Good morning investors!

During the ever important earnings season, we publish our “Earnings Recap” — an in-depth summary of the earnings reports for stocks that we cover on a regular basis.

It was a quieter week on the earnings front, but we did get huge earnings from Nvidia, as well as some important clarity on the consumer and tariff effects from some major retailers.

Here’s a look at the 5 names we are covering in this report:

• Monday 5/26: --

• Tuesday 5/27: --

• Wednesday 5/28: Nvidia, Salesforce, and Dick’s Sporting Goods

• Thursday 5/29: Costco and Ulta Beauty

• Friday 5/30: --

Nvidia (NVDA)

NVIDIA $NVDA ( ▼ 2.92% ) delivered $44.06B in Q1 revenue (+69% YoY), fueled by continued AI infrastructure demand. But not all was perfect as Data Center revenue of $39.1B came in below expectations of $39.22B, and gross margins compressed significantly due to a $4.5B charge related to China export restrictions on H20 products. Adjusted EPS hit $0.81, but GAAP EPS of $0.76 came in lighter. Free cash flow remained a major strength at $26.1B (+75% YoY), helping support a $14.1B buyback.

🔑 Key Points

• Revenue Meets at $44.06B: Up 69% YoY and in line with estimates; AI strength offset China headwinds.

• EPS Beats at $0.81.: Adjusted EPS up 33% YoY; GAAP EPS fell short due to $4.5B H20 inventory charge.

• Margins Under Pressure: GAAP gross margin dropped to 60.5% (vs. 78.4% YoY); adjusted gross margin excluding H20 was 71.3%.

• Data Center Misses Lofty Bar: $39.1B grew 73% YoY, but fell short of some whisper estimates in the $40–41B range.

• Cash Machine: Free cash flow surged to $26.1B (+75% YoY); $14.1B in buybacks, $244M in dividends.

👀 What You Need to Know

NVIDIA’s Q1 headline growth remains best-in-class, but markets took note of margin slippage and a high-profile miss in Data Center revenue, its most closely watched segment. While Blackwell demand looks strong into Q2 and beyond, the H20 disruption in China shaved ~$8B from the outlook. That said, with FCF over $26B in one quarter, NVIDIA’s balance sheet firepower gives it tremendous room to invest, buy back stock, and outpace peers in the AI arms race.

NVDA shares are +6.0% so far this week.

Costco (COST)

Costco $COST ( ▲ 3.12% ) reported a strong Q3 with total revenue rising 8% YoY to $63.21B and EPS climbing 13% to $4.28, narrowly beating analyst expectations. The highlight this quarter was continued growth in high-margin membership revenue, which jumped 10% to $1.24B, helping to offset pressure from elevated merchandise costs and operating expenses. Same-store sales rose 8%, aided by 15% growth in e-commerce. Management didn’t announce a membership fee hike but reiterated that one is likely by FY26.

🔑 Key Points

• Revenue Rises to $63.21B: Net sales rose 8% YoY, powered by strength in core stores (+8%) and digital (+15%).

• EPS of $4.28 Beats Slightly: Net income rose 13% to $1.9B; earnings per share outpaced estimates by 1%.

• Margins Mixed: Operating margin held at 4%, but gross profit margin remained low at 3.0% due to inflationary pressure.

• Cash Flow Healthy: Operating cash flow grew 13% to $9.5B; free cash flow reached $5.9B.

• Membership Engine Strong: Paid members rose to 74.5M (+5%), with exec memberships driving growth.

👀 What You Need to Know

Costco’s low-margin, high-turnover model remains resilient, but there’s little room for margin expansion near-term. Management reiterated full-year plans to expand globally, with 905 warehouses now in operation (+52 YoY). The long-awaited membership fee hike remains on the horizon, a key catalyst for boosting profitability. For long-term investors, Costco’s consistency and member-driven flywheel remain key strengths, though valuation remains rich near 50x forward earnings.

COST shares are -0.1% so far this week.

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Salesforce (CRM)

Salesforce $CRM ( ▼ 0.58% ) delivered a steady start to fiscal 2026, with Q1 revenue of $9.83 billion growing 8% year-over-year and narrowly beating estimates. Adjusted EPS came in at $2.58, slightly ahead of consensus, while operating income rose 8% to $3.2 billion. Gross margin held firm at 77.0% despite rising costs, and operating cash flow improved 4% to $6.5 billion. A standout figure this quarter: AI and Data Cloud ARR crossed the $1 billion mark, up 120% year-over-year, underscoring Salesforce’s accelerating pivot into AI.

🔑 Key Points

• Revenue In-Line at $9.83B: Grew 8% YoY and beat estimates by less than 1%, led by strength in subscription revenue.

• EPS Beats at $2.58: Slightly ahead of the $2.55 estimate, up 6% YoY, aided by stable margins.

