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LivestreamMenuOn Thursday, Jim Cramer and portfolio director Jeff Marks convened the CNBC Investing Club’s July Monthly Meeting. They ran through each stock in the portfolio — calling out names to buy and places where we’d look to trim — before taking some questions from members. One of the big themes throughout the hourlong meeting: stocks that make parabolic moves must be trimmed. Emotion carries them higher to unsustainable levels, and emotion can be why they collapse without warning. That’s what is happening to a number of artificial intelligence winners in recent days, but Jim emphasized he doesn’t believe the fundamentals have deteriorated in those names. In fact, he said he sees an opportunity to buy stocks like Corning, GE Vernova and Eaton. Away from the AI trade, we’re also tempted to add to our positions in FedEx Freight and Johnson & Johnson. On the other side, Home Depot and Starbucks are two stocks that Jim and Jeff discussed trimming. We took action on the Home Depot side of things after the meeting ended. Now, here’s a closer look at our latest thinking on the portfolio. The memory buyers Jim said the big four hyperscalers are in a bind with all their AI spending: the totals have gotten so large that people are worried about whether they’ll generate enough profits to justify them, especially as soaring memory prices push up the cost of building data centers. But, at the same time, there’s a concern that they cannot afford not to spend on what they believe to be a revolutionary technology. Nobody knows how this tension will resolve, Jim said, but it is fluid. Alphabet : Thankfully, it has Google Search, YouTube and Google Cloud to help fund its spending. Those properties also give Alphabet the possibility to earn its way out of the data center money pit. Having Warren Buffett on its side is a nice vote of confidence . Amazon : The springtime momentum has evaporated, and we’re concerned that the debt market may have had enough Amazon bonds , raising the prospect of an equity sale. We all hope that Amazon starts to recoup this spending next year and beyond. Microsoft : Need to see more AI monetization from this one. It shares the same characteristics as Salesforce and IBM , selling software that doesn’t fit into this new world. An improved Copilot, as Citi argued Wednesday , would help the narrative. As tempted as we are to trim, we’re mindful there is some optionality. Meta Platforms : The social media giant gave us what we wanted with its foray into selling compute power. Jim had believed a cloud plan would warrant a big pop for the stock because it eases concerns about excessive AI spending. That’s exactly what we’ve seen, and it’s why the hyperscalers are so hard to quit . Apple : While Apple needs a lot of memory chips for its devices like the other four companies here, it is the only one not spending like a banshee on AI data centers. The market has, finally, come around to Apple’s low-cost AI gambit. We think demand for its devices should prove fairly durable despite price hikes. Own it, don’t trade it. The data center suppliers Nvidia : The company remains the beating heart of the data center, but you might not realize that based on its recent stock performance. We’re not giving up on it because we haven’t seen anything go actually wrong for its business. Nevertheless, ramping up its stock buyback, borrowing a page from the Apple playbook, remains imperative. Broadcom : Broadcom has nine lives, with CEO Hock Tan always figuring out how to get the best clients by offering the best deals. Right now, a lot of those clients are looking for custom alternatives to Nvidia. Intel : As instrumental as Broadcom and Nvidia are to the data center, they soon may not be as instrumental as Intel, which is seeing booming demand for its central processing units (CPUs), and CEO Lip-Bu Tan is cleaning up its manufacturing business so it can be a real alternative to capacity-constrained TSMC . Intel’s national champion status is another thing in its favor. Qnity : You can’t make semiconductors without the chemicals and materials sold by this former DuPont segment. Shares have come down hard in recent weeks, but we don’t believe the issue is demand for its products. There’s real scarcity value here. Corning : This one went parabolic in June, prompting us to take profits on multiple instances. Now it’s come back to Earth in a big way, and we would be buyers Thursday if we weren’t restricted. We sold 150 shares in June and would be looking to buy back in the ballpark of 25 shares. GE Vernova and Eaton : Both companies are key to powering data centers. GEV’s turbines turn natural gas into energy, while Eaton’s electrical equipment ensures the power gets to the server racks filled with chips. Both stocks are down Thursday and worth buying. The others FedEx : After spinning off its less-than-truckload division (more on that in a second), FedEx is a more streamlined company, focused on winning in the parcel-delivery business against UPS . We like it into the holiday season because we think it’ll eat UPS’s lunch. FedEx Freight : Now being able to operate as a standalone company with a focused management team, there’s the opportunity for internal improvement. The real kicker, though, is that we’re finally exiting a bruising multiyear freight recession, as J.B. Hunt showed Wednesday night. That means the macro is supporting its growth too. Based on what J.B. Hunt told us, we’re tempted to buy more FDXF. Boeing : This one trades on cash flow, not on numbers of planes delivered, and we only learn about cash flow four times a year. Despite these lulls, we know from GE Aerospace that the aerospace industry is