3 of our stocks surged in the AI trade came back. 3 others stumbled
The stock market has experienced a significant surge since the last CNBC Investing Club Monthly Meeting, with the artificial intelligence trade making a strong comeback. The tech-heavy Nasdaq led the way, climbing 2.7% over the period, while the S&P 500 gained 2.6% and the Dow Jones Industrial Average advanced 2.3%. Despite the overall gains, there was plenty of volatility beneath the surface, including the forced unwinding of Situational Awareness, a highly leveraged AI-focused hedge fund that briefly pressured some of the market's biggest winners.
The market's comeback was driven in part by strong performances from several stocks in the portfolio. Microsoft was one of the top performers, surging 22.8% after delivering strong quarterly results that showed investors what successful AI spending looks like. The company's ability to generate $19 billion in free cash flow while keeping its capital spending outlook relatively disciplined gave investors greater confidence that Microsoft's massive AI investments are translating into meaningful returns. According to Jim, "Microsoft has gone from most hated to most loved," and he urged investors to "stay long. Do not touch it."
Market Volatility
As the market continued to push higher, some of the stocks in the portfolio experienced significant gains, while others stumbled. Eaton was another top performer, rebounding sharply after posting a strong quarter. The electrical equipment supplier beat both top and bottom line expectations and raised its full-year organic growth and earnings outlook, while orders and backlog surged across its electrical businesses. Jim called the hedge fund blow-up a "clearing event," and Eaton's quarter gave investors another reason to return to the group. The company remains a picks-and-shovels play on the data center buildout, providing AI exposure without having to bet directly on the technology itself.
Salesforce was also a top performer, rallying as investors warmed back up to software after spending much of the first half of the year worried that AI would disrupt traditional software-as-a-service (SaaS) business models. The company's strong results, combined with those of Microsoft and Palantir, added fuel to the comeback. While Salesforce remains a show-me story, the rally demonstrates how quickly sentiment can change once expectations get low enough for good news to matter.
Stock Performance
On the other hand, some stocks in the portfolio experienced significant declines. Linde was one of the bottom performers, falling 7.9% after its second-quarter earnings report. Despite beating earnings and revenue expectations, investors focused on lighter-than-expected guidance and problems in Linde's healthcare business. However, Jim viewed the post-earnings sell-off as a buying opportunity rather than a change in the long-term story. "You buy the stock," he said. "It's one of the greatest stories of our time. It is." Apple was another bottom performer, down 9.3% after its earnings report. While the company beat Wall Street's revenue and profit expectations, higher memory costs, supply constraints, and softer guidance overshadowed the good.
Market Outlook
Meta Platforms was the worst performer, falling 12.9% after its earnings report revived concerns about the company's massive AI spending. While the advertising business remained strong, investors focused on a softer revenue outlook, higher capital spending, and a roughly 91% decline in quarterly free cash flow. Meta CEO Mark Zuckerberg did little to convince Wall Street that those investments will generate meaningful returns anytime soon, despite confirming plans for a public cloud buildout. As the market continues to evolve, it's essential to stay informed and adapt to changing trends. The CNBC Investing Club with Jim Cramer provides valuable insights and updates on the portfolio, including trade alerts and analysis of the latest market developments. With the August Monthly Meeting livestream approaching, investors can expect a detailed review of the portfolio and guidance on how to navigate the complex and ever-changing landscape of the stock market.
Source: cnbc.com · 2026-08-13