Jim Cramer stock market Monday: Oil drops as AI spending stays in focus

CNBC’s Jim Cramer stock market Monday briefing pointed to a risk-on start for U.S. equities after the U.S. and Iran paused fighting over the weekend, with Nasdaq futures up about 1.4% and oil prices sharply lower. West Texas Intermediate crude fell about 7% to below $84 a barrel, putting it on track for its largest decline since May, according to CNBC.

The drop in crude offered relief after higher energy prices weighed on markets last week. Cramer said the market’s pressure points also included concern about how much listed technology companies are spending on artificial intelligence infrastructure.

What is moving the stock market Monday?

CNBC cited lower oil prices, stronger futures and renewed scrutiny of AI capital spending as the main themes. For investors, the mechanism is direct: cheaper oil can ease inflation and margin concerns, while large AI infrastructure commitments can pressure stocks if investors doubt the spending will translate into earnings.

Cramer said the recent sell-off in several technology shares showed investors were becoming less tolerant of heavy AI infrastructure outlays. He pointed to Alphabet, which came under pressure even as Google Cloud showed strong demand, as an example of the market asking companies to convert demand into profit.

Nvidia remained central to the AI discussion. The Wall Street Journal reported that Nvidia is considering a $250 billion backstop for OpenAI to support leasing at SoftBank’s data center project in southern Ohio. CNBC noted that the reported figure does not include the chips that would be installed in the facility.

Nvidia also agreed to a $500 billion partnership with South Korea’s SK Group to develop AI infrastructure, according to CNBC. SK Telecom plans a 2-gigawatt data center using Nvidia’s Vera Rubin chips, while Nvidia and SK Hynix also reached a long-term memory supply agreement. Cramer said memory availability remains a bottleneck because supply is tight and new capacity takes time to add.

Memory-chip demand was also visible in China. Changxin Technology Group, known as CXMT, rose 466% in its Shanghai trading debut after its initial public offering, becoming the most valuable China-listed company, CNBC reported. The U.S. government considers CXMT a national-security risk, while Apple is reportedly testing CXMT chips for devices sold in China.

Samsung and Broadcom separately announced a $200 billion agreement to expand work on memory and foundry technologies. CNBC said the deal showed chip designers and manufacturers continuing to invest even as equity investors scrutinize the scale of AI infrastructure spending. Meta, Amazon and Microsoft are due to report earnings this week, according to CNBC.

Which analyst calls stood out?

• Barclays raised its Verizon price target to $46 from $45, while Wells Fargo lifted its target to $47 from $43. Both firms kept hold ratings, according to CNBC. Reuters reported Verizon has signed a fiber deal with Google worth more than $1 billion.
• Wells Fargo cut its Charter Communications target to $101 from $160 and maintained a sell rating. Barclays reduced its target to $115 from $130. CNBC said Charter’s shares fell Friday after another quarter of subscriber declines and a free-cash-flow miss.
• Barclays raised its SLB target to $67 from $64, citing the Middle East rebuild and a data center partnership with Meta, according to CNBC. Bank of America increased its target to $57 from $56.
• Barclays lowered its SAP target to $242 from $255. CNBC said the firm cited less predictable near-term cost execution, even as SAP sees AI demand supporting its second-half outlook.

Cramer’s comments were made in the context of the CNBC Investing Club, which disclosed holdings including Nvidia, Apple and Broadcom. CNBC said Investing Club subscribers receive trade alerts before Cramer trades in his charitable trust portfolio.

This story draws on original reporting from CNBC.