Every weekday, Jim Cramer’s CNBC Investment Club shares the Homestretch, an afternoon update timed with the final hour of trading on Wall Street. At the end of April, stock prices surged, with the S&P 500 index reaching a new intraday high of over 7,200 for the first time ever. The Nasdaq also saw gains, remaining just shy of its all-time high from Monday. April turned out to be remarkably strong for both indexes, marking their best month since 2020. As the day wrapped up, the S&P 500 had risen more than 10% in April, while the Nasdaq was up by over 15%. Factors like declining oil prices and lower bond yields contributed to the stock market’s positivity on Thursday. Brent crude oil prices have dropped from a wartime high of $126 a barrel in Iran, and yields on the 10-year Treasury note fell due to a slower-than-expected U.S. economic growth.
Moreover, the big four tech giants—Alphabet, Amazon, Microsoft, and Meta—reported their quarterly earnings on the same night, revealing they are ramping up their capital spending significantly as competition in artificial intelligence heats up. It’s quite rare for them to align their financial reports so closely, which might suggest a strategic intent to dominate AI. Together, these four companies are planning to spend at least $695 billion this year—an increase of over 14% from an earlier estimate of $608 billion.
Breaking down their commitments for this year, we see Alphabet planning $180 billion to $190 billion (up from a previous forecast of $175 billion to $185 billion), Amazon stabilizing at $200 billion, Microsoft estimating roughly $190 billion, and Meta aiming for $125 billion to $145 billion (increased from $115 billion to $135 billion). It’s evident that none of these companies are slowing their investments, as they all strive to keep pace in the AI sector. However, the market appears to view capital expenditures differently for those engaged in cloud services (like Alphabet, Amazon, and Microsoft) versus Meta, which hasn’t fully embraced cloud.
This difference in focus sent Alphabet’s stock rising by nearly 10%, hitting another all-time high, while Meta’s stock slid almost 8% during the same session. Over on the horizon, Apple is set to release its financial results after market close. This will be the company’s first financial report since CEO Tim Cook announced John Ternus as his successor, effective September. Analysts are likely to inquire about the leadership transition and Apple’s future strategies in AI and hardware under the new CEO. Ternus, with over two decades in the industry, is expected to maintain a strict operational approach but it remains unclear how involved he was in previous conference calls prior to Cook’s tenure starting in 2011.
Attention will be on device sales in China, the reception of the new MacBook Neo, and service revenue growth. Furthermore, given the rising costs of memory, doubts linger on whether Apple has adequate supply or if they plan to hike device prices to protect profit margins. Memory manufacturers like SanDisk and Western Digital are also set to report their earnings, raising questions on whether their financials can sustain their recent sharp growth driven by a boom in AI-related demand for high-performance storage.
Other companies reporting this evening include Amgen, Stryker, and Agnico Eagle Mines. The following morning, Linde, ExxonMobil, Chevron, and Aon are expected to share their insights. Linde, in particular, might gain from the ongoing global helium shortage due to the situation in Iran, and many are curious about new business developments. As a member of Jim Cramer’s CNBC Investment Club, subscribers receive alerts about trades before he acts on them. Once a trade alert is issued, he waits 45 minutes before executing any transactions within his charitable trust portfolio. If he discusses a stock on CNBC, he issues a trade alert and then waits 72 hours before making any moves. This information is governed by specific terms and privacy policies, and no guaranteed outcomes arise from receipt of the investment club insights.
