Every weekday, Jim Cramer’s CNBC Investment Club releases the Homestretch, a practical afternoon update to coincide with the last hour of trading on Wall Street. Stocks were rebounding on Friday. After a terrible week, technology drove the market higher on Friday, even as Amazon, which is technically in consumer discretionary power, pulled out following the results. For the week, the S&P 500 and Nasdaq still fell. Fears that AI tools will replace their businesses has led to a sell-off in enterprise software stocks, inflicting major damage on the tech industry. While the Magnificent Seven struggled, with club-name software stocks like Salesforce , CrowdStrike , and Palo Alto Networks down more than 10%, about 11 other club stocks rose more than 5%, helping our diverse portfolio withstand the market pain. The best-performing sector this week was consumer staples, with Bank of America saying 2026 was up 13% across the group, making it the best year in decades. Staples has long been disliked, and the rapidly changing sentiment towards this reliable but low-growth group led us to downgrade Procter & Gamble to a Hold equivalent rating of 2 on Wednesday. Hyperscaler profits are over. The consistent message from management is that spending needs to increase to build out AI infrastructure to meet demand. Metaplatforms said it invested $22.14 billion in the fourth quarter and $72.22 billion in 2025, and expects to spend an additional $115 billion to $135 billion in 2026. Microsoft is spending $37.5 billion on capital expenditures, with analysts modeling $148 billion for the company’s entire fiscal year. Alphabet this week announced it spent $27.5 billion on capital expenditures in the fourth quarter, bringing the total to $91.4 billion. This number is expected to jump to a range of $175 billion to $185 billion by 2026. Ultimately, Amazon spent about $39.5 billion on capital expenditures in the fourth quarter and $128 billion in 2025. In 2026, we plan to invest $200 billion the most aggressively. A doubling of capital spending year over year would be beneficial to the returns and backlogs of so many different companies in the portfolio. On the chip side, you should expect to pay a lot of money for Nvidia’s latest GPU. In the industrial sector, Eaton electrical equipment is used within data centers, and power data centers require natural gas turbines from GE Vernova. The company also provides electrification and grid management solutions. Dover manufactures heat exchangers used to cool servers in data centers. Corning fiber cabling is essential for connecting AI data centers. Cisco Systems and Qnity Electronics are also playing a key role in building AI. The stock to watch is Broadcom. The semiconductor and infrastructure software company’s stock is down about 4% since the beginning of the year and 20% from its Dec. 10 all-time high of about $413. Based on what we’ve learned about spending plans from Alphabet and Meta, Broadcom’s major custom chip customers, we’ve decided to revert Broadcom to a 1 rating, which is equivalent to Buy. Alphabet’s doubling of its capital spending plans further strengthens confidence that Broadcom can beat profit estimates this year, making a pullback from the stock’s highs an attractive entry point. Broadcom will report earnings early next month. The pace of earnings season will slow next week. However, about 15% of S&P 500 companies still plan to report. Within the portfolio, we get quarterly reports from DuPont and Cisco. Other big earnings reports include Marriott, Coca-Cola, McDonald’s, Dutch Brothers, Applied Materials, and CVS Health. Next week brings more economic data, including December retail sales and January consumer price index. The most important economic indicator is the January jobs report, which will be released on Wednesday, but was postponed last week due to the brief government shutdown. This week, markets didn’t like the fact that job openings in December fell to their lowest level in more than five years, and Challenger Statistics’ January layoffs report hit the highest level since 2009. Economists now expect nonfarm payrolls to rise by about 70,000 in January, with the national unemployment rate unchanged at 4.4%. (See here for a complete list of Jim Cramer Charitable Trust stocks.) As a subscriber to Jim Cramer’s CNBC Investment Club, you will receive trade alerts before Jim makes a trade. After Jim sends a trade alert, he waits 45 minutes before buying or selling stocks in his charitable trust’s portfolio. If Jim talks about a stock on CNBC TV, he will issue a trade alert and then wait 72 hours before executing the trade. The above investment club information is subject to our Terms of Use and Privacy Policy, along with our disclaimer. No fiduciary duties or obligations exist or arise from your receipt of information provided in connection with the Investment Club. No specific results or benefits are guaranteed.
