What Cramer is watching Thursday — Nvidia, Salesforce down; big hopes for new Eli Lilly drug

Published Thu, Aug 25 20229:14 AM EDT

What I am looking at Aug. 25, 2022 Nvidia (NVDA) was not strong in gaming and not strong in data center in its latest quarter. You can say there's a 30% decline in demand for the aggregate at this company run by CEO Jensen Huang. There is also a giant amount of inventory in the system that they took a charge for. The Club holding also lowered guidance. The stock fell 3% in the premarket to around $167. The analysts seemed baffled, but this is the same pattern that we saw in 2018: Stock runs from $49 per share in Jan to $72 in October and then we got a preannouncement, which dropped the stock to $40 in November and then another clearing event to $32, which turned out to be a test-and-hold bottom (May of 2019) and then off to the races. This one is a little more complicated: Ether plus model changes plus slowing Chinese data centers, but this should end up similar with a bottom — again, to be tested. Almost every Wall Street research outfit cut price targets but said bottoming and Citi adds a bizarre positive catalyst call. ( Read our earnings analysis .) Salesforce (CRM): This Club holding misjudged its quarter; not on the dollar but on the ability to close deals. The Dow stock dropped roughly 7.5% in the premarket. Still plenty to be digitized including, Veterans Affairs Department, Mondelez (MDLZ) and L'Oreal's Kiehl's brand but deals will take some time now and the stock may not reflect all of the downside. The stock was at $309 per share in November during the original pivot, and it's now back at its May bottom. It's most likely still too rich. Buyback is real but so is hope that there will be less chaos in the world. Clients are more "measured," co-CEO Marc Benioff told me Wednesday after the earnings release. There are endless price target cuts on the Street. ( Read our earnings analysis .) Snowflake (SNOW), on the other hand, thrives on the chaos, and it's now going to change the paradigm with its rent the cloud model. The one and not done analytic hiring is much cheaper than the traditional hire cloud for three years contract. The stock soared 19% in the premarket on a revenue beat. While there's less visibility, there's much more traction in a world where you have a Super Bowl event but then don't need the cloud as much. Why is this model so good? When you can't find the engineers yourself then you can let them come to you. I equate this model to Uber (UBER) versus leasing a car. Three-year "lease of a car" with some analytical ability versus an "Uber deluxe" with a driver powered by artificial intelligence. Just a brilliant model for the slowdown. We are exhibiting very fast growth and "needlessly" GAAP positive, CEO Frank Slootman told me after releasing the quarter. He's back and he will take this company and make it much bigger. Next stop $300? Multiple price target boosts. Splunk (SPLK) looks a little better in its reported quarter. But I think it is in the crosshairs of Snowflake. SPLK shares down 10% in Thursday's premarket. Peloton (PTON): One day after soaring 20% on news the company will sell on Amazon (AMZN), the stock sinks 14% in Thursday's premarket widening quarterly losses and lower than expected revenue of $678.7 million. CEO Barry McCarthy, who took over in February from founder John Foley, has a lot of wood to chop. Negative free cash flow of $411.9 million. Shockingly that much less than year-ago $678.4 million going out the door. Citi raises price target on Club holding Eli Lilly (LLY) to $370 per share from $285. Analyst Andrew Baum raises Type-2 diabetes drug Mounjaro, also in trials for obesity, sales estimates to $25 billion from $15 billion. Prescription trends strong. I think this will be the biggest drug of all time, if gets regulatory approval to treat obesity. Burlington Stores (BURL) did cut numbers: Comp sales down 19% but had been estimated down 15% to 30%. Peer of TJX Companies (TJX), which the Club started a new position in Wednesday. TJX, T.J. Maxx, Marshall's and HomeGoods, best situated to capitalize on inventory gluts at the likes of Walmart (WMT) and Target (TGT). As we noted in our commentary, we believe TJX is the superior operator to Burlington. Williams-Sonoma (WSM): True blow out with quarterly same-store sales up 11.3%, nearly doubling estimates. Earnings-per-share: $3.87 versus $3.54 expected, just very strong. CEO Laura Alber is on "Mad Money" Thursday evening. No promotion, positive demand, strong order fulfillment. Effective digital-first-but-not-digital-only strategy. Business-to-business a $1 billion endeavor, a 32% increase in demand. International coming, still supply chain issues. Beats across the board in same-store sales by category: Pottery Barn up 21.5%; Pottery Barn Kids and Teens up 5.3%; West Elm up 6.1%; namesake Williams-Sonoma stores up 0.5%. Lead times must get lower. Early returns positive on holiday seasons. Williams-Sonoma has better month to month. Gross margin near historic high 43.5%. Share buyback $766 million. Multiple price target boosts. Mizuho says buy fintech SoFi (SOFI) off President Joe Biden student loan forgiveness program. It's the part about ending payment extensions at year-end. Analyst Dan Dolev says this could drive loan refinances. Homebuilders: Bank of America takes the best, Lennar (LEN), to a sell from hold (underperform from neutral). KB Home (KBH) lowered to hold from buy; Toll Brothers (TOL) also to hold from buy. (Jim Cramer's Charitable Trust is long NVDA, CRM and LLY. See here for a full list of the stocks.) 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Nvidia CEO Jensen Huang

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What I am looking at Aug. 25, 2022

Nvidia (NVDA) was not strong in gaming and not strong in data center in its latest quarter. You can say there's a 30% decline in demand for the aggregate at this company run by CEO Jensen Huang. There is also a giant amount of inventory in the system that they took a charge for. The Club holding also lowered guidance. The stock fell 3% in the premarket to around $167.