Jim Cramer’s update on our AI stocks and the rest of the portfolio
On Friday, the CNBC Investing Club held its February Monthly Meeting, where Jim Cramer and Director of Portfolio Analysis ran through each stock in the portfolio. Jim put a special focus on the Club stocks within the artificial intelligence trade. He’s dubbed them the “Fourth Industrial Revolution stocks,” borrowing the term from Nvidia CEO Jensen Huang, who has often used it to describe the AI boom. Here is Jim’s rapid-fire update on the portfolio, beginning with the AI basket before broadening to our remaining positions across financials, retail and more. Fourth industrial revolution stocks Jim started the meeting by running through the clear-cut winners of the AI buildout. Nvidia : The chipmaker remains the gold standard in AI computing. Its quarterly results and guidance on Wednesday night were stunning and reinforced the notion that a Fourth Industrial Revolution is, in fact, upon us. We’re not perturbed by the stock’s back-to-back weak sessions following the earnings report . Corning : Jim learned about the new-and-improved Corning on his trip to its Kentucky factory, when the iPhone glass supplier’s CEO talked up its data center ambitions and contended fiber optics will replace copper as a better way to connect data center racks. We went all in, and the story is better than even we thought. Qnity Electronics : We waited patiently for DuPont to spin off this materials supplier for the semiconductor and electronics industries. It’s paid off with a huge hit, much more than we even thought we could get. We are staying for the duration. The story is just too good. Eaton : As the premier supplier of electrical equipment that helps connect data centers to the grid, Eaton is in an excellent spot, and even more so now that it’s planning to spin off its eMobility unit and plans to buy Boyd Thermal. The acquisition will give Eaton an attractive foothold in liquid cooling, a technology that helps keep AI chips from Nvidia and others from overheating. GE Vernova : Data centers obviously need electricity, and GE Vernova’s gas turbines are in high demand but short in supply. That’s a great recipe for profit growth. It also has a nuclear reactor business. We will need all the power we can get. This company will provide it. A little more nuance is needed in discussing this next group of AI stocks. They’re all great companies, but they are not created equal when it comes to the Fourth Industrial Revolution. Alphabet : The Google parent is the best of this group, with YouTube, a fast-growing cloud computing division, its robotaxi unit (Waymo), and, of course, the Gemini chatbot. Oh, and there’s cash cow Google Search, too. While Alphabet’s capex budget is huge, it cannot afford to sit out this technology transformation. We want to own more, but are waiting for a pullback to the $300 level. Amazon : In the second chair is the cloud and e-commerce giant. Its AWS cloud business is excellent and accelerating, and we still love Prime. The ad business is very profitable and growing. Its capex budget is massive and pressuring cash flows, though we’re fine with it. However, we own enough stock and aren’t looking to add more. We recognize its recent performance has been disappointing. Meta Platforms : The Instagram parent is a tough stock to crack. It looks like Mark Zuckerberg fell behind in the AI model race and is now buying as much Nvidia and AMD hardware as he can. We don’t want to fight him on his data center ambitions. He’s too smart, and his businesses are too lucrative to stress about declines in cash flow. Microsoft : Of these four tech titans, this is the one we’re most worried about. Why are we still in it? We don’t want to repeat the mistake we made last spring by prematurely exiting Alphabet, which forced us to buy back in at higher prices at the end of 2025. Microsoft is run by smart people and has optionality that could get shares working again. Cisco Systems : The networking supplier builds the plumbing for the internet, so it has extensive exposure to the AI revolution. However, elevated memory costs caused the stock to get hit on earnings earlier this month. We’re holding on, though, because the topline growth drivers are still intact and we booked profits before the quarter at much higher levels. Broadcom : Its custom chip and networking business is on fire. But given it also has substantial software exposure, the stock has been hurt by the “AI is eating software” disruption narrative. We still believe CEO Hock Tan will lead us higher, but the stock’s trading pattern bears watching. CrowdStrike and Palo Alto Networks : The software disruption worries have, regrettably, ensnared the cybersecurity names. We don’t think these names are as vulnerable as run-of-the-mill software-as-a-service (SaaS) providers. But we’ve also made peace with the fact that investors are unlikely to pay the same premium for these stocks as before. So, we only want to own one of them, and CrowdStrike is our preference because it has the most proprietary weapons to defend its clients from cyber miscreants. Salesforce : This has been our hardest-hit stock in the software carnage. It’s been a tough decline to stomach. Still, the possibilities of Agentforce are immense, and we want to see if we can’t get some momentum going after earnings this wee k. Apple : If you