Cramer and Marks flag five stocks after AI-linked pullback

Jim Cramer and CNBC Investing Club portfolio director Jeff Marks identified five portfolio holdings they would consider adding to after recent market moves, while also discussing trims in Home Depot and Starbucks. During the club’s July monthly meeting on Thursday, they said Corning, GE Vernova, Eaton, FedEx Freight and Johnson & Johnson stood out as potential purchases, according to CNBC.

The discussion came after sharp gains and reversals in several artificial intelligence-linked stocks. Cramer told club members that rapid, emotion-driven advances can leave shares vulnerable to abrupt declines, though he said he did not believe the underlying businesses of several AI beneficiaries had weakened, CNBC reported.

AI spending remains the central tension

Cramer described the largest cloud and internet platforms as caught between two pressures: investors are scrutinising whether AI capital spending can produce adequate returns, while the companies risk falling behind if they reduce investment in a technology they view as strategic. Rising memory-chip costs are adding to the expense of building data centres, according to CNBC’s account of the meeting.

Within that group, CNBC said the club viewed Alphabet as better placed to finance investment through Google Search, YouTube and Google Cloud. Amazon drew more caution after a loss of spring momentum and concerns about the market’s appetite for additional Amazon debt. Microsoft, according to the club, needs clearer evidence that AI tools such as Copilot can generate revenue growth.

Meta Platforms was presented more positively after its move to sell computing capacity, which Cramer had said could ease investor concerns over AI spending. Apple was distinguished from the other large technology companies because, while it uses memory chips in devices, it is not committing comparable sums to AI data centres, CNBC reported.

Data-centre suppliers in focus

Among infrastructure suppliers, Cramer and Marks said they remained constructive on Nvidia’s business despite weaker recent share performance. They also discussed Broadcom’s role in supplying custom chips for customers seeking alternatives to Nvidia, and Intel’s demand for central processing units, with CEO Lip-Bu Tan working to improve the company’s manufacturing operations, according to CNBC.

Corning was one of the five names highlighted for possible buying. CNBC said the club had taken profits in the stock in June after a strong advance and would have considered buying back a smaller amount on Thursday if trading restrictions had not applied. The club had previously sold 150 shares and discussed buying about 25 shares, according to CNBC.

GE Vernova and Eaton were also cited as possible additions. CNBC said Cramer and Marks linked both companies to data-centre power demand: GE Vernova supplies gas turbines used to generate electricity, while Eaton provides electrical equipment that helps distribute power to server racks.

Freight, healthcare and potential trims

Outside the AI trade, CNBC said the club was tempted to add to FedEx Freight after J.B. Hunt’s results suggested the freight market may be emerging from a multiyear downturn. FedEx itself was described as more focused after separating its less-than-truckload business, with the parcel operation competing against UPS.

Johnson & Johnson was the other non-AI name singled out for potential buying. CNBC said the club viewed the company’s second quarter as blemished by a $150 million revenue shortfall at Abiomed, its heart-pump subsidiary, but did not see that division as sufficient reason to change its broader view given the scale of J&J’s annual revenue and the performance of its pharmaceutical business.

Cramer and Marks also discussed reducing exposure to Home Depot and Starbucks. CNBC said the club acted on Home Depot after the meeting, citing the stock’s sensitivity to interest rates and the possibility that Federal Reserve easing may take longer to arrive. Starbucks was described as a possible trim after a recent rally, even as the club said it still viewed the turnaround under CEO Brian Niccol favourably.

CNBC said the Investing Club sends trade alerts before Cramer executes trades in his charitable trust, with stated waiting periods before transactions. The club also says its information is subject to its terms, conditions and disclaimer, and that no specific outcome or profit is guaranteed.

This story draws on original reporting from CNBC.