On Friday, the CNBC Investment Club held its February monthly meeting, where Jim Cramer and Director of Portfolio Analysis explained each stock in the portfolio. Jim focused specifically on club stocks in the artificial intelligence industry. He calls these stocks “Fourth Industrial Revolution stocks,” borrowing the term from Nvidia CEO Jensen Huang, who often uses the term to describe the AI boom. Check out Jim’s rapid-fire updates on his portfolio, starting with the AI basket and expanding to the rest of his positions in finance, retail, and more. Fourth Industrial Revolution Stock Jim started the meeting by outlining the clear winners in building AI. Nvidia: This chipmaker remains the gold standard for AI computing. The quarterly results and guidance released Wednesday night were surprising and reinforced the idea that the Fourth Industrial Revolution is indeed here. We are not upset by the drop in the stock price after the earnings report. Corning: Jim learned about the new and improved Corning during a trip to a factory in Kentucky. That’s when the CEO of an iPhone glass supplier talked about his data center ambitions, claiming that fiber optics would replace copper wire as a better way to connect data center racks. We tried our best, but the story is better than we expected. Qnity Electronics : We waited patiently for DuPont to spin off this materials supplier for the semiconductor and electronics industries. As a result, it became a huge hit, far exceeding expectations. We are staying for the duration. The story is too good. Eaton : As a leading supplier of electrical equipment that helps connect data centers to the power grid, Eaton is well-positioned, but it’s even better positioned now as it plans to spin off its eMobility division and acquire Boyd Thermal. The acquisition gives Eaton an attractive foothold in liquid cooling technology that prevents Nvidia and other AI chips from overheating. GE Vernova: Data centers obviously need power, and GE Vernova’s gas turbines are in high demand but in short supply. It’s a great recipe for profit growth. It also operates a nuclear reactor business. We need all the power we can get. This company will provide it. Discussing this next group of AI stocks requires a little more nuance. They are all great companies, but they are not created equal when it comes to the Fourth Industrial Revolution. Alphabet : Google’s parent company is the best of the group, with its fast-growing cloud computing division YouTube, its robotaxis division (Waymo), and of course its Gemini chatbot. Oh, and there’s also a Google search for cash cows. Alphabet has a huge capital investment budget, but it cannot afford to ignore this technological transformation. We would like to hold more but are waiting for a drop to the $300 level. Amazon: In the second chair sits the cloud and e-commerce giant. Their AWS cloud business is accelerating wonderfully, and we still love Prime. Advertising business is very profitable and growing. Our capital expenditure budget is huge and puts a strain on our cash flow, but we’re OK with that. However, we do not intend to add any more inventory as we have sufficient inventory. We acknowledge that the company’s recent performance has been disappointing. Metaplatform: Instagram’s parent company is a tough stock to crack. Mark Zuckerberg is lagging behind in the AI model race and now appears to be buying as much Nvidia and AMD hardware as he can. We’re not going to fight him over his data center ambitions. He is too smart and his business is too profitable to need to stress about declining cash flow. Microsoft : Of these four tech giants, this is the one we’re most concerned about. Why are we still in it? We don’t want to repeat the mistake we made last spring when we exited Alphabet early and were forced to buy it back at a higher price at the end of 2025. Microsoft is run by smart people and has options that could make the stock work again. Cisco Systems : This networking supplier is broadly involved in the AI revolution, as it builds the plumbing for the internet. However, the company’s revenue took a hit earlier this month due to rising memory costs. But the company is holding up because its revenue growth engine remains intact and it posted a much higher level of profit a quarter ago. Broadcom: Custom chip and networking business is strong. But the stock has been hurt by the confusing narrative of “AI is cannibalizing software,” given its significant exposure to software as well. We still believe that CEO Hock Tan can take the company even higher, but the stock’s trading pattern warrants attention. CrowdStrike and Palo Alto Networks: Unfortunately, concerns about software disruption have ensnared the big names in cybersecurity. We believe these names are less vulnerable than run-of-the-mill Software-as-a-Service (SaaS) providers. But we’ve also come to terms with the fact that investors are unlikely to pay the same premium for these stocks as before. So we only want to own one of them. CrowdStrike is our preference. Because CrowdStrike has the most unique arsenal to protect our clients from cybercriminals. Salesforce : This is our stock that was hit hardest by the software carnage. It was a severe decline in my stomach. Still, the potential for Agentforce is immense, and we’d like to see if we can build some momentum