Apple is preparing a new way to buy iPhones. Also, making sense of Google’s new AI models
Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch – an afternoon update that can work, during the last hour of trading on Wall Street. Stocks rose again on Tuesday, as the S&P 500 moved on pace to snap a three-session losing streak. The continued rise in oil prices and interest rates is not stopping the market rally, at least for today. The theme of artificial intelligence buildout traded higher on Wednesday as the market prepares for future gains. We wrote last Monday that earnings season could be the trigger that puts AI trading back on track, and that the thesis will face its first big test on Wednesday evening when Alphabet reports results. As we noted at the time, if Alphabet, Amazon, Microsoft and Meta Platforms raise their capital expenditure forecasts this year, while continuing to show investment growth in 2027, it will strengthen investors’ confidence in the size and strength of the current AI investment cycle. Apple shares rose slightly after Bloomberg News reported that the company is partnering with buy-now, pay-later firm Klarna to launch a new lease program, called Apple Upgrade. According to the report, this new service is expected to be launched on July 28 and will support most iPhone, Mac, iPad, and Apple Watch models. Instead of buying a new device outright, the subscription program allows users to upgrade early to a new model or keep the device at the end of the lease term. Apple Upgrade will be available initially in the US and accessible both online and in Apple’s brick-and-mortar stores. As Apple raises prices on many devices due to rising memory costs, Apple Upgrade can help alleviate sticker shock by offering lower monthly payments than current financing plans. The ability to spread payments may also entice users who have held onto an iPhone for four or five years — or even longer — to finally upgrade to a new device. This is important because Apple’s new, more powerful devices support its Apple Intelligence offering, which is set to get a much-needed overhaul this fall. The increased power and horsepower of the new devices also support a wider range of applications, creating more opportunities to monetize each device. Finally, the multi-year hardware subscription program also locks users into Apple’s ecosystem, reducing the risk of switching to competing devices. Alphabet Google has announced a new trio of special Gemini models. The models – Gemini 3.5 Flash-Lite, Gemini 3.5 Flash Cyber, and Gemini 3.6 Flash – are designed for different use cases and couldn’t come at a better time. First, they should help ease investor concerns about the pace of innovation following last week’s disappointing news that the Gemini 3.5 Pro was running behind schedule. The flagship model was originally due out in June. Alongside Tuesday’s news, Google said “Gemini 3.5 Pro is currently in testing with our partners and we plan to make it widely available as soon as it’s ready. Similarly, our team is already focused on building the next generation of models. We’ve started our most ambitious pre-training race, on Gemini 4, and we’re excited about the progress.” The arrival of these three special models coincides with a broader shift in the corporate world, as companies rethink their AI strategies. After being hit with huge AI computing bills, companies have begun to transition from “tokenmaxxing” – where users throw everything they have at the most advanced models they can find – into an era where the focus is on token performance. A token is the basic unit of data processed by an AI model; the more it is used, the greater the debt. One way to address this shift in thinking is to offer customers specialized models for critical tasks – such as drug discovery or cybersecurity – with high-performance models aimed at high-volume, low-complexity queries. Google seems to be taking steps in this direction with Tuesday’s updates, especially with the launch of Gemini 3.5 Flash Cyber. This progressive approach to model development doesn’t just happen at Google. It happens in every field of technology. Instead of designing one model to rule them all, LLM developers are beginning to think of models as the tools they are. Anyone who has ever assembled Ikea furniture, repaired a car, or worked on their home, knows one fact above all: having the right tool for the job changes everything in terms of how well and efficiently the job is done. The tokenmaxxing era seems to have awakened AI developers to this universal rule. As a result, we expect the effectiveness of the use of AI to increase, and with it, overall adoption. That makes Tuesday’s news good for Google’s AI program, and we expect to see more specific models over time. This may be one of the topics discussed on Wednesday night’s Alphabet earnings call. The headline of Tuesday night’s earnings reports is club name Capital One. We want to see the bank return to the habit of passing more cash per share in a more ethical way on its card and network payments. Also reported Tuesday night were Interactive Brokers, EQT Corporation, Chubb and Alaska Air Group. The team name GE Vernova reports before the opening bell on Wednesday. We want to hear from the company about firm orders and pricing for its gas engines, which are key to the creation of AI, with immediate opportunities in its Electrification segment. Other companies scheduled to report on Wednesday include AT&T, PulteGroup, and Otis Worldwide. The only economic data release scheduled for Wednesday is weekly mortgage applications. (See here for a full list of stocks from Jim Cramer’s Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling stock in his charity portfolio. When Jim talks about a stock on CNBC TV, he waits 72 hours after issuing a trade warning before making a trade. THE PRIVATE INFORMATION OF THE BURNING CLUB IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, AND OUR PRIVACY POLICY. NO LEGAL LIABILITY OR OBLIGATION EXISTS, OR IS CREATED, BY YOUR ACCEPTANCE OF ANY INFORMATION PROVIDED BY CONTACTING THE INVESTMENT CLUB. NO PARTICULAR RESULT OR INTEREST IS GUARANTEED.
