Cisco’s memory-price warning is having ripple effects across the tech sector
Every weekday the CNBC Investing Club with Jim Cramer holds a “Morning Meeting” livestream at 10:20 a.m. ET. Here’s a recap of Thursday’s key moments. 1. Wall Street is lower Thursday, with declines picking up steam after the conclusion of the Morning Meeting. The market rotation into cyclicals from technology stocks, especially software, continues to play out. Industrials, a classic cyclical sector, are among the strongest groups in the market and are doing a lot of the heavy lifting in the portfolio, as Jim Cramer highlighted in a column earlier Thursday. Club holdings Dupont , Dover , Honeywell , Linde , GE Vernova , and Eaton all seeing extraordinary moves year-to-date, all while the S & P 500 has made only a slight move higher over the same period. With our trusted S & P Oscillator nearing overbought territory, we’re maintaining portfolio discipline and making some trims Thursday in Eaton and Procter & Gamble after those stocks benefited from the rotation. 2. Our decision earlier this week to trim Cisco ahead of its earnings print Wednesday night proved prescient, as shares slide more than 10% on Thursday. There was plenty to like in the beat-and-raise quarter , such as networking order growth accelerating to more than 20%, marking its sixth straight quarter of double-digit growth amid AI hardware demand. But a dip in the company’s gross margins due to rising memory prices spooked investors. Still, we’re not bailing on the stock here because management is taking action through pricing power, has showed robust order growth and still managed to raise its full-year earnings guidance. 3. Caught up in the fray of Cisco’s memory-price warning is fellow Club name Apple , with shares down more than 3% on Thursday. PC makers Dell Technologies and HP Inc. , which we don’t own, are being hit even harder, down 9% and 6%, respectively. Memory is an important input for all their products, and investors have been on edge about the implications for their margins later this year. That’s why Cisco’s commentary is rippling into their stocks. In other Apple news, Bloomberg News reported that the iPhone maker is running into some problems with their tests of the Siri upgrade. It appears the plan was for a full launch in March, but now it’s going to be more of a staggered rollout of new features throughout the year. We hope to see that play out. Apple’s partnership with Google’s Gemini AI models made us more optimistic that this will be a valuable feature. While the news is a little disappointing, even without the enhanced Siri, Apple is seeing strong iPhone sales right now, so a slower Siri rollout may not make it a thesis breaker. (Jim Cramer’s Charitable Trust is long DD, DOV, HON, LIN, GEV, ETN, CSCO, AAPL. See here for a full list of the stocks.) 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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