• Cloud & AI Momentum: ARR from Data Cloud and AI topped $1B, surging 120% YoY, and featured in 60% of top deals.

• Margins Hold Despite Cost Pressures: Gross margin steady at 77.0%, while operating expenses rose 7% YoY and cost of revenue increased 5%.

• Cash Flow Positive: Operating cash flow rose 4% YoY to $6.5B, with free cash flow of $6.3B; company returned $3.1B via buybacks and dividends.

👀 What You Need to Know

Salesforce is proving it can navigate a maturing core CRM business while leaning into AI and data. While subscription growth is solid, services revenue declined 3% YoY and margin expansion may slow if costs continue rising. The company maintained its FY26 guidance, raising revenue expectations slightly and keeping operating margin targets intact. With Informatica's acquisition pending and Data Cloud scaling rapidly, the long-term AI platform strategy is in motion, but execution in the next few quarters will be key to justifying the premium valuation.

CRM shares are -2.3% so far this week.

Ulta Beauty (ULTA)

Ulta Beauty $ULTA ( ▲ 11.78% ) posted a stronger-than-expected Q1, with EPS of $6.70 topping estimates by 15% and revenue climbing 4.5% YoY to $2.85B. Strength in skincare and wellness helped offset softness in cosmetics, and management raised full-year guidance across the board. However, investors remained cautious as margin pressures and a 3% YoY net income decline highlighted underlying cost challenges.

🔑 Key Points

• Revenue Beats at $2.85B: Up +4.5% YoY and above the $2.79B estimate, helped by strength in skincare (+14% YoY) and fragrance (+10% YoY), though cosmetics remained flat.

• EPS Crushes at $6.70: Surged +4% YoY and beat consensus by 15.3%, even as net income slipped slightly to $305M.

• Margins Flat: Gross margin held at 39.1%, while operating income was flat YoY and profit margin dipped 80bps to 10.7%.

• Strong Free Cash Flow: FCF rose to $141M (+114% YoY) and operating cash flow surged +38% to $220M.

• FY25 Guidance Raised: Revenue outlook lifted to $11.5B–$11.7B (from $11.5B–$11.6B), EPS now $22.65–$23.20 (prior $22.50–$22.90), with same-store sales guided to +0–1.5%.

👀 What You Need to Know

Ulta’s strategy to lean into skincare and wellness categories is working as those segments are outgrowing traditional cosmetics and insulating results from consumer uncertainty. But operating expenses rose 6.7% YoY, and gross margin slightly compressed due to supply chain costs and fixed expense deleverage. With inventory up 11% YoY and traffic trends flattening, any sales slowdown could pressure results. That said, the buyback program remains aggressive ($358.7M in Q1), and Ulta’s ~39% gross margin is still elite for retail. Investors should watch for traction in exclusive brand partnerships and how the category mix evolves as consumer wallets tighten.

ULTA shares are +12.7% so far this week.

Dick’s Sporting Goods (DKS)

Dick’s Sporting Goods $DKS ( ▼ 1.03% ) posted a strong start to FY25, beating expectations on both revenue and earnings. Q1 revenue rose 5% to $3.17B, topping estimates by 1.6%, while EPS came in at $3.37, up 2% YoY and beating consensus by nearly 5%. Comparable sales grew a healthy 4.5%, driven by strength in key categories like footwear and apparel. Operating income increased 8% to $360M, showing solid margin execution despite macro pressures and cautious consumer sentiment.

🔑 Key Points

• Revenue Beats at $3.17B: Up 5% YoY and ahead of estimates by 1.6% on strong comps in footwear and apparel.

• EPS Rises to $3.37: Topped consensus by 5%, growing 2% YoY despite higher expenses.

• Margins Hold Steady: Operating income rose 8% to $360M; operating margin remained flat at 8.3%.

• Inventory Swells 12%: Stock levels are well above last year, raising risk of markdowns in future quarters.

• Free Cash Flow Drops to -$208M: A sharp swing from +$74M last year as working capital pressures intensified.

👀 What You Need to Know

While comps and earnings were solid, investors should note the 23% drop in operating cash flow and elevated inventory levels (+12% YoY), which could signal future margin compression or markdown risk. Management kept full-year guidance unchanged, a positive in the current tariff environment, but still suggests caution despite strong early trends. The $2.4B acquisition of Foot Locker adds strategic scale, but also brings execution risk. With shares trading at ~13x forward EPS and a healthy balance sheet, Dick’s remains a retail standout, but tightening cash flow warrants close watch.

DKS shares are +8.4% so far this week.

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The Investor’s Edge

Disclosure

This is not investing advice. It is very important that you do your own research and make investments based on your own personal circumstances, preferences, goals and risk tolerance.