AI Stocks Under Pressure, LULU Faces 8-Year Lows & DOCU Slides on Earnings

Alex Coffey discusses pre-market weakness driven by AI/tech stocks (Broadcom earnings hangover), with Lululemon facing severe pressure due to disappointing guidance and weak US sales, while DocuSign meets expectations but lacks upside. Tesla receives upgrades from JP Morgan and Erste Group. Overall cautious tone ahead of payrolls.

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Alex Coffey 8.0

AI Stocks Under Pressure, LULU Faces 8-Year Lows & DOCU Slides on Earnings

SPX; LULU; DOCU

ndx

Alex explicitly states AI/tech leaders (which dominate NDX) are under 'pretty sizable pressure' pre-market, down ~3%, continuing weakness from Broadcom earnings. He notes this is a 'continuation trade' and that 'the good cannot outweigh the bad so far.'

rut

Alex notes that yesterday 75-80% of S&P components were higher, suggesting broad market participation, but the weakness is concentrated in large-cap AI leaders. RUT (small caps) may be less affected by the AI selloff, but overall cautious tone ahead of payrolls limits upside.

Diane

Market had a split finish yesterday, pre-market softness today ahead of payrolls report.
Alex Coffey

AI-centric tech names (Lumentum, Micron, Coherent, Applied Materials, Seagate, Intel, Dell, Supermicro) are under significant pre-market pressure, down ~3%, continuing weakness from Broadcom earnings. Yesterday saw 75-80% of S&P components higher but AI leaders dragged down Nasdaq and S&P.
Diane

Lululemon remains under pressure despite beating low expectations. Guidance and road ahead look poor.
Alex Coffey

Lululemon is set to be the worst S&P 500 performer, down over 10% pre-market. Q1 results were in-line to slightly better, but earnings declined significantly year-over-year. US comp sales down 6%. Margins missed due to off-price channel sales. Full-year revenue guidance cut to $11-11.15B from $11.35-11.5B.
Diane

Goldman lowered Lululemon PT to 122, Bank of America to 140, Evercore to 115, Baird to 140. Expect further rerating.
Diane

DocuSign reported quarterly results that weren't bad, but lacked 'wow factor'.
Alex Coffey

DocuSign had a more favorable quarter than Lululemon. Adjusted EPS $1.99 vs $0.90 last year and $1.00 estimate. Revenue grew 8.7%, slightly above expectations. Free cash flow $290M vs $217M estimate. Q2 revenue guidance $865-869M in-line. Full year guidance $3.49-3.5B, slight narrowing.
Diane

Quantum computing company Quantinuum (ticker Q&T) debuted via IPO at $60.
Alex Coffey

Quantinuum opened at $68 but closed at $60.38, now trading below IPO price at $58.50 bid. First quantum company to debut via traditional IPO rather than SPAC, seen as industry maturation, but enthusiasm was very meek.
Diane

Tesla getting new love from Wall Street.
Alex Coffey

Tesla has unusual analyst disagreement: ~50% buy, ~40% hold, ~10% sell. JP Morgan upgraded from underweight to neutral, PT from $145 to $475, citing Tesla as forefront of physical AI. Erste Group upgraded from sell to hold, citing sales/profits increase supported by new products, but high valuation limits upside.

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