Salesforce leads cloud computing stocks higher as investors breathe sigh of relief
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Salesforce (NYSE:CRM) shares jumped more than 12% in early trading Wednesday after the cloud computing software provider posted first-quarter results that topped expectations and issued guidance that prompted investors to move into other cloud computing stocks.
ServiceNow (NYSE:NOW) rose more than 3.5% on back of the results, while Workday (NASDAQ:WDAY), Adobe (NASDAQ:ADBE) and Autodesk (ADSK) saw more modest gains, including a 2% gain in Adobe.
Wedbush Securities analyst Dan Ives, who has an outperform rating on Salesforce (CRM) shares and a target price of $225 a share, noted that Salesforce (CRM) is seen as a bellwether for tech and with it reporting outside of the normal schedule, investors were "laser focused" on its report and comments to see if there were any signs of weakness. Instead, it was the opposite.
In addition to Salesforce (CRM) reporting first-quarter revenue of $7.41B, which edged above analysts' estimates of $7.38B in sales, Ives said in a research that the company "gave mixed guidance that was much better than the Street was fearing and will be a key shot in the arm for the tech bulls."
Ives also pointed out that the shift to the cloud is roughly 40% complete and there is a "massive digital growth wave ahead" that will benefit Salesforce (CRM), as well as other cloud computing companies, including Microsoft (MSFT), Amazon (AMZN), Google (GOOG) (GOOGL) and Oracle (ORCL).
Earlier this month, Roth Capital analyst Richard Baldry upgraded Salesforce's (CRM) stock to buy from neutral, but Wall Street didn't respond in kind.