News and analysis

Good Wall Street morning to everybody. Why do I consider this last morning of May as actually a good one? Because it gave me a good opportunity to buy even more shares of Dell at an amazingly low price. Indeed, a rapid 20% correction, from an all-time high at $179.70 just two days ago (on May 29) to $142.50 per share right at the moment, cannot be normally justified by the company’s own forward guidance, which was slightly lower than consensus estimates, while its Q1 results were brilliant. The reasonable background behind this mad overnight shift to a discounted trading in after-hours is rather of a technical nature, as Dell stock became overbought following its equally mad recent rally from $85 in February to almost $180 in May. This was too fast for an old and stable IT business.

I sought a chance to buy Dell within a $105-110 price range after the stock already soared to $130 on March 1. I found this opportunity when the market gave it to all of us, after a couple of weeks of waiting in an ambush, and so I used that chance. Yet, the current price of just above $140 after the peak of nearly $180 is an equivalent of nearly $100 after a previous peak of $130, and so the whole situation repeats itself at new levels.

So, this market is so merciful to indecisive traders to allow us another fantastic purchase opportunity in less than three months.

What were the fundamentals urging Dell shares to fall? The computer world giant reported its quarterly sales of $22.2 billion vs average analyst pool bets on $21.65 billion. This was also a 6% surplus compared to the same quarter of 2023. Dell’s Infrastructure Solutions Group is a standout performer, with the division’s revenue adding 22% YoY to $9.2 billion, helped mostly by a record 42% increase in servers and networking sales. This is great, or I am a space cadet fool. It was only the Client Solutions Group which remained flat YoY, while commercial client sales were at a 3% annual rise (not so high). The company's chief financial officer, Yvonne McGill, pronounced the magic two-sound mantra (not AUM, but AI) on artificial intelligence influence on the company's achievements. What else does the market need to return to the growing rally soon?

Dell's adjusted income (earnings per share, or EPS) was $1.27, also slightly above the analyst estimate of $1.25. The only disadvantage was that this profit number showed a 3% decrease vs the first quarter of the previous year. And does it cost a 20% discount for the shares price? You would better judge it yourself.

It certainly feels like this exclusive market volatility in Dell Technologies stock or, most of all, my regular posts on this issue (ha-ha) would make Dell shares a top choice financial instrument for private investors. Well, it is already very popular, because it’s moving like another meme stock, though its market caps (and thus, the ability of its next price moves to be forecasted) is 15 to 100 times more than the market caps of some hyping Reddit’s collective brainchild like GameStop and AMC. Let me hope this explosive combination of reasons would only attract many “newcomers” (in terms of never thinking on trading Dell before). Again, portfolio investors used to trade more solid flagships like Google or Amazon, but many of them became tired from disappointing behaviour of Tesla or Apple since the beginning of 2024. For all these groups of Wall Street inhabitants, a possible Plan B may include using some part of their trading volumes to trade a middle layer of IT stocks, which is also going to grow further on the AI, big data and cloud agenda. For me, DELL could be in a short-list of such assets.

Monero (XMR) is climbing 2.3% to $145.80 this week and is very close to the support of the uptrend established on June 18, 2022. This proximity to the uptrend support fuels hopes that the token will continue to rise.

However, Monero has faced significant pressure from U.S. regulatory actions, particularly because it is a privacy-focused cryptocurrency. Recently, the peer-to-peer trading platform LocalMonero announced it would stop trading the token. Although the platform did not specify the reasons, it is likely influenced by American regulators' scrutiny of privacy coins.

Despite this ongoing regulatory pressure, Monero surged by 21% in May, indicating it still has a dedicated user base. If the price crosses the $150.00 barrier, it is likely to continue rising to $175.00.

Dogecoin (DOGE) is down 4.8% to $0.1590 this week, performing worse than Bitcoin (BTC), which lost 0.7% to $68,000. DOGE prices stumbled after the death of Kabosu, the Shiba Inu dog whose quizzical expression became the face of the "doge" internet memes. Kabosu's image is featured on DOGE avatars, and the current decline in prices could be seen as a symbolic mourning for the iconic face of the cryptocurrency.

Once this period of mourning ends, prices may resume climbing towards the nearest resistance at $0.1800. This scenario is supported by technical analysis, which indicates that a rebound is likely. Further confirming this outlook, a significant investment was made by an investor who bought 2 million call options with a strike price of $0.2200 expiring on June 14.

The market value of Salesforce (CRM) frustratingly plunged by nearly 17% in extended trading on May 29 to echo the cloud computing service company's quarterly numbers as well as its forward guidance for the rest of the year. In particular, the current quarter's projections of Salesforce management have been lower compared to Wall St consensus expectations. Adjusted equity per share (EPS) is expected within a range between $2.34 and $2.36 on revenue of $9.20 billion to $9.25 billion. Thus, both top and bottom figures clearly missed analyst pool bets, with investment houses representatives betting on EPS of $2.40 based upon revenue of $9.34 billion on average. The company's remaining performance obligations (cRPO) annual growth in constant currency was reported at 10% against the previously foreseen 12%. Subscription and support revenues for Q1 were at $8.59 billion to mark a 12% increase for the last 12 months.

As to the full fiscal year of 2025, Salesforce has only slightly corrected its expected subscription pace forecast to "around 10%" from the previous "10%+" potential. Yet, the speed and size of asset's fall seems very excessive. And this crash mostly happened due to overoptimistic mood in the recent months, when the crowd preferred to ignore signs of more or less unharried scenarios for Salesforce business instead of fast joining the AI revolutionary rally. This was probably the case when unrealistic dreams may rather lead to sad surprise and disappointment. And so, the market isn't happy to deal with smooth evolution instead of revolutionary growth. Some analysts even began to doubt the SaaS (software as a service) model of business, used by Salesforce, when cloud-based software programs just deliver all applications to end users in an internet browser.

Such conclusions seems to be premature after Q1 EPS number of $2.44 on revenue of $9.13 billion was still better in terms of money return than consensus estimates at $2.37 for EPS on revenue of $9.15 billion. EPS jumped 44% YoY, which cannot be characterized as moving ahead with slow pace. Another positive argument is that Salesforce CEOs are keeping intact their revenue guidance for the whole fiscal year of 2025. The company's mission of managing customer relationships, integrating the business segments and building applications is still in demand. CRM has been actively investing into AI features and this would pay off handsomely one day. Higher-for-longer interest rates are the same for the cloud service segment, yet the weaker forward guidance by CRM is in contrast with solid numbers from cloud giants like Amazon Web Service and Microsoft's Azure service as both are expecting higher customer spending soon. Therefore, Salesforce's cloudy income looks rather postponed for a while.

The share price of about $230 at the moment, instead of the recent $270+ highs is discounted and potentially advantageous from this point of view. All the growth of the last six months faded, and so the inertial decline may continue up to any of $200+ levels, but buying activity from current prices is already attractive to us. CRM business scaling is only waiting for its next-after-covid and proper new time for recovery and further growth.