in good shape, even with a flare-up in Iran war tensions. We can be patient with Boeing because we can’t predict exactly when its next leg higher will begin. Honeywell Aerospace : For a stock that just debuted a few weeks ago, it’s fairly reviled. As with Boeing, the Iran war creates some noise, and it’s facing some supply-chain questions. Still, we know this one has great potential as one of the few pure-play aerospace names out there. Goldman Sachs : We loved the Goldman quarter from Tuesday morning and still believe there’s more upside to be had from current levels around $1,100. This moment is tailor-made for the investment bank. Wells Fargo : After back-to-back lackluster results, Wells did enough Tuesday to remain in the portfolio. CEO Charlie Scharf’s efforts to expand into a bigger player in M & A and equity underwriting are smart, even if the analyst community is still laser-focused on interest income. At less than 12 times 2027 earnings estimates, we can afford to be patient. Capital One : This bank stock is still inexpensive at roughly 9 times earnings, and consumer credit trends remain healthy. While we’re believers in the long-term benefits of the Discover acquisition, management must better articulate the combined company’s earnings power. If it does, we think the stock has meaningful upside. Johnson & Johnson : The healthcare giant’s second quarter was imperfect, primarily due to a $150 million revenue miss from its Abiomed heart pumps subsidiary. This is a $100 billion in annual sales company, and we won’t let this small division shake us out when the pharma business is doing so well. We want to buy more. Eli Lilly : Despite headlines this week about Lilly falling behind Novo Nordisk in the obesity pill race, we don’t want to give up on Lilly. It always seems to have something up its sleeve. Plus, it’s got so much money from its injectable GLP-1 success that it’s able to buy a bunch of smaller companies in other areas. That includes the purchase of a psychedelic drugmaker Thursday. Cardinal Health : We were right to buy more Cardinal into the teeth of its post-earnings sell-off this spring. Now shares were caught up in hospital operator HCA Healthcare’s warning. While Cardinal does do business with HCA, we’re not anxious to say goodbye considering its full mosaic of businesses. Linde : While some of our plain old industrials are testing our patience (more on that below), the same cannot be said for Linde. The industrial gas supplier is a steady performer in good times and bad. But when economic growth picks up, it really shines. DuPont and Dover : We’re lumping these two industrial players together because our views are similar. We need to see proof of life. They’re not nearly as exciting as other AI-linked industrials and need to show us they’re still worth holding. Dover reports next Thursday morning. DuPont is set for early August. Honeywell Technologies : This is the remaining Honeywell after spinning off Honeywell Aerospace. CEO Vimal Kapur is motivated to make something happen to improve its portfolio (seemingly unlike Dover and DuPont). For now, Honeywell Technologies is a beneficiary of reshoring manufacturing to the U.S. It sells fire prevention systems, advanced sensors used in industrial facilities, and control systems for oil-and-gas plants . Costco : The members-only retailer continues to execute, but its valuation remains the biggest hurdle. At more than 40 times earnings, the stock has little room for error. We remain confident the business can eventually grow into its premium multiple, but are wary of how the stock has stagnated. TJX Companies : The recent weakness has been frustrating given the company’s strong fundamentals. We continue to believe the off-price retailer behind T.J. Maxx, Marshalls, and HomeGoods is well positioned to benefit from value-conscious consumers, and we’re willing to stay patient while the stock catches up with the business. Starbucks : We have been rewarded for our patience in the coffee chain as its turnaround gains traction. While we’re considering trimming after the recent rally to protect our gains and right-size our position, we still like the long-term direction of the business under CEO Brian Niccol. Procter & Gamble : The Tide maker is a hedge against an economic slowdown. We luckily trimmed some shares at higher levels when it was benefiting from a rotation away from AI names. We continue to wait for clearer signs that management can reignite the top and bottom lines. Home Depot : The home improvement retail giant is inextricably linked to interest rates. We still think lower inflation and an eventual Federal Reserve easing cycle could revive housing demand. But, until that happens, capital could be better deployed elsewhere. With the stock putting together a few good days in a row, we trimmed some Thursday . Salesforce : Our smallest position is struggling with the same software disruption concerns as Microsoft. We know it’s an uphill climb, but we’re willing to hang around to see if CEO Marc Benioff can make good on his pledge for a second-half acceleration. CrowdStrike and Palo Alto : Our bullish cybersecurity thesis continues to play out. While fears initially emerged that generative AI models would disrupt the industry, they’ve instead reinforced the need for trusted cybersecurity vendors. IBM’s recent pre-earnings announcement further supports that view. That said, after both stocks have rallied sharply, we’d wait for a pullback before adding to either position. (See here for a full list of the stocks in 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 a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.Read More
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