The AI trade comeback. Plus, our take on latest Intel deal
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 are higher again , with the artificial intelligence buildout stocks extending their rebound from last week’s sell-off. The tech-heavy Nasdaq is leading the way Tuesday, with an over 1% gain. (The Dow is flat due to an over 9% drop in Boeing stock after the company said it won’t significantly ramp up 737 Max production until late next year.) One reason for the AI recovery rally may be that the market is feeling a little better about the AI funding worries that roiled markets last week. What happened this week? Anthropic’s IPO filing, Meta Platforms upsizing its common stock offering to $25 billion, and Broadcom securing $63 billion in financing for Anthropic to buy its XPU AI accelerators and networking solutions. The next important catalyst for the AI buildout trade will be hyperscale earnings and their capital expenditure commentary. When Alphabet and Microsoft report after Wednesday’s close, followed by Amazon on Thursday, AI bulls will want to hear management discuss the returns they are generating on their AI investments, as well as plans to continue investing in infrastructure to meet growing demand. Intel struck a new quantum deal . Late Monday, the chip giant announced an agreement to purchase Classiq, a leading provider of quantum computing software. The deal brings together Classiq’s automated quantum algorithm synthesis platform with Intel’s existing quantum software platform, scalable silicon spin-qubit technology, and advanced semiconductor manufacturing expertise. Intel said the combination enables it to become a full-stack quantum solutions provider. (A spin-qubit is a basic unit in a quantum computer). Terms were provided. But reports say that Intel is paying about $2.3 billion for Classiq. Club stock Intel is up 3.5% in Tuesday’s strong market for tech. Buying a quantum computing platform is not how we would prefer Intel to use the proceeds from its $20 billion common stock offering back in August. We want to see money going to expanding Intel’s manufacturing capacity to support new foundry customers for its next-generation 14A production process. However, we know CEO Lip Bu Tan to be a disciplined operator who spent a lot of energy repairing Intel’s balance sheet. We trust that he would not spend this type of cash on an acquisition if it were too speculative. Intel reports earnings Thursday evening. Announcing an external customer for 14A would go a long way in the market because it would put more value toward the company’s foundry business. In the interim, strong demand for central processing units (CPUs) in data centers should be enough to support earnings. There are no Club earnings after the bell . But there are some major companies on the schedule, including Visa, Baker Hughes, Seagate, Robinhood, and NXP Semiconductors. SK Hynix reports overnight, and its earnings and commentary could influence sentiment of fellow memory semiconductor maker Micron . Before Wednesday’s open, Club name GE Vernova , as well as GE Healthcare, Boston Scientific, Vertiv, and VF Corp report quarterly results. (Jim Cramer’s Charitable Trust is long BA, META, GOOGL, MSFT, MU, GEV. See here for a full list of the stocks.) 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.
