We’re downgrading 2 AI stocks — plus, what we need to see
Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street. Markets are mixed on Monday , coming off a week in which the S & P 500 and the Nasdaq fell 1.5% and 2%, respectively. Bond yields fell slightly after CNBC reported that the Treasury could use its roughly $1 trillion General Account to help fund its government bonds repurchase. Oil moved lower, and losses held after the Trump administration announced a plan, called “Operation Economic Outcast,” to isolate Iran’s economy by threatening to impose secondary sanctions on the “enablers” (trading partners) of the Islamic Republic Typically, a dip in both bond yields and oil prices is the recipe for a stock market rally. However, the market couldn’t get going because bond yields remain elevated and AI infrastructure stocks are struggling. Last Friday, we tied the sell-off in AI stocks — from memory and semiconductor names to component plays and industrial infrastructure stocks — to growing political pushback against data centers ahead of the November midterm elections. Jim explored this new thesis further in his Sunday story. We took action on Monday with a Broadcom sale , but Jim noted in the Morning Meeting that additional trims may be necessary to put the portfolio in a better position to handle an AI investment speed bump. The group has enjoyed significant gains over the past few years, and we don’t want to give them all back. He said a trim of Corning or GE Vernova could be next, acknowledging that it would be a reversal of our recent buys in both names. Those lots may be at a loss, but we don’t want to give back our larger gains. We haven’t made a move yet, but we are downgrading those two stocks to 2s to better align our ratings with our most up-to-date views. What do we need to see to get more positive? We’re on the lookout for prominent politicians who support data center development to speak out. Nvidia earnings Wednesday evening could help reshape the narrative for the better. And perhaps most simply, an easing of the mob-like selling pressure that has hit the group over the past week and change. There are no major earnings after the closing bell on Monday. Before the opening bell on Tuesday, we’ll see earnings from Dick’s Sporting Goods . On the data side, we’ll see the July new home sales report and the Conference Board Consumer Confidence Survey, both released at 10 a.m. ET. (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.