Here are the 3 big things we're watching in the stock market in the week ahead

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Here are the 3 big things we're watching in the stock market in the week ahead Published Mon, May 25 202610:03 AM EDTUpdated 5 Min Ago Kevin Stankiewicz@in/kevin-stankiewicz-b5593466Zev Fima@zevfima. It may be a holiday-shortened week of trading on Wall Street. But the four days are filled with updates on some of the market's biggest debates: Is AI eating software? Is the American consumer OK? And what's happening with inflation? Let's get into it. 1. Earnings: Salesforce reports on Wednesday night. Unfortunately, the stock has not become any less of a battleground since its last earnings report in late February. The fears that artificial intelligence will disrupt its business are alive and well, as Bank of America's sell call on the stock last week shows. The stock chart shows it too. The reality is, Salesforce won't vanquish these existential concerns with one strong earnings report Wednesday. But a journey of a thousand miles begins with a single step, and Jim Cramer has said we're willing to give CEO Marc Benioff a chance to show progress. So, what would a step in the right direction look like? It starts with strong revenue growth for Agentforce, its platform for building AI agents capable of taking action with limited human intervention. In February, Agentforce was doing $800 million in annual recurring revenue, about 2% of its total, and more than 29,000 deals had been closed since launch. Where are these numbers now? The reaction Friday to Workday's quarter indicates the market is capable of celebrating a good software quarter. At the same time, investors are worried about slowing growth in Salesforce's legacy business, where it relies on seat-based licenses. For that reason, Salesforcce will need to deliver adequate performance on other metrics, particularly current remaining performance obligation (cRPO), which measures contracted revenue expected to be realized in the next 12 months. Last quarter's 9% organic growth in cRPO was a slight disappointment. Its guidance for the April quarter was also 9% organically, or 13% in total when including a 4% benefit from its Informatica acquisition . Operating margins will be another gauge of the company's overall health, with the FactSet consensus coming in at 33.4%, implying 1.2 percentage points of year-over-year expansion. One more thing to call out: Salesforce is rolling out new reporting segments with this release, going from five to two. It'll provide the numbers in both the new and old format for now, but analysts may ask management to explain their rationale on the earnings call. That was the case last week when Nvidia made a change to its segment structure. Here's what the Street is expecting, according to estimates compiled by LSEG: Revenue: $11.05 billion EPS: $3.12 Costco's quarterly results are due Thursday night. The company releases sales numbers monthly, so the top line isn't the focus when it reports. Instead, it's all about profit margins, earnings, membership renewal trends, same-store sales, and what management has to share on the call about any changes in consumer shopping trends. The U.S. renewal rate, in particular, is something to watch because it's slipped in recent quarters as the company courted online sign-ups, which skew younger. The problem is people who join digitally renew at a lower rate than folks who signed up in-store. Costco has taken steps to improve its retention, such as targeted marketing, and we want proof it's paying off. High oil prices are weighing on consumers , but Costco is unique in that the dynamic can drive traffic to its locations because the company typically offers the lowest price for gas in their area. Costco's membership model already helps to ensure loyalty while the bulk selling strategy ensures those members get the best value in town. In periods of soaring gas prices specifically, people seek out value with increased vigor. As analysts at JPMorgan put it in a note last month, "Whenever gas spikes, a [Costco] membership is more attractive, as is the credit card (5%/4% cash back on gas purchases)." Of course, if you're already headed to the Costco parking lot to fill up the tank, you may as well stock up on some pantry items and groceries while seeing what other deals are to be had. To be sure, the increased fuel prices may pinch Costco's profit margins, but that is an understood dynamic on Wall Street. Tax returns likely provided some benefit in the quarter, so we'll be interested to hear about buying patterns as that benefit started to diminish. Ultimately, the more the consumer is strained, the more they will hunt out value. Between Costco's membership model and bulk selling strategy, few, if any, can beat it on value. Here's the LSEG consensus: Revenue: $69.73 billion EPS: $4.93 2. Economic data: The bul