markets

Matt Phillips4/13/26

Goldman analysts are watching these non-software growth stocks

It’s been a rough run for what Wall Street calls secular growth stocks: companies that can boost sales because of long-term shifts in their sector, almost regardless of broader economic conditions.

Software stocks, longtime secular growth poster children, have recently been creamed by worries their days are numbered due to AI. Despite weathering the market shocks from the war with Iran relatively well, software remains down sharply, with the iShares Expanded Tech Software ETF down roughly 30% for the year.

But software hasn’t been the only problem.

“Even excluding Software, many secular growth stocks have recently
underperformed and trade at discounted valuation multiples relative to the
past decade,” Goldman Sachs analysts wrote in a note published Friday.

That could be an opportunity, they suggested.

“The median non-software stock in our ‘Rule of 10’ secular growth screen trades at a P/E of 29x, a 53% premium to the median S&P 500 stock that is close to the bottom of the range during the past 10 years. Consensus 2027 sales growth for the median company in the screen is 3x the growth rate for the median S&P 500 company. PEG ratios are also similar to levels reached during recent troughs.”

The company noted that power infrastructure is a particularly interesting place to prospect for non-software-related growth at something of a discount.

It also provided a helpful list of non-software growth stocks based on its screen for companies that have notched 10% sales growth in 2024 and 2025 and are expected to do the same through 2028.

It includes familiar AI-related names like Broadcom, Advanced Micro Devices, Vertiv Holdings, Arista Networks, and Nvidia, as well as a couple outliers such as DoorDash and Axon.

We’ve thrown in the dates of their upcoming earnings reports, which will be interesting to keep an eye on over the next few weeks.

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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

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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