Nvidia stomps the bears. Plus, Cramer’s thoughts on 2 struggling portfolio names
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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. (We’re no longer recording the audio, so we can get this new written feature to members as quickly as possible.) Markets rebound as Nvidia goes green: After a slow start to the session , Nvidia shares climbed out of their early hole and traded higher on the day. One reason behind the positive reversal could an understanding that large cloud providers and other major tech companies are likely already lining up to get their hands on Nvidia’s newest artificial intelligence hardware. “Amazon’s CEO, Andy Jassy, he said would be happy to get as many of the chips he could get his hands on,” Jim Cramer said. But what Nvidia has accomplished to advance AI is far more important than simply looking at cloud computing. It will have a positive impact on many real-world applications, like the health-care industry. “Nvidia is all over the time it takes to do a drug trial. It is going to shorten it dramatically,” Jim said. Over time, he added, these AI-fueled improvements in drug discovery could translate to “more money for Danaher,” a Club holding in the life-sciences industry whose customers include pharmaceutical companies. In the immediate near term, remember that Danaher “is in the sweet spot whenever you see these $2 billion to $3 billion takeovers of biotechs,” Jim said. Indeed, we saw another one of those deals in the biotech space Tuesday. AstraZeneca agreed to buy Fusion Pharmaceuticals for up to $2.4 billion. Another announcement that got our attention was Nvidia bringing the its 3D applications platform Omniverse to Apple ‘s Vision Pro mixed reality headsets. “The commercial uses for the Vision Pro just jumped to the top because [Nvidia CEO Jensen Huang] showed how you would buy a car with it,” Jim said. “The simulation may be better than a test drive because you can then ask for the car to your specs.” We call that synergy between two long-standing Club holdings that are “own it, don’t trade it” stocks in Jim’s view. It’s only a matter of time before the market really starts to appreciate Nvidia’s push into software and services, like what the Omniverse provides. Catch more of Cramer’s exclusive with Huang on “Mad Money” on Tuesday and Wednesday nights. Morning Meeting follow up: Part of Tuesday’s Morning Meeting focused on the recent struggles at Starbucks and a litigation overhang impacting Abbott Laboratories . Since Jim couldn’t make the Morning Meeting, he offered his thoughts on the two storylines. Regarding Starbucks, he said, “People don’t want to say sell it because perhaps this is what trough looks like.” Trough may be viewed in a few different ways. It could be about “comps,” or same-store sales, which are going through a rough patch right now due to headwinds in China, the Middle East, and the afternoon daypart in the U.S. It also could mean valuation, as many analysts have cited Starbucks’ cheap price-to-earnings ratio versus history. On Abbott Labs, Jim said, “If Abbott’s stock goes back down buy it. This exposure to lawsuits is, sadly, business as usual. It’s the numbers; [Johnson & Johnson] has 80,000 plaintiffs suing it. Abbott has such a small number it could quadruple, no quintuple, before we should even factor it in.” As of Jan. 31, Abbott had 993 lawsuits pending in federal and state courts. GLP-1s: It’s hard to go a day without the increasingly popular drugs known as GLP-1s in the news. Oprah Winfrey hosted a TV special Monday night, discussing the health benefits she has enjoyed since taking these revolutionary medications to help destigmatize weight-loss drugs. We are all still trying to figure out exactly what changes in consumer tastes and habits these drugs will bring, but one area that increasingly looks at risk is in alcoholic beverages. Jim thinks the decline in Brown-Forman shares to a four-year low may be explained by GLP-1 use. “The company says no way. But the explanation is a simple one: Why pay up for higher end wine and spirits when they all taste the same? This is the GLP-1 dilemma,” he said. However, Cramer doesn’t think all alcoholic beverage companies fall into this trap. “Beer does not suffer from the GLP-1 dilemma because it is a social drink. And Constellation Brands’ price points are reasonable,” he added. Shares of Constellation Brands currently trade about $5 per share, or roughly 2%, off the Club holding’s all-time high reached in July. A peek at Wednesday : It’s going to be a busy day with earnings in the morning from Chinese online retailer Pinduoduo and packaged food company General Mills , followed by Broadcom’s AI Infrastructure Invest Event, which is set to kick off at 12 p.m. ET. Then, at 2 p.m. ET, we’ll get a policy announcement from the Federal Reserve’s Federal Open Market Committee followed a half-hour later by Chair Jerome Powell’s press conference. Although no interest rate cut — or hike, for that matter — is expected, the March meeting is notable because the Fed will release an update to their economic projection materials. This includes projections for gross domestic product, the unemployment rate, and PCE inflation, as well as the so-called “dot plots,” which asses each FOMC participants view of appropriate monetary policy. (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.
Jensen Huang, co-founder and chief executive officer of Nvidia Corp., arrives at an event in Taipei, Taiwan, on Thursday, Jan. 25, 2024.
Lam Yik Fei | Bloomberg | Getty Images
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. (We’re no longer recording the audio, so we can get this new written feature to members as quickly as possible.)
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