CNBC’s Jim Cramer said Thursday that he thinks the post-earnings movement will provide important takeaways. microsoft and meta platform KK. His message to investors is simple. “Don’t give up on hyperscalers after just one quarter.”
Microsoft stock fell nearly 10% on Thursday, but Meta rose about 10% on Wednesday evening after the two tech giants reported earnings.
In Microsoft’s case, investors were concerned after the software maker announced slowing cloud growth and management gave a weak answer to questions about AI spending. Meanwhile, Wall Street rejoiced after showing that Facebook’s parent company’s AI investments are accelerating revenue growth and overcoming concerns about overspending.
Kramer particularly praised Meta’s advertising business, which accounted for 97% of total revenue in the quarter. “It’s up to[Meta CEO]Mark Zuckerberg to say that AI has enabled his company to offer the world’s largest advertising vehicle to a user base of 3.5 billion daily active users,” Cramer said.
It may be tempting for investors to view Meta as the new winner in the escalating AI arms race, eliminating Microsoft from the competition altogether. But Kramer said that’s a fool’s errand because the market seems to change its tune every quarter. After all, Meta stock fell on its last quarterly earnings report in October, in part due to concerns about increased spending on AI initiatives.
Mr. Kramer also of the alphabet Wall Street Reception. The market had previously feared that OpenAI, the creator of ChatGPT, would threaten Google’s parent company’s dominant search business and that its own AI technology was inferior. But in recent months, the stock has benefited from positive news about Gemini, Google’s large-scale language model. Additionally, Alphabet stock soared in its last earnings report, thanks to strong demand for artificial intelligence that boosted the company’s cloud business.
“When we hear from them next week, we’ll know (they’re) the winner in AI search,” Kramer said of Alphabet.
Then, NvidiaAt the very least, the market shouldn’t change its tune as often as other tech giants, Cramer said. He claimed that the company maintains a huge market share in the AI chip market that is second to none.
“They’re not playing the game at all. They’re running the game. They’re home. That’s the best place to be,” Kramer added.
Disclosure: Cramer’s Charitable Trust, a portfolio used by CNBC Investment Club, owns stock in NVDA, GOOGL, META, and MSFT.
