3 Earnings Winners Setting Up for Another Leg Higher

Strong earnings reports often create some of the best momentum setups in the market, especially when a stock gaps sharply higher, holds those gains and then begins consolidating near its highs.

That combination can signal that investors are not simply reacting to a one-day surprise, but actively repricing the business as earnings expectations improve. When that initial move is followed by a tight continuation pattern, it can create an attractive setup for another leg higher.

Okta (OKTA), Gartner (IT) and Salesforce (CRM) each fit that profile today. All three delivered strong earnings results, gapped higher on the news and are now forming constructive technical patterns that could set the stage for fresh breakouts.

Okta Stock Builds on a Powerful Earnings Gap

Okta was one of the biggest post-earnings winners last week, with shares surging nearly 29% after the identity-security company delivered a better-than-expected quarter. Second-quarter revenue increased 11% year over year to $805 million, while subscription revenue climbed 12%. More importantly, current remaining performance obligations, a useful indicator of near-term subscription demand, accelerated 14% to $2.59 billion. Free cash flow also jumped to $227 million from $162 million a year earlier.

There is also a compelling AI angle developing around the business. As companies deploy autonomous AI agents across their operations, those agents increasingly require identities, permissions and controls just like human employees. Okta is positioning its identity platform as a critical security layer for this emerging infrastructure.

That narrative appears to be gaining traction alongside improving fundamentals. Okta currently carries a Zacks Rank #2 (Buy), and the strong quarter could provide additional support to earnings estimates.

Technically, the earnings gap was unusually powerful. Rather than immediately giving back the move, OKTA shares have held near their highs and are now pressing against resistance around $173.50. A decisive move through that level would represent a fresh breakout and could open the door to another leg higher.

On the downside, the $164 area is an important near-term support level. As long as shares remain above that zone, the post-earnings setup remains constructive.

Gartner Stock Sets Up Near a Breakout

Gartner offers a somewhat different setup, combining improving earnings momentum with an unusually inexpensive valuation.

The research and advisory company reported adjusted second-quarter earnings of $4.37 per share, up nearly 24% year over year and comfortably above expectations. Free cash flow increased 9% to $378 million, while management raised its full-year outlook for adjusted EBITDA, earnings and free cash flow. Gartner also repurchased $547 million of stock during the quarter.

The stock now carries a Zacks Rank #1 (Strong Buy), while valuation remains compelling. IT shares trade at just 13.8x forward earnings, despite long-term EPS expectations of roughly 20.1% annual growth, giving the stock a PEG ratio of only 0.68.

The technical setup is also increasingly constructive. Gartner shares are consolidating beneath resistance around $203, creating a well-defined breakout level. A sustained move above $203 could signal the beginning of another leg higher.

Meanwhile, the $190 area has emerged as an important support zone. That gives investors a relatively clear framework: strength above $203 confirms the breakout, while a loss of $190 would weaken the setup.

Salesforce Shares Show Runaway Momentum

Salesforce may be the most interesting name of the three because its earnings report directly challenged one of the market's most persistent narratives this year.

Software stocks were hit hard as investors worried that generative and agentic AI could disrupt traditional SaaS businesses. Salesforce was caught directly in that selloff. But its latest earnings report suggested AI may ultimately prove to be considerably more opportunity than threat.

Second-quarter revenue increased 11% year over year to $11.3 billion, while non-GAAP diluted EPS more than doubled to $5.90. Free cash flow surged 81% to $1.1 billion, and Salesforce raised its full-year revenue outlook. Current remaining performance obligations also accelerated to 14% growth.

Perhaps most important, the company's AI businesses are gaining substantial traction. Agentforce and Data 360 annual recurring revenue reached nearly $3.9 billion, up more than 210% year over year, while Agentforce ARR exceeded $1.5 billion and grew more than 240%.

Investors responded by sending CRM shares more than 22% higher in the following session.

Even after that move, Salesforce trades at only around 17.5x forward earnings, while long-term EPS is forecast to grow roughly 18% annually. The stock currently carries a Zacks Rank #3 (Hold), although the report is still fresh and upward estimate revisions following the quarter could potentially improve that rank.

Technically, CRM has not even produced the clean consolidation seen in OKTA and IT yet. Momentum has been so strong that shares continue to push higher following the gap.

That makes Salesforce one to watch closely. Ideally, shares would form a tight bull flag or another short consolidation that establishes a cleaner breakout level. More aggressive momentum investors may choose to participate in the runaway move, but waiting for a defined setup would provide a clearer risk-reward profile.

Should Investors Buy Shares in CRM, IT and OKTA?

What makes these three setups particularly interesting is that they share a broader narrative.

Okta, Gartner and Salesforce were all pressured to varying degrees by concerns that AI could disrupt established software and information-services businesses. Investors spent much of the year asking which companies AI might replace.

Recent earnings are beginning to suggest that the market may have pushed that thesis too far.

Salesforce is already generating rapidly growing AI revenue, Okta may become an increasingly important security layer for autonomous agents, and Gartner continues to produce strong earnings and cash flow despite fears surrounding AI disruption.

If investors continue to reconsider the idea that AI is inherently bearish for established software and information businesses, the rerating of these stocks may have considerably further to go.

With earnings momentum improving and technicals turning bullish, all three stocks deserve a place near the top of investors' watchlists.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research