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AI optimism and a decline in oil prices helped U.S. stock indices edge higher to fresh records Wednesday.
The S&P 500 notched a gain of 0.1% to 7,523.2, the tech-heavy Nasdaq Composite rose fractionally to 26,670.1 and the Dow Jones Industrial Average was up 0.4% to 50,677.2. The benchmark price for U.S. crude fell more than 4% to roughly $89 per barrel on hopes that talks between the U.S. and Iran will result in resumed international oil flows. The day included earnings reports that show technology company growth ahead of analyst expectations.
Snowflake Beats, Guides Higher as $6B AWS AI Deal Accelerates Growth Strategy
Snowflake (SNOW) delivered a strong Q1, topping expectations on both revenue and profitability, with sales of $1.39 billion and adjusted EPS of $0.39. The company also issued solid near-term and full-year guidance, forecasting Q2 product revenue of $1.415–$1.420 billion and FY2027 product revenue of $5.84 billion. Snowflake provided updates that highlight continued momentum in AI-driven growth and deepening cloud partnerships. It announced an expanded, multi-year collaboration with Amazon.com Inc (AMZN) Amazon Web Services, including a $6 billion commitment to Graviton compute and AI infrastructure to accelerate enterprise AI adoption, alongside a recent agreement to acquire Natoma.
Salesforce Beats on EPS, Raises FY Outlook as AI-Driven Growth
Salesforce (CRM) reported a solid Q1, with revenue of $11.13 billion slightly exceeding expectations, and adjusted EPS of $3.88 coming in well above estimates, marking 50% year-over-year growth. The company returned significant capital to shareholders, including a $25 billion accelerated share repurchase, and raised its FY27 revenue outlook to $45.9–$46.2 billion. Growth was driven by strong demand for AI-focused offerings such as Agentforce and Data 360. Salesforce also highlighted continued momentum into the second half of FY27, expecting organic revenue acceleration supported by its core platforms and recent contributions from Informatica.
Economic Events for Tomorrow (ET)
8:30am: PCE Price Index
8:30am: Prelim GDP
8:30am: Prelim GDP Price Index
8:30am: Unemployment Claims
8:30am: Durable Goods Orders
8:30am: Personal Income
8:30am: Personal Spending
8:55am: FOMC Member Williams Speaks
10:00am: New Home Sales
10:15am: FOMC Member Musalem Speaks
10:30am: Natural Gas Storage
Sentiment on Zscaler (ZS) shares took a nosedive after it disappointed analysts and investors with third quarter results Tuesday that project higher spending and lower free cash flow margins.
Shares of Zscaler were down 30% in early trading.
The company reported adjusted third quarter earnings of $1.08 per share, on revenue of $850.5M and annual recurring revenue (ARR) of $3.53B, all above estimates, with a non-GAAP operating margin of 23%. It raised its revenue guidance for the year to a range of $3.3295B to $3.3325B, boosted by the recent Red Canary acquisition. But the challenge: it cut its free cash flow margin outlook from 26.5% to 27%, down to 22.8% to 23.3%, citing capital expenditure as a percentage of revenue in the high single digits for fiscal 2026.
Founder and CEO Jay Chaudhry reminded listeners of Zscaler’s reputation for corporate cybersecurity that acts like a fortress against attackers, and “Zero Trust” architecture that prevents lateral movement.
CFO Kevin Rubin, who talked about results and cybersecurity in February, cited two significant sales leader departures as a setback but said there is opportunity “to continue scaling our rapidly expanding AI Security portfolio, accelerating Zero Trust everywhere adoption and growing our data security revenue.”
But analysts want to see more growth. From the conference call transcript, here are answers from management on some of the toughest Wall Street analyst questions:
Question from Ittai Kidron, an equity research analyst at Oppenheimer & Co: Why might ARR growth decelerate?
Answer: Rubin said prudent guidance resulted partly from talent disruption. He also said, “the pace of uptake with the integrated SecOps products … [requires a] prudent approach as it relates to Q4, so the guide implies 9.5% net new ARR growth on an organic basis, excluding Red Canary.”
Q: Gabriela Borges, an analyst and head of U.S. Software Equity Research at Goldman Sachs, asked about new logo and sales growth.
A: Rubin said he was not “trying to suggest that new logo growth is tempering. What I was intending to convey is that my expectations relative to the early look for next year took a tempered approach to how we thought about the contributions of new logo growths."
Q: Andrew DeGasperi, Senior Software Analyst at BNP Paribas, asked about inflation and the impact on customers. Zscaler’s hardware spending, including memory storage and processor purchases, is rising.
A: Chaudhry said, all these AI data centers [being constructed is] causing such a shortage of so many parts. … Rubin said, “We purchase equipment for our data center and Zero Trust branch appliances. … I think the world is recognizing that hardware costs have gone up. … We are also being opportunistic in taking advantage of delivery of data center equipment where we can get it to lock in today's prices ahead of potential increases in the future. This is pulling forward some of the investments we expected to make in fiscal 27 into Q4.”
