We’re raising our Nvidia price target — plus, reports on Oracle’s big new customer
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. Market moves : The S & P 500 hit another new record high on Wednesday. The gains are mostly centered around technology and beneficiaries of the AI Infrastructure buildout, while most consumer stocks and health care lagged. Bond yields were down slightly after the August producer price index surprisingly declined from July. Barring a major surprise from Thursday’s consumer price index, odds are the Federal Reserve will cut interest rates by 25 basis points at its meeting next week. The market currently favors a total of three Fed cuts by year-end. Ad alliance : Netflix and Amazon announced a new partnership on Wednesday, which will enable advertisers using Amazon’s demand-side platform (DSP) to access Netflix’s premium ad inventory. The offering will be available in major markets like the United States, the United Kingdom, France, Spain, Mexico, Canada, Japan, Brazil, Italy, Germany, and Australia beginning in the fourth quarter. Netflix has previously announced programmatic partnerships with Display & Video 360 from Alphabet ‘s Google, Trade Desk , Microsoft , and Yahoo, but the publication Digiday points out that adding Amazon to the fold gives advertisers access to commerce data. “That gives advertisers something beyond just reach — signals they can actually use to power their ads on Netflix,” Digiday said . We talked in June about a story that said advertisers were moving “millions of dollars” in budgets from Trade Desk to Amazon’s DSP for many reasons, including lower fees, a better interface, and greater measurement visibility. This latest deal with Netflix is further proof that it has become a real player in the streaming ad market. Despite the positive news, Amazon shares traded lower on Wednesday. The biggest driver of the stock at the moment is Amazon Web Services, and whether it’s losing ground to competitors. Oracle’s backlog and guidance reignited those fears. We think the demise of AWS has been greatly exaggerated, but the cloud computing unit will need to post better growth to change the narrative. Oracle boom : Oracle ‘s staggering backlog growth and multi-year cloud infrastructure revenue framework were pushing the stock up more than 40%, and those gains are bringing up a lot of other stocks with it. From chipmakers like Broadcom and Nvidia , to electrical equipment provider Eaton , data-center cooling specialist Vertiv , and power generation equipment manufacturer GE Vernova , we’re seeing some major market moves in reaction to Oracle. If Oracle delivers on its financial plan of delivering $114 billion of cloud infrastructure revenue in its 2029 fiscal year, that’s going to require a lot more computing power. It won’t only be Oracle. Microsoft, Alphabet, and Amazon will need to keep investing as the cloud computing race heats up. Within Oracle’s backlog is a $300 billion computing deal from OpenAI that spans roughly five years, according to The Wall Street Journal . According to the report, this single deal will require 4.5 Gigawatts of power capacity, which is equivalent to the amount of power consumed by about four million homes. PT boost : Given these dynamics, we have more confidence in the long-term outlook for AI infrastructure spending and its sustainability. As a result, we are increasing our Nvidia price target to $200 from $170. We’ll continue to evaluate Broadcom for a price target update following its now 20% move since reporting earnings on Sept. 4. Up next : There are no major earnings reports after the closing bell on Wednesday. Kroger reports before Thursday’s opening bell. As mentioned above, we will get CPI, as well as a look at weekly jobless claims figures. (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.
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