Top 10 Things to Watch
1. Workday stock saw a decline of 9% this morning following a disappointing guidance announcement last night. This highlights the increasing threat that AI poses, as fewer seats mean higher charges per seat. It indicates a potentially lasting slowdown driven by AI advancements. Cowen and Evercore have downgraded the stock from “buy” to “hold,” with substantial price reductions also noted.
2. HP Inc. is facing challenges due to the memory chip crisis, particularly in its personal computer sector, which has experienced double-digit sales drops this year. Memory and storage, which usually account for 15% to 18% of a PC’s input costs, now make up 35%. The stock fell over 5% today. The current AI boom is a contributing factor to this memory shortage, and we expect to hear from key influencer Nvidia tonight.
3. During last night’s State of the Union address, President Donald Trump suggested that major tech firms should manage their own energy needs for data centers. This shift towards hyperscalers building their own power facilities could benefit reliable nuclear companies like GE Vernova and BWX Technologies. However, I still have reservations about investing in speculative nuclear stocks.
4. Lowe’s stock dipped by 3.5% in premarket trading. While fourth-quarter comparable sales outperformed expectations at 1.8%, the guidance for the full year was weak in several areas, including earnings per share. Home Depot, as reported yesterday, has finally surpassed its main competitor. Wells Fargo raised its price target for Home Depot from $395 to $420, suggesting a stabilizing trend.
5. Diageo’s shares plummeted 10% this morning after the company reduced its sales outlook for 2026 and cut its dividend to support a turnaround strategy under new CEO Dave Lewis. Known for his aggressive cost-cutting approach at Unilever and Tesco, Mr. Lewis indicated that these steps are necessary to revitalize Diageo. Alcohol stocks are facing continued challenges.
6. TJX Companies reported solid fourth-quarter earnings this morning, attributing it to same-store sales growth of 5%, surpassing the anticipated 3.8%. Although the guidance for the first quarter and full year fell short of expectations, the stock price dipped slightly in the prior session. Historically, this management team is recognized for under-promising while over-delivering.
7. Morgan Stanley has decreased IBM’s price target from $304 to $247 while keeping its rating steady. Analysts believe IBM is facing “some degree of AI disruption risk” amid recent developments in AI. Conversely, UBS upgraded the stock from sell to hold, as they see a more favorable risk-reward dynamic following IBM’s 23% drop this year.
8. Ahead of next week’s quarterly report, JPMorgan cut CrowdStrike’s price target from $582 to $472. Despite this, analysts are maintaining a buy rating on the stock, expecting a “healthy” fourth quarter due to the cybersecurity leader’s robust deal pipeline. The recent stock price drop is tied to broader downsizing factors, not inherent business issues.
9. Oppenheimer has upgraded Oracle from Hold to Buy, setting a price target of $185, indicating an approximate 27% upside. Although some analysts believe this assessment may be premature given market concerns about Oracle’s significant AI spending, they noted that the stock’s price multiple has more than halved since September, creating a favorable risk-reward scenario.
10. Wells Fargo increased its price target for Caterpillar, rated Buy, from $756 to $870. The company is raising its forecast for nonresidential construction this year and next by about 3%, indicating a strong need for Caterpillar’s earth-moving equipment. Caterpillar aligns well with my criteria for identifying promising stocks discussed recently on “Mad Money.”
