Meta’s latest move in the AI talent war, plus Cramer’s 4 quick hits
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. Stocks pulled back on Friday , capping off another volatile week. Weakness in the hyperscalers — Amazon , Alphabet , Meta Platforms , and Microsoft — weighed on the major averages. The S & P 500 is on pace to lose more than 1%, while the Nasdaq is headed for a decline of over 2%. The Dow is roughly flat on the week. Semiconductors and AI infrastructure stocks bore the brunt of the early selling pressure, though several names, including Micron , Sandisk , GE Vernova , Eaton , and Qnity Electronics , rebounded as dip buyers stepped in. 4 quick hits from Jim: People are broadening their tech purview to aerospace, as it is catching bids everywhere. GE Aerospace is up nearly 3%, while Club name Honeywell Aerospace is up more than 2%. You can pick one tech stock, but don’t buy it until the end of the day, as I fear that those on margin will have to panic or go. Healthcare is going to be right for some time. I even think stocks like Abbott Labs have to be examined. But Johnson & Johnson is the way to go, as I think it can really break out here, as it was a spectacular quarter. We raised our price target on the Club stock. Industrials are going to be hard because of the exposure to data centers. Go with the transport stocks instead. Go with FedEx and FedEx Freight . (In the simplest terms, transportation stocks are companies that move goods and people.) Another sign of the intensifying AI talent war : Longtime Amazon Web Services executive 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 key AI infrastructure offerings, including Amazon’s custom Trainium AI chips. When the Investing Club interviewed him earlier this year, he argued that the future of AI infrastructure will be won by improving “price performance,” delivering more computing power at a lower cost through custom silicon. If customers “can find a chip and a processor that allows them to get more performance for fewer dollars, well, that’s a very strategic advantage for their business,” Brown said. That philosophy has become more important as AI models grow more computationally intensive and power-hungry. If Brown brings that expertise to Meta, it could strengthen the company’s ambitions to eventually build out a cloud computing business, a strategy that CEO Mark Zuckerberg said is “definitely on the table” at the company’s shareholder meeting in May. Jim confirmed earlier this month that Meta plans to sell computing power to outside customers to create another revenue stream. In related news, the New York Times reported Friday that Anthropic was working on a deal to lease computing power from Meta, valued at up to $10 billion over two years. CNBC’s Kate Rooney confirmed the report, noting the two companies were in very preliminary talks, according to a person familiar with the matter. Earnings season picks up next week with about 80 companies in the S & P 500 and six in the portfolio scheduled to report. After working through the big banks over the past few days, we thought Goldman Sachs was the best, and Wells Fargo also showed solid improvement , which the market rewarded a little later. Next week is more of an industrial, autos, and defense-focused week. However, there are some big tech names on the horizon, with both Alphabet and Intel scheduled to report. Alphabet is the first among the hyperscalers out of the gate, and it will be interesting to hear what management says about capital expenditures and its decision to raise $84.75 billion through an equity offering in June. (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.