CNBC’s Jim Cramer on Thursday sees a crucial takeaway in the post-earnings swings for Microsoft and Meta Platforms stocks. His message to investors is simple: Do not give up on hyperscalers after a single quarter.
Shares of Microsoft fell nearly 10% Thursday while Meta jumped roughly 10% after earnings reports from both tech giants Wednesday evening.
In the case of Microsoft, investors were concerned after the software maker posted slowing cloud growth and management gave a weak response to questions about AI spending. Meanwhile, Wall Street cheered the Facebook parent as its AI investments showed that they were accelerating revenue growth, offsetting concerns about excessive spending.
Cramer, in particular, praised Meta’s advertising business, which made up 97% of overall revenue for the quarter. “Leave it to [CEO] Mark Zuckerberg from Meta to say that AI has allowed his company to offer the greatest advertising vehicle in the world, aimed at his user base” of 3.5 billion daily active users, Cramer said.
It may be tempting for investors to now view Meta as the new winner in the heated AI arms race and dismiss Microsoft entirely in the race. But Cramer said that is a fool’s errands as the market seemingly changes its tune each quarter. After all, Meta stock tumbled on its previous quarterly earnings report in October due in part to concerns about elevated spending on AI initiatives.
Cramer also pointed to the huge turnaround in Alphabet’s reception on Wall Street. The market was once concerned that ChatGPT creator OpenAI would threaten the Google parent’s dominant search business, and that its own AI technology was inferior. However, positive news around Gemini, the large language models from Google, have been a boon for the stock in recent months. Additionally, Alphabet shