Palo Alto rises while Alphabet sinks — plus the latest on Wells Fargo, Broadcom and Apple

Published Mon, Feb 26 20242:29 PM EST

Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street. (We're no longer recording the audio, so we can get this new written feature to members as quickly as possible.) Stocks pulled back as bond yields marched higher after a couple of weaker Treasury auctions. Monday's declines come after the S & P 500 gained more than 1% last week and closed at a new all-time high. PANW surges: We added to our position in Palo Alto Networks Monday morning following our big push last week and at Saturday's Annual Meeting , and the stock has instantly rewarded those who caught it with a double-digit percent move at one point. We don't see any specific catalyst behind this surge, other than investors realizing its platformization strategy will accelerate market share gains. The recent cybersecurity attack on UnitedHealth Group-owned Change Healthcare was further proof that even the largest companies in the world are vulnerable to outside threats. With Monday's gains, Palo Alto Networks has recovered almost half of its post-earnings selloff. Alphabet struggles: But Google's parent company weighed on the portfolio, with shares down more than 4% at one point on concerns about its AI offerings. It always seems like Alphabet 's AI initiatives keep taking one step forward and two steps back, with the latest blunder involving image generation for its Gemini AI model, the company's answer to OpenAI's ChatGPT. In a note from Melius Research, analyst Ben Reitzes argued the stock at 21 times earnings is "cheap for a reason." Adds Jim Cramer: "Ben Reitzes at Melius raises lots of negatives about Google that can be summed up as a lack of discipline, which is why it is the worst of the Super Six." The Super Six are Amazon , Apple , Alphabet, Meta Platforms , Microsoft , and Nvidia . Wells Fargo speaks: Shares of Wells Fargo made a new 52-week high earlier before giving back its gains as part of the broader market dip. Still, the bank's shares fared much better than the broader financials sector Monday. The bank's CFO Michael Santomassimo spoke at the UBS Financial Services Conference, and one of his more closely watched updates was a reiteration of the company's outlook that net interest income will decline 7% to 9% in 2024. We think there's room for upside to this guide since it incorporates six rate cuts and it's highly likely we'll see less than that. However, Santomassimo reminded the room that there are a lot of factors that go into the guide. Quick hits: "Broadcom is all about selling things they got with VMware that they don't need. This is just one," Cramer said. Broadcom struck a deal Monday to sell its End—User Computing division to KKR for $4 billion. "Buffett's cash hoard may be a factor of an unwillingness to get involved in anything that's still down. I wonder if he is selling Apple right here" Cramer added. "His lack of discussion of it made me feel that's the case." Later: The big earnings reports after the closing bell are Unity , Zoom Video , and Workday . One report before the opening bell on Tuesday that we'll be closely monitoring is Lowe's . While we already got a glimpse into the home improvement landscape last week with Home Depot , Lowe's will provide a slightly different view due to its higher exposure to the do-it-yourself (DIY) customer. "Lowe's could be a catalyst that makes it worth buying Stanley Black & Decker with that yield protection," Jim said. (See here for a full list of the stocks in Jim Cramer's Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Alphabet CEO Sundar Pichai walks to lunch at the Allen & Co. Media and Technology Conference in Sun Valley, Idaho, on July 12, 2023.

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