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Luke Kawa

Wedbush analyst Dan Ives adds CoreWeave, IREN, and Shopify to his list of top 30 AI stocks, removes SoundHound, ServiceNow, and Salesforce

Wedbush Securities analyst Dan Ives is still very bullish on the outlook for AI stocks as we creep closer to the start of another new year.

“In a nutshell, this AI Revolution is just beginning today and we believe tech stocks and the AI winners should be bought given our view this is Year 3 of what will be a 10-year cycle of this AI Revolution buildout,” the analyst wrote.

But he’s switching up his roster of potential stock market beneficiaries from the ongoing boom.

Ives added neocloud CoreWeave, bitcoin miner turned data center company IREN, and Shopify to his list of top 30 AI winners (which are held in the Dan IVES Wedbush AI Revolution ETF). To make room for the trio, he axed SoundHound AI, ServiceNow, and Salesforce from the list.

His rationale for the additions and removals:

  • 🟢 CoreWeave: Demand for AI compute will exceed supply in the near term.

  • 🟢 IREN: He’s a fan of its “differentiated approach to providing significant power supply necessary to fuel the AI Revolution.” IREN touted its 3-gigawatt secured power portfolio in North America by announcing a deal to provide compute to Microsoft in early November, and aims to vertically integrate power infrastructure into its data center business.

  • 🟢 Shopify: He’s optimistic on how aggressively the company is integrating AI into its business, both in terms of expanding buying channels and pursuing operational efficiencies.

  • ❌ SoundHound AI: Ives is worried that the company is “facing a difficult competitive landscape” over the coming quarters, noting that it’s leaned more into M&A to add customers.

  • ❌ ServiceNow: He says the company has a “choppy path to monetize on its increased usage.”

  • ❌ Salesforce: Ives says that its AI monetization has been slower than anticipated to date.

Of note: the analyst is leaning a little more into the upstream parts of the AI supply chain, rebalancing his ETF toward the facilitators rather than companies that are closer to end consumers.

“The ability to provide enough infrastructure for these AI initiatives becomes more critical with rising risks regarding keeping these facilities online,” he wrote. “We are incrementally positive on these AI Infrastructure names over the coming years as more enterprises go down the AI path which will only increase compute demand over time creating a larger disparity between supply and demand.”

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Helena Cheng

Lululemon’s stretch getting tested: Stock plunges after after outlook is cut

Lululemon shares are down double digits in premarket trading after the company cut its full-year sales and profit outlook, overshadowing a Q1 beat and raising fresh concerns about the brand’s turnaround efforts.

The company now expects fiscal 2026 revenue to be flat to down 1%, compared with its prior forecast for 2% to 4% growth. Guidance for full-year diluted earnings per share was dragged down to a range of $10.95 to $11.15, below the company’s previous guidance of $12.10 to $12.30 and well below Wall Street’s estimate of $13.26.

Key numbers for Q1:

  • EPS of $1.69 vs. the $1.68 expected.

  • Revenue of $2.47 billion vs. the $2.43 billion expected.

The modest top-line beat masked a widening divergence between Lululemon’s geographic markets. While international revenue rose 22% overall with a 30% increase in Mainland China, the bigger problem remains North America, where revenue fell 5%.

Interim co-CEO and CFO Meghan Frank acknowledged during the earnings call that recent product rollouts underperformed. A highly anticipated yoga campaign failed to generate its expected “halo effect” across broader product lines.

Profitability metrics took a major hit, with gross margins contracting by 410 basis points to 54.2% due to mounting tariff costs and promotional markdowns. Operating income consequently fell 37% year over year to $276.9 million.

“We experienced spikes of negative commentary in the media and on social channels with regard to our brand, which had an impact on traffic and overall top-line performance,” Frank said during the earnings call. “And second, not all of our product launches have met our expectations. While we have had several successful launches so far this year, we have seen others as we start Q2 not generate the anticipated guest response.”

Lululemon’s valuation has already been steadily compressing for years. While it was once one of retail’s richly valued stocks, investors have been questioning whether the company can return to the double-digit growth era.

The results also arrive during a leadership transition. Lululemon announced back in April that former Nike executive Heidi O’Neill is set to take over as CEO in September, with investors looking to her to revive growth in North America and restore the brand’s growth.

As Lululemon faces both macroeconomic pressure and brand-specific challenges, its stock has dropped around 40% year to date.

markets
Paige Oamek

US job growth skyrocketed in May, blasting past expectations

The US economy added 172,000 jobs in the month of May, the Bureau of Labor Statistics reported Friday, sending 10-year Treasury yields higher.

The strong May job market surprised economists. Experts had predicted only 85,000 new jobs — just half the reported number. The unemployment rate held steady at 4.3%, as expected.

The job growth story is a hopeful spot for the economy as consumers continue to feel inflationary pressure from the Iran war.

Job gains were buoyed by the leisure and hospitality sector, which added 70,000 jobs, as well as local government, healthcare, and education.

Both the March and April jobs reports were revised upward, making them collectively 93,000 higher than previously reported.

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