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. Tuesday markets: It is a quiet day at the index level on Wall Street, as the S & P 500, Nasdaq Composite and Dow Jones Industrial Average are all little changed in afternoon trading. Beneath the surface, though, there are some interesting moves afoot. Most notable among them is the 5% jump in shares of Google parent Alphabet after the tech giant disclosed a quantum computing breakthrough. We sold into the strength earlier in the session. Meanwhile, Oracle — a readthrough to the broader artificial intelligence trade — is on pace for its worst day of the year following its earnings miss Monday night. Some of our AI-related stocks, such as Nvidia and Eaton , are lower Tuesday. Elsewhere, shares of Walgreens Boots Alliance took off a little past noon after The Wall Street Journal reported that the pharmacy chain was in talks to sell itself to private-equity firm Sycamore Partners. We continue to keep a close eye on mergers-and-acquisitions activity, given the more accommodative regulatory environment we expect under President-elect Donald Trump. An increase in dealmaking is especially good for Club name Morgan Stanley and, to a lesser extent, Wells Fargo , which has been building up its investment banking business . Broadcom : Shares of Broadcom on Tuesday are down more than 4% as its Thursday evening earnings report looms. Broadcom is another AI stock down on the back of Oracle’s quarter. The lack of upside in Oracle’s results and outlook is bringing out the sellers, who are seizing on the idea that all this investment in AI isn’t worth it if companies aren’t blowing out the numbers. This isn’t the first time we have seen this narrative hit a so-called hyperscaler, as Club holdings Amazon , Meta Platforms , Alphabet , and Microsoft have all been subject to selling pressure on this idea in previous quarters. We disagreed with those pullbacks before and continue to do so. However, we think some of the weakness in Broadcom, specifically, is tied to a note by Citi. The analysts are generally very positive on the company and raised their price target on the stock to $205 a share from $175. Citi expects Broadcom to report strong results Thursday, projecting upside to their sales estimate thanks to the recovery in its non-AI semiconductor business. This part of Broadcom’s business makes up about a third of its sales. But there’s a catch. Citi also expects Broadcom to guide its next quarter sales below the Wall Street consensus due to a slowdown in orders from Alphabet, its largest AI customer. For the full year, Citi expects Broadcom’s AI sales to grow to $15 billion in fiscal 2025 from $12 billion this year — a projection that looks light compared with other analysts. For example, JPMorgan said in its earnings preview Sunday that it expects AI revenues around $17 to $18 billion next year. Broadcom’s AI sales, which are made up of networking solutions and custom chips to tech companies like Alphabet and Meta, are a key driver of the stock’s sentiment, which means a difference of a few billion dollars can have a large impact. We’re not making any calls on Broadcom ahead of Thursday’s release. But it’s worth noting we took advantage of the stock’s pullback to the mid-$160s last month to add to our position . So, we clearly see no change in our long-term thesis around AI wins and synergies from its blockbuster VMWare acquisition. If the stock gets dinged due to a slow start to the year, it could be another opportunity to leg into the position like it was the previous time the company reported . Up next: After the closing bell Tuesday, we’ll get the latest quarterly results from meme stock darling GameStop and arcade operator Dave & Buster’s . Before the opening bell Wednesday, Macy’s will publish its full results. It already provided preliminary numbers in late November but delayed its full earnings release and conference call to allow for a completion of an independent investigation into a delivery expense issue. On the data side, we’ll see the pivotal consumer price index report for November. The inflation index is expected to show an increase of 2.7% year over year. Meanwhile, core CPI, which excludes volatile food and energy prices, is projected to rise 3.3% on an annual basis. It’s one of the last key data points before next week’s Federal Reserve meeting. Traders currently put roughly 86% odds of a quarter-point rate cut at the meeting, according to the CME Group’s FedWatch tool . One more thing: Here’s the Nvidia CEO Jensen Huang story that Jim mentioned on Tuesday’s Morning Meeting. (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.
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.