towards earnings this week. Apple : If you’re worried about the hundreds of billions of dollars hyperscalers are spending, there’s only one solution. That means buying Apple stock, which is the biggest freeloader in this AI race. Even if it means paying Alphabet a small amount to integrate Gemini into iOS, it deserves that spot. This is a smart deal that allows Apple to leverage key models without hurting its cash flow. Rest of the Portfolio After covering the AI basket, Jim moves on to the rest of the portfolio, starting with the financials, where there is a big sell-off on Friday. Capital One and Wells Fargo: Both financial stocks we raised earlier this week were caught in a broader selloff on concerns that AI could disrupt the payments and credit card space. This was a novel debate, and we were happy to take the other side. Both companies have been working hard to incorporate AI into daily business, and Friday’s pullback could make both stocks a buy. Goldman Sachs: A boom in high-quality IPOs is here, and Goldman Sachs will be the top underwriter. There’s also a wave of mergers coming that will surprise us, with Goldman becoming the top advisor. Exactly where you want to go. For members who recently joined and don’t own Goldman, Friday’s drop looks like a great entry point. BlackRock : This asset manager has great technology, and its fourth quarter earnings report showed the business is on track. But the private market exposure that was once a reason to like the stock is starting to look a little troubling. It’s more a question of guilt by association by other, less diligent players in the space. That’s not fun to fight, though. Dover and DuPont: We group these two as pure industries. Dover had a strong quarter with growth across its diversified portfolio. CEO Richard Tobin has positioned the company for a number of exciting bolt-on M&A deals. DuPont, excluding Qnity, focuses on healthcare and water purification. Both are great places. We continue to bet on CEO Lori Koch. Honeywell: With the impending split, this feels like DuPont again. Both the company’s aerospace and automation companies have exciting prospects as independent companies due to scarcity factors. Keep investing because you will be rewarded when the split occurs. Boeing : The aerospace industry is in one of the biggest bull markets we’ve ever seen, which is why we want to own this stock along with Honeywell. CEO Kelly Ortberg is doing a great job of repairing the mess her predecessor caused. This could easily be a stock trading at $300 per share in a year’s time. The company’s recent pullback with no news seems like an opportunity. Linde: Industrial gas suppliers continue to increase power. While the overall global economy remains weak, limiting overall volume growth, Linde has exposure to the semiconductor and space industries. In addition to being a well-run company, there is a lot of growth there. TJX Company: Walmart’s earnings report surprised many, but perhaps the strongest quarter in retail came from TJX, which has benefited from the struggles of traditional department stores. Few retailers can maintain the consistency offered by the parent companies of HomeGoods and TJ Maxx. Home Depot: The home improvement store is doing well, but it’s neither good nor bad. But the company’s stock price will rise long before the economy improves, as it fits the criteria all major portfolio managers look for when interest rates are low. I would like to buy it before making a big move. Costco: With food inflation subdued, Costco is expected to avoid any material negative surprises. The metric we pay attention to is the membership renewal rate. We love the shopping experience that Costco provides, but we don’t want to see any more updates. Starbucks: Under CEO Brian Nicol, the company is undergoing a turnaround. Nicole has inherited a difficult situation, but he is in charge of the case. Soon, Starbucks is expected to achieve fairly good same store numbers due to renovations and closing weak stores. Procter & Gamble: With a new CEO in Shailesh Jejrikar at the helm, the stock is trading as if investors are expecting big, positive changes. P&G has played a role in our portfolio as a defensive stock that benefits from rotation away from AI stocks. But we want to stay here because we feel better days are ahead under Jejurical. Nike: This is also in a rebuilding camp, with CEO Elliott Hill working hard. But it’s a game of catch-up, with stiff competition from the likes of Hoka’s parents Deckers and New Balance. Hill is worth your time, but we stay close to the story. Bristol-Myers Squibb: Out of nowhere, this drug company is showing signs of life. Admittedly, the rollout of the schizophrenia drug Cobenfi has been slower than we expected. But other parts of the company’s portfolio are doing well, particularly in cardiovascular areas. Eli Lilly: A leader in GLP-1 weight loss drugs, Lilly is more volatile than other drug companies due to its high earnings multiple. Additionally, its obesity drug rivalry with Novo Nordisk, which is aggressively cutting prices to regain market share, adds another wrinkle that could cause big swings in the stock price. But there’s still a lot to like here. (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 discusses a stock on CNBC, 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.
