NVIDIA stepped on the bear.Jim Cramer on Starbucks, Abbott’s troubled stocks

Every weekday, CNBC Investment Club with Jim Cramer publishes Homestretch—an actionable afternoon update just in time for the final hour of trading on Wall Street. (We’re no longer recording audio so we can get this new written feature to members as soon as possible.) Markets bounce back as Nvidia turns green: After a slow start, Nvidia stock climbed off its early lows to trade higher on the day. One reason behind this positive reversal may be because large cloud providers and other major tech companies may already be lining up to purchase Nvidia’s latest artificial intelligence hardware. “Amazon CEO Andy Jassy said he would be happy to get as many chips as possible,” Jim Cramer said. But Nvidia’s achievements in advancing artificial intelligence are far more important than just focusing on cloud computing. It will have a positive impact on many real-world applications, such as the healthcare industry. “Nvidia has been working on the time required for drug trials. It will be significantly shortened,” Jim said. He added that over time, these AI-driven improvements in drug discovery could translate into “more money for Danaher,” a life sciences industry holding whose clients include pharmaceuticals company. In the near term, Jim said, keep in mind that Danaher “is in the sweet spot every time you see these $2 billion to $3 billion acquisitions of biotech companies.” In fact, we saw another deal in the biotech space on Tuesday. AstraZeneca agreed to acquire Fusion Pharmaceuticals for up to $2.4 billion. Another announcement that caught our attention is Nvidia bringing its 3D applications platform Omniverse to Apple’s Vision Pro mixed reality headset. “The commercial use of Vision Pro just jumped to the top because (Nvidia CEO Jensen Huang) showed how you could use it to buy a car,” Jim said. “A mock-up is probably better than a test drive because you can buy the car to your own specifications.” In Jim’s view, we call the synergies between the club’s two long-term holdings “own it, don’t trade it” “its” stock. It’s only a matter of time before the market really starts to appreciate Nvidia’s move into software and services, such as those offered by Omniverse. Watch for more exclusive coverage from Kramer and Huang on “Mad Money” on Tuesday and Wednesday nights. MORNING MEETING FOLLOW-UP: Part of Tuesday’s morning meeting focused on Starbucks’ recent woes and the pending litigation affecting Abbott Laboratories. Since Jim couldn’t make it to the morning meeting, he pitched his ideas for both storylines. Regarding Starbucks, he said, “People don’t want to say sell it because maybe that’s what the bottom is like.” The bottom can be viewed in a few different ways. This may have to do with “comparison” or same-store sales, which are currently going through a tough time due to headwinds in the afternoon hours in China, the Middle East and the US. As many analysts have suggested, it could also mean that the valuation cites Starbucks’ cheap price-to-earnings ratio compared to history. On Abbott Labs, Jim said, “If Abbott shares pull back, buy it. Sadly, this litigation risk is business as usual. Here are the numbers; (Johnson & Johnson) There are 80,000 plaintiffs suing it. Abbott’s numbers are too few.” Before we should even think about it, it’s probably going to quadruple, not five. As of January 31, Abbott had 993 lawsuits pending in federal and state courts. GLP-1: It’s hard to go a day without the growing popularity of GLP-1 drugs in the news. Oprah Winfrey hosted Monday night TV special, discussing the health benefits she has enjoyed since taking these revolutionary drugs to help remove the stigma of weight loss medications. We are still trying to figure out what changes these drugs will bring to consumer tastes and habits, But one area where risk is increasingly being looked at is alcoholic beverages. Jim believes Brown-Forman’s stock price plunge to a four-year low may be due to the use of GLP-1. “The company says it’s not possible. But the explanation is simple: why spend Money to buy higher-end wines and spirits because they all taste the same? That’s the GLP-1 dilemma,” he said. However, Cramer doesn’t think all alcoholic beverage companies will fall into this trap. “Beer doesn’t suffer from the GLP-1 dilemma because it is a social drink. The price point of Constellation Brand is also very reasonable,” he added. Constellation Brands shares are currently trading at about $5 a share, about 2% below Club Holdings’ all-time high set in July. Wednesday at a glance: It’s going to be a busy day, with earnings from Chinese online retailer Pinduoduo and packaged food company General Mills in the morning, followed by Broadcom’s AI infrastructure investment event, scheduled for It starts at 12 noon ET. Then, at 2 p.m. ET, we’ll have the policy announcement from the Federal Open Market Committee, and half an hour later, Chairman Powell will hold a press conference. Although no rate cuts or increases are expected, the March meeting is noteworthy because the Fed will release an update on its economic forecasts. This includes forecasts for gross domestic product, unemployment and personal consumption expenditures inflation, as well as a so-called “dot plot” that assesses each FOMC participant’s view on appropriate monetary policy. (See here for a complete list of stocks in the Jim Cramer Charitable Trust.) As a subscriber to Jim Cramer’s CNBC Investing Club, you will receive trade alerts before Jim makes his trades. Jim waits 45 minutes after sending a trade alert before buying or selling stocks in his charitable trust portfolio. If Jim talked about a stock on CNBC TV, he would wait 72 hours after issuing a trade alert before executing the trade. The investment club information above is subject to our Terms and Conditions and Privacy Policy and our Disclaimer. No fiduciary duty or obligation shall exist or arise upon your receipt of any information relating to the Investment Club. No specific results or profits are guaranteed.

Nvidia Corporation co-founder and CEO Jen-Hsun Huang arrives for an event in Taipei, Taiwan, Thursday, January 25, 2024.

Lin Yifei | Bloomberg | Getty Images

Every weekday, CNBC Investment Club with Jim Cramer publishes Homestretch—an actionable afternoon update just in time for the final hour of trading on Wall Street. (We are no longer recording audio so we can make this new written feature available to members as soon as possible.)

About The Author

admin

See author's posts

About The Author

admin

Leave a Reply Cancel reply

Related News

People Also Read