was highly positive about the results, with CEO Jay Chaudhry highlighting the "outstanding" quarter and the company's achievement of a new milestone with over $3 billion in annual recurring revenue (ARR). He attributed the strong demand to Zscaler's "Zero Trust and AI security solutions," which he sees as "imperative in today's world." Looking ahead, the company provided robust guidance for fiscal 2026, projecting full-year revenue between $3.265 billion and $3.284 billion, with a non-GAAP EPS in the range of $3.64 to $3.68, both of which were above analyst expectations and underscore management's confidence in continued growth. Salesforce (CRM) Shares fell nearly 6% in the most recent quarterly earnings report, for its fiscal second quarter of 2026, showcased a mixed picture. The company beat analyst estimates on both the top and bottom lines, with adjusted earnings per share (EPS) of $2.91 against a consensus estimate of $2.77. Revenue also came in slightly higher than expected at $10.24 billion, exceeding the forecast of roughly $10.14 billion. While these numbers were strong, a more cautious-than-expected revenue forecast for the upcoming quarter gave investors pause. Management, led by CEO Marc Benioff, was bullish on the company's long-term strategy, highlighting the significant growth of its Data Cloud and AI products, which have an annual recurring revenue of over $1.2 billion—up 120% year-over-year. Benioff reiterated the company's commitment to becoming an "agentic enterprise," where humans and AI agents work together to drive efficiency and customer success. The company also announced a $20 billion increase to its share buyback program, demonstrating confidence in its future. However, the slightly weak forward guidance for revenue tempered the market's enthusiasm despite the beat on earnings and a strong focus on margin expansion. Broadcom (AVGO) Management delivered an impressive fiscal third-quarter report that exceeded expectations across the board and led its share price over 10%. The company's adjusted earnings per share (EPS) came in at $1.69, surpassing the consensus estimate of $1.65. Revenue was also robust, reaching $15.95 billion and beating the forecast of $15.83 billion, a strong 22% increase from the same period last year. Management commentary was particularly optimistic, with CEO Hock Tan highlighting the company's record quarter driven by the exceptional strength in custom AI accelerators, networking, and VMware. He specifically noted that AI revenue surged 63% year-over-year to $5.2 billion, and he expects this momentum to continue, projecting AI semiconductor revenue will accelerate to $6.2 billion in the upcoming fourth quarter. This confidence was also reflected in the company's guidance for the fourth quarter, which forecasts revenue of approximately $17.4 billion, well above analyst estimates of $17.02 billion, solidifying Broadcom's position as a key beneficiary of the artificial intelligence boom. Lululemon (LULU) Shares fell 18% as management is trying to find a way to navigate the looming tariff uncertainty. The most recent quarterly report showed a disconnect between its current performance and future outlook. The company's adjusted earnings per share (EPS) of $3.10 comfortably beat analyst estimates of $2.87, and revenue came in at $2.53 billion, which was just shy of the $2.54 billion forecast. Despite the solid financial results for the quarter, the stock plummeted due to a significant reduction in its full-year guidance. Management commentary reflected this cautious tone, with CEO Calvin McDonald noting disappointment in the company's U.S. business results and the need to strengthen its merchandise mix. The company is now forecasting full-year revenue between $10.85 billion and $11.00 billion and diluted EPS of $12.77 to $12.97, both of which were meaningfully lower than previous expectations and reflected a slowdown in the U.S. market and an impact from higher tariffs. Parting Thoughts We welcome an opportunity to discuss the above detail and wish you much success in the rest of your week! Regards, Erick J. Palacios, MBA Brent Buckmaster President & Wealth/Fiduciary Advisor Wealth/Fiduciary Advisor