Canyon Edge - $NVDA & $CRM Earnings, "Print" vs Expectations

Welcome to the 1st edition of Canyon Edge - in this edition we talk about Nvidia and Salesforce’s upcoming earnings reports, take a look at how Salesforce trades around earnings, and what factors influence the movement of a stock during earnings.

Earnings Intelligence

$NVDA | Wednesday, May 28 - Q1 2026 Earnings

Sell-side Consensus Estimates (YoY):

• Revenue: $43.198B (+65.86%)

• Data Center Revenue: $39.1B (+73%)

• EPS (GAAP): $0.81 (+36.18%)

Sentiment Check:

12 Strong Buys / 42 Buys / 7 Holds / 1 Sell / 0 Strong Sell

Street leans bullish, as they have been for a while, but Seaport Global’s Jay Goldberg issued the stock's first sell rating 3 weeks ago, along with a price target that is the lowest on the street. Momentum has been negative year to date (-5% YTD) but high in May with a 17% increase. We’re still seeing investors questioning how the trade war will impact their supply chain. In April, the US banned Nvidia from exporting its H20 chip to China, and Jensen Huang said this will cut sales by $15 billion. Investor appetite remains high in the semis space, though, along with companies giving sustained increases in capex revisions.

What Matters:

Forget topline or bottom line beats, everyone is waiting to hear the guidance and how the revenue mix is affected by the impact of the US and China trade restrictions. 

China Exposure: Sellside desks trimmed revenue estimates after the H20 ban, so we will see what management has to say about the back half of the year. Our team believes this is what will move the stock this quarter.

Desk Color:

Morgan Stanley: “Remain OW, Top Pick in semis”

Oppenheimer: “Best positioned in AI…benefiting from full-stack AI hardware/software”

$CRM | Wednesday, May 28 - Q1 2026 Earnings

Sell side Consensus Estimates (YoY):

• Revenue: $9.75B (+6.75%)

• Net Income: $2.49 (+73%)

• EPS (Adjusted): $2.55 (+4.37%)

Sentiment Check:

11 Strong Buys / 21 Buys / 10 Holds / 0 Sell / 2 Strong Sell

Salesforce reports Q1 2026 earnings this Wednesday, and analysts are expecting results to come in within the company’s guidance, around $9.71 to $9.76 billion in revenue. While that’s solid, there’s not a lot of buzz around big upside, especially with tougher comps ahead for remaining performance obligations (CRPO). Investors are also keeping an eye on Agentforce, Salesforce’s new AI push, which is seeing solid early adoption but has sparked some concerns that it might be pulling focus from core products like Sales and Service Cloud. Deal activity has slowed a bit, with longer sales cycles, but deals aren’t falling through, and expectations for the rest of the year are holding steady. Most expect Salesforce to stick to its full-year guidance rather than raise it, playing it safe given the uncertain macro backdrop.

What Matters:

AI Focus: Everyone’s watching how aggressively Salesforce leans into Agentforce and AI-powered products. The Street wants clarity on whether this pivot is accelerating growth or cannibalizing core Sales and Service Cloud revenues.

CRPO & Guidance: With remaining performance obligations (CRPO) growth facing tougher comps, investors are looking to see how confident management is in the back half of the year. If full-year guidance holds or even ticks up, that’s what could move the stock.

Desk Color:

Morgan Stanley: “We see limited downside with achievable targets and an undemanding multiple.”

Jefferies: “Though deals are taking longer to close, they aren't getting canceled and 2025 expectations remain intact.”

Invest like a PM - What Really Matters Heading Into Q1 Earnings for Salesforce

The Setup:

Salesforce reports Q1 FY26 earnings after the bell on Wednesday, May 28. On paper, expectations are muted: the Street is looking for ~$9.75B in revenue and ~$2.55 EPS. But this isn’t just about whether CRM hits its numbers, it’s about whether the February narrative break gets repaired.

Back in Q4, Salesforce missed on its core Sales and Service Cloud businesses and issued soft FY26 guidance, sending the stock down ~4%. The problem wasn’t the miss, it was the execution risk tied to its AI pivot and structural deceleration.

Think Like a PM: Q1 Is a Credibility Check, Not a Beat/Miss Trade

The Quality of Execution Still Matters

Agentforce may have signed 3,000 paid deals since October, but it's not moving the top line yet. This quarter, investors want proof that AI investments are creating future leverage, without cannibalizing legacy revenues. If CRPO or margins miss, it signals Salesforce still hasn’t nailed the transition.

Core Clouds = The Silent Red Flag

Sales and Service Cloud revenues declined sequentially in Q4. That’s rare, and worrisome. If those segments stay flat or fall again, it won’t matter how much AI hype management throws on the call. Investors are starting to question whether Salesforce’s foundational business is stalling out.

Positioning Is Still Crowded

Despite the February stumble, CRM remains a large-cap tech name held for “quality growth at a reasonable price.” Most funds haven’t trimmed meaningfully, and passive exposure remains high. A second weak quarter could open the door to rotation, especially as names like MSFT, ORCL, and even NOW show stronger cloud/AI synergy.

Analyst Mode

What Actually Moves a Stock?

When I first started trading I would always be confused when a stock didn’t go up even though they would beat expectations on revenue and net income, but as I keep learning I realize;

It’s not just about “good earnings.”

Young investors often think a stock moves solely on “good” or “bad” earnings. But I’ve learned that professional investors know it’s all about how actual results compare to what’s already priced in, and how the market is positioned.

Numbers vs. Expectations: The Heartbeat of Stock Moves

At its core, markets are forward-looking and price in expectations, not just raw numbers. What really moves a stock is the surprise, how actual results compare to what investors had already anticipated.

Consensus matters. Every quarter, sell-side analysts publish earnings estimates — revenue, EPS, margins, and key operational metrics. These form the baseline investors expect.

If a company reports $2.00 EPS but the Street expected $2.10, that’s a miss, even though $2.00 sounds solid on its own. The stock may drop because expectations weren’t met.

Conversely, if the consensus was $1.85, a $2.00 print can spark a rally, as investors see upside surprise.

But EPS isn’t always the single deciding factor when funds are trading earnings. During Q2 2024, Lululemon reported EPS of $3.15 vs. estimates of $2.93. Taking this at face value you would’ve thought the stock jumped 10+ %, but when we dig deeper we see that the investment setup going into earnings had investors watching their comparable sales and guidance for the Americas, which both came in lackluster compared to analyst estimates. The stock had a mixed reaction from investors after hours.

Lets take a look at Netflix’s 40% drop in 2022 due to a shocking miss on the subscriber front;

The Netflix Q1 2022 Example; A Classic Case of Missed Expectations

Netflix reported solid revenue growth, but missed on a key subscriber metric, the number of new paid subscribers was far below consensus.

The market focuses on what matters most to growth and valuation - in Netflix’s case, subscriber growth drives future revenue.

Despite good revenue, the missed subscriber adds signaled slower growth ahead. This surprise to the downside caused a swift 40% sell-off (as pictured above).

Don’t just look at top-line or bottom-line numbers; focus on the drivers behind those numbers that the market cares about most. For some companies it’s same-store-sales growth for others it’s revenue mix, knowing what’s important to the stock and what factors influence it is big when you are attempting to call the quarter.

In the midst of the 2,000 line models that analyst create, if you’re trading the quarter it boils down to one or two things that funds are looking for to either add to the position or sell the stock.

Thanks for reading the 1st edition of the Canyon Edge, as always - subscribe for more and all inquiries should be directed to;

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