Costco Stock Pops 4% As It Tops Estimates in Q3; Membership Revenue Soars
Strong tech performance and encouraging, if modest, earnings announcements from major companies like Costco helped U.S. markets close the...
Quick overview
- U.S. equities closed higher, driven by strong tech performance and positive earnings from major companies like Costco.
- The Dow Jones Industrial Average gained 117 points, reflecting improved market sentiment amid signs of consumer resilience.
- Costco reported a slight earnings beat with EPS of $4.28, but its shares dipped 0.43% despite strong comparable sales growth.
- Nvidia's shares surged 3.24% following a significant sales increase, while Salesforce's stock fell due to cautious forward guidance.
Strong tech performance and encouraging, if modest, earnings announcements from major companies like Costco helped U.S. markets close the day higher.
Wall Street Ends Higher as Optimism Builds
The Dow Jones Industrial Average closed the U.S. trading session with a gain of 117 points, finishing at 42,215.73, up 0.28% on the day. Broader indices also posted gains, driven by upbeat corporate earnings and momentum in the tech sector. Market sentiment improved as investors responded positively to early signs of a resilient consumer sector and continued strength in artificial intelligence-linked demand.
Costco Delivers Solid Earnings Beat, But Shares Waver
Retail giant Costco Wholesale released its first-quarter financials, narrowly beating Wall Street’s expectations. The company posted earnings per share (EPS) of $4.28, just above the $4.24 analysts projected. Revenue also edged higher, supported by a strong rise in comparable sales and a notable boost in membership fee income. However, shares of Costco (NASDAQ: COST) slipped 0.43% during the session to close at $1,008.74.
Following the report, Costco’s stock briefly rallied about 1.5% in after-hours trading, rising to $1,024. However, that momentum quickly faded, with prices reverting to their closing levels by late evening.
Despite the muted price action, the quarter showcased Costco’s operational strength. Total comparable sales were up 5.7% year-over-year, and net income rose to $1.90 billion, compared to $1.68 billion a year earlier. Membership revenue climbed 11%, benefiting from the company’s first fee increase since 2017, introduced in September last year.
Costco Earnings Snapshot:
- Earnings Per Share (EPS): Reported at $4.28, beating analyst expectations of $4.24.
- Revenue: Came in at $63.21 billion, slightly ahead of the consensus forecast of $63.19 billion.
- Sales Growth: Total sales rose 8% year-over-year.
Profitability and Growth:
- Net Income: Increased to $1.90 billion for the quarter ending May 11, up from $1.68 billion a year ago.
- Comparable Sales: Up 5.7% YoY globally.
- U.S. comparable sales: +6.6%
- Canada: +2.9%
- International: +3.2%
Membership Fee Momentum:
- Fee Revenue: Reached $1.24 billion, up 11% from the previous quarter.
- Price Hike Impact: Reflects the $5 increase in annual membership fees implemented in September 2024, the first since 2017.
Operational Footprint & Liquidity:
- Total Warehouses: 905 globally, with 624 in the United States.
- Cash Position: Costco ended the quarter with $13.84 billion in cash and equivalents.
- Stock Performance: COST shares are +10% year-to-date, despite slipping 0.43% to $1,008.74 ahead of the earnings release.
Tech Stocks Steal the Show: Nvidia Jumps, Salesforce Drops
The technology sector continued to lead gains, bolstered by Nvidia’s sharp post-earnings rally. Shares of Nvidia climbed 3.24% to $139.18 after reporting a staggering 69% increase in quarterly sales, driven by explosive demand for AI chips and infrastructure.
In contrast, Salesforce (CRM) saw its shares tumble 3.30% to $266.92. Despite delivering solid results, the company’s cautious forward guidance weighed on investor sentiment and overshadowed its earnings performance.
US Major Indices Overview – May 29, 2025:
- Dow Jones Industrial Average: Gained +117 points to 42,215.73 (+0.28%)
- S&P 500: Rose +23.62 points to 5,912.17 (+0.40%)
- Nasdaq Composite: Increased +74.93 points to 19,175.87 (+0.39%)
Key Stock Movers Today:
- Nvidia (NVDA): Jumped +3.24% to $139.18 following a blockbuster earnings report and 69% sales growth.
- Salesforce (CRM): Dropped -3.30% to $266.92 on cautious guidance despite strong earnings.
- Dell Technologies (DELL): Slight dip of -0.18% to $113.57 ahead of its earnings release.
- Meta (META): Gained +0.23%, while Microsoft (MSFT) added +0.29%, boosting tech.
- Amazon (AMZN): Rose +0.48% on continued optimism in retail and cloud segments.
Conclusion: While Costco’s post-earnings stock reaction remained subdued, the retailer’s strong financial performance underscored continued consumer resilience. Combined with Nvidia’s breakout on AI strength, the upbeat tone helped push U.S. indices higher. Investors remain focused on corporate performance and macro signals, with the tech sector anchoring current market optimism.
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