are worried about the hundreds of billions of dollars the hyperscalers are spending, there is only one solution. That is to buy Apple stock, the greatest freeloader in this AI race. It deserves its status, even though it’s going to pay Alphabet a small amount to integrate Gemini into iOS. It’s a smart deal that enables Apple to tap into a leading model without sapping its cash flows. The rest of the portfolio After covering the AI basket, Jim moved on to the rest of the portfolio, starting with the financials, where a big sell-off is underway on Friday. Capital One and Wells Fargo : We scooped up additional shares of both financials earlier this week, which were swept up in a broader sell-off amid concerns that AI could disrupt the payments and credit card space. It’s a novel argument that we were happy to take the other side of. Both firms have worked hard to integrate AI into their day-to-day businesses, and their stocks look like buys during Friday’s pullback. Goldman Sachs : A high-quality IPO boom is coming, and Goldman Sachs will be the top underwriter. We also see a wave of mergers coming that will dazzle us, and Goldman will be the top adviser. Just where you want to be. For members who recently joined and don’t own any Goldman, Friday’s decline looks like a terrific entry point. BlackRock : The asset manager has good technology, and its fourth-quarter earnings report showed a business humming along. But its exposure to private markets, once a reason to like the stock, has started to look a little more troublesome. It’s more of a guilt-by-association problem because of other, less diligent players in the space. Nevertheless, that’s not a fun thing to fight. Dover and DuPont : We’re grouping these two together as pure-play industrials. Dover had a strong quarter , with growth across its diversified portfolio, and CEO Richard Tobin has positioned the company for a number of exciting bolt-on mergers and acquisitions. DuPont, minus Qnity, has a big focus on health care and water purification. Both are great places to be. We’re continuing to bet on CEO Lori Koch. Honeywell : With a looming split, this feels like DuPont all over again. Both its aerospace and automation companies have exciting prospects as standalone firms because of the scarcity factor. When the split occurs, we will be rewarded, so we’re staying invested. Boeing : Aerospace is in one of the greatest bull markets we’ve seen, and that’s why we want to own this stock along with Honeywell. CEO Kelly Ortberg is doing a remarkable job fixing the mess that his predecessors made. This could easily be a stock trading at $300 a share a year from now. Its recent pullback on seemingly no news looks like an opportunity. Linde : The industrial gas supplier just keeps powering higher. While the broader global economy remains sluggish and limits overall volume growth, Linde has exposure to the semiconductor and space industries. There’s plenty of growth there, on top of it being a well-run firm. TJX Companies : Walmart’s earnings report wowed many people, but the strongest quarter in retail arguably came from TJX, which benefits from the struggles of traditional department stores. Very few retailers can maintain the consistency that the parent company of HomeGoods and T.J. Maxx provides. Home Depot : The home-improvement retailer is doing fine, not great, not bad. But its stock will take off well before business gets better because it fits the bill every large portfolio manager seeks when interest rates are going down. You want to buy it before the big move. Costco : With food inflation cooling, Costco should hopefully be able to avoid any real negative surprises. The metric we’re watching is membership renewal rates. As much as we love the shopping experience that Costco offers, we don’t want to see any further declines in renewals. Starbucks : The turnaround under CEO Brian Niccol is coming together. Niccol took over a troubled situation, but he’s on the case. Soon, we expect Starbucks to deliver some seriously good comparable-store numbers due to refurbishments and the closing of weaker stores. Procter & Gamble : With a new CEO at the helm in Shailesh Jejurikar, the stock is trading as if investors expect big, positive changes. P & G has served its role in our portfolio as a defensive name that benefits from rotations away from AI stocks. But we sense better days ahead under Jejurikar, so we want to stick around. Nike : Also in the turnaround camp, with CEO Elliott Hill doing his best. But it’s a game of catch-up, and there’s some serious competition from the likes of Hoka parent Deckers and New Balance. Hill deserves time, but we’re staying close to the story. Bristol Myers Squibb : Out of nowhere, the drugmaker is showing signs of life. Admittedly, the schizophrenia drug Cobenfy has had a slower rollout than we hoped. But other parts of its portfolio, especially in the cardiovascular space, are doing well. Eli Lilly : The leader in GLP-1 weight-loss drugs, Lilly’s higher earnings multiple makes it more volatile than other drugmakers. Plus, its obesity treatment rivalry with Novo Nordisk, which is willing to cut prices to regain market share, adds another wrinkle that can drive big stock swings. But there remains a lot to like here. (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) 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