The acquisition at the heart of China’s Nvidia probe, and Palo Alto joins a ‘best ideas’ list
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. Markets : Stocks are up to start the week, with both the S & P 500 and Nasdaq hitting new all-time highs. A positive update on a potential trade deal between the U.S. and China is improving market sentiment, with the two sides reportedly agreeing on a framework that would keep the social media platform TikTok operating in the United States. However, talks could be complicated by China’s crackdown on the U.S. semiconductor industry. China’s Ministry of Commerce announced over the weekend that it opened an anti-dumping probe related to American-made analog integrated circuits. What is Mellanox?: Also, China’s market regulators on Monday said Nvidia was in violation of antitrust monopoly laws tied to its roughly $7 billion acquisition of Mellanox Technologies in 2020. Shares of Nvidia largely shrugged off the news, but they were down a couple of percentage points in premarket trading. Jim Cramer weighed in on the latest twist in Nvidia’s complicated China story during the Morning Meeting. “I am hoping that this company is part of a comprehensive deal” in trade negotiations with China, he said. Jim called China’s accusations toward Nvidia “political motivated.” In a statement to CNBC, an Nvidia spokesperson said: “We comply with the law in all respects. We will continue to cooperate with all relevant government agencies as they evaluate the impact of export controls on competition in the commercial markets.” Acquiring Mellanox and its InfiniBand solutions has been a big part of Nvidia’s data center strategy, bolstering its capabilities on the networking technology used for chip-to-chip communication. The massive computational demands of artificial intelligence workloads adds to the importance of networking equipment. Nvidia has gotten a lot out of the Mellanox deal. Nvidia’s networking revenues reached a record $7.3 billion last quarter, with management calling out “strong demand” across its three main offerings in Spectrum-X ethernet, InfiniBand and NVLink. At an industry conference earlier this month, CFO Colette Kress said: “We are quite fortunate with Mellanox. [It] probably, and nearly is, the best acquisition on the planet that ever happened.” This isn’t the first time Mellanox has been in the crosshairs of Beijing. There were questions about whether Nvidia would get the necessary approvals from China to close the deal because of the U.S.-China trade tensions that existed at the time. Shortly after the Mellanox deal closed in April 2020, Nvidia CEO Jensen Huang appeared on “Mad Money” with Jim. “This is a homerun deal. Man, I’ve been dreaming about this,” Huang said then. Cyber success : Our two cybersecurity stocks, CrowdStrike and Palo Alto Networks , traded higher on Monday and outperformed the tech-heavy Nasdaq. Palo Alto Networks got a boost from Wedbush Securities after it added the stock to its list of “best ideas.” Wedbush called fiscal year 2026 an “inflection year” for Palo Alto Networks’ platformization strategy and believes the $25 billion CyberArk acquisition is underappreciated. Palo Alto Networks reported its fiscal 2025 fourth quarter results in August, and it was one of the best cybersecurity earnings releases we saw all season, with beats across nearly every metric and strong guidance for the year ahead. We’re also bullish on the CyberArk deal, which is why we’ve added to our position twice since the deal was announced. For CrowdStrike, we’re monitoring headlines from its annual Fal.Con conference. It kicked off on Monday, and there will be an investor briefing event on Wednesday. Up Next: There are no major earnings reports after the close on Monday and before the open on Tuesday, but there are two minor names in Dave & Buster’s and Ferguson. On the data side, the August retail sales report and industrial production will be released on Tuesday. It’s all building up to the Federal Reserve’s interest rate decision on Wednesday afternoon. (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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