Meta’s latest move in the AI talent battle, and 4 quick hits for Cramer
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 retreated on Friday, capping another tumultuous week. Weaknesses to hyperscalers – Amazon, Alphabet, Meta Platforms, and Microsoft – are limited to large scale. The IS&P 500 is on track to lose more than 1%, while the Nasdaq is headed for a decline of more than 2%. The Dow is almost flat for the week. Semiconductors and AI infrastructure stocks bore the brunt of early selling pressure, although several names, including Micron , Sandisk , GE Vernova , Eaton , and Qnity Electronics , rebounded as dip buyers entered. 4 Quick hits from Jim: People are expanding their technological horizons in aerospace, as it is holding bids everywhere. GE Aerospace rose nearly 3%, while Club name Honeywell Aerospace rose more than 2%. You can pick one tech stock, but don’t buy it until the end of the day, as I’m afraid those on the edge will have to panic or leave. Health care will be fine for some time. I even think stocks like Abbott Labs are worth checking out. But Johnson & Johnson is the way to go, as I think it can stand out here, as it was a fantastic quarter. We have raised our price target on Club stock. Industries will suffer from exposure to data centers. Go with carry stocks instead. Go with FedEx and FedEx Freight. (In simple terms, transportation stocks are companies that move goods and people.) Another sign of the intensifying battle for AI talent : Longtime Amazon Web Services CEO Dave Brown is leaving after 19 years and is in talks to join Meta, according to multiple reports. Brown led AWS’s compute and machine learning services division, overseeing the provision of critical AI infrastructure, including custom Amazon Trainium AI chips. When Investing Club interviewed him earlier this year, he asserted that the future of AI infrastructure will be achieved by improving “price efficiency,” delivering more computing power at a lower cost with custom silicon. If customers “can get a chip and processor that allows them to get more performance for fewer dollars, that’s a strategic advantage for their business,” Brown said. That philosophy has become increasingly important as AI models grow more focused and power-hungry. If Brown brings that technology to Meta, it could bolster the company’s ambitions to eventually build a cloud computing business, a strategy CEO Mark Zuckerberg said was “definitely on the cards” at the company’s shareholder meeting in May. Jim confirmed earlier this month that Meta plans to sell computing power to foreign customers to create another source of income. In related news, the New York Times reported Friday that Anthropic was working on a deal to lease computing power to Meta, worth up to $10 billion over two years. CNBC’s Kate Rooney confirmed the report, noting that the two companies were in preliminary discussions, according to a person familiar with the matter. Earnings season will begin next week with about 80 companies in the S & P 500 and six in the portfolio scheduled to report. After working on the big banks for the past few days, we thought that Goldman Sachs was the best, and Wells Fargo also showed a strong improvement, which the market rewarded a little later. Next week is more of an industrial, automotive, and defense week. However, there are big tech names on the horizon, with Alphabet and Intel set to report. Alphabet is the first among the hyperscalers out of the gate, and it will be interesting to hear what management has to say about capital expenditures and their decision to raise $84.75 billion through an equity offering in June. (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.
