Red-hot Arm soars to another all-time high. What’s fueling the move this time?
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. The S & P 500 and Nasdaq powered higher on Thursday, with both indexes touching all-time highs during the session. Helping fuel the gains, Axios reported that the U.S. and Iran agreed to a memorandum of understanding to keep their ceasefire going and begin talks on Tehran’s nuclear program. While welcoming these encouraging headlines on the war, this is hardly an all-clear sign. It was only a few hours ago that we were reading about the U.S. and Iran trading airstrikes , causing a spike in oil prices. Following the news, oil has basically turned flat on the day. Some of our best portfolio stocks are CrowdStrike and Palo Alto Networks . These two cybersecurity providers were unfairly dragged down Wednesday in sympathy with peer ZScaler ‘s earnings blowup. We wrote that their declines weren’t cause for concern , and we’re now seeing the buyers step in. CrowdStrike and Palo Alto were each up roughly 4%. Another mover that caught our eye: Microsoft , which gained more than 3.5% on the session and has now erased all its late April post-earnings losses . The Information, a tech-focused publication, reported Microsoft will debut a new coding model next week at its Build developer conference . One of the reasons why we put Microsoft on a short leash is because we’re worried that its AI innovation is lagging behind the likes of OpenAI, Anthropic, and Alphabet ‘s Google. Needless to say, we’re glad to hear about product announcements on the horizon. The big question is: Will the moves be effective and well-received? Our biggest mover by a mile is Arm Holdings . Shares soared more than 13.5% on Thursday afternoon, pushing its one-month gains north of 73% — easily the best performer in our portfolio in that stretch. The stock has more than tripled year to date. After sliding nearly 6% on Wednesday, it is on track for another record close. Arm is no stranger to massive single-day moves these days, thanks to all the excitement about the growing importance of central processing units (CPUs) for agentic AI systems; the same goes for Intel and Advanced Micro Devices , the two other main data center CPU suppliers. Interestingly, they’re seeing divergent performance Thursday. While Arm was flying, AMD was up a more modest 5%, and Intel was down almost 1%. We can’t pinpoint an exact reason for Arm’s major outperformance. But there are a few different headlines that, when taken together, could be fueling another wave of buying. Mizuho Securities raised its price target on Arm shares to $360 from $290, citing tailwinds from both the company’s new in-house CPU efforts and its traditional business collecting royalties and licensing fees for its CPU intellectual property. It’s difficult to imagine this is the main driver of Thursday’s action, but we wanted to call it out as a sign that Wall Street isn’t souring on the stock despite its big run. Snowflake announced a $6 billion cloud-computing spending commitment with Amazon — and it explicitly mentions that Snowflake will use Amazon’s Graviton CPUs as part of this multiyear agreement. This is very positive for Amazon’s computing business, as Jim mentioned on Thursday’s Morning Meeting . But the Arm angle is this: Amazon licenses the Arm instruction set for Graviton. In very simple terms, the more demand Amazon sees for Graviton, the better it is for Arm because Arm collects a royalty on every chip that contains its IP. Amazon first debuted Arm-based Graviton in 2018 , and it’s now on its fifth generation . Excitement is building for Nvidia ‘s presentation next week at the Computex conference in Taiwan after CEO Jensen Huang said the company has a “surprise new product.” Nvidia and Arm have a close partnership. Nvidia is another licensee of Arm IP for its Grace and Vera CPUs, and we saw last week that what Nvidia says can move Arm’s stock. Shares of Arm soared after Nvidia’s bullish CPU comments on its May 20 earnings call. Huang’s keynote is Monday morning, Taiwan local time (Taipei is 12 hours ahead of New York). Arm CEO Rene Haas is also giving a Computex keynote on Tuesday morning local time. We don’t know what announcements may be coming, but the overall tone on AI demand should be quite upbeat. We trimmed Arm on Tuesday because the stock has had a parabolic move, and our discipline requires us to lock in gains in case the momentum quickly fades. Big earnings are on our radar after Thursday’s closing bell. Club name Costco leads the group, and we’ll pay close attention to its membership metrics . Fellow retailers American Eagle and Gap will provide a look at consumer spending trends for clothes. We’ll also hear from Dell , which will offer another read on AI server demand, and cybersecurity providers Okta and SentinelOne . The earnings calendar is light on Friday morning. On the economic data side, the Census Bureau’s Monthly wholesale trade survey, which figures into quarterly GDP estimates, is due out at 8:30 a.m. ET. (See here for a full list of the stocks in Jim Cramer’s Charitable Trust, including CRWD, PANW, MSFT, GOOGL, ARM, AMZN, NVDA, COST.) 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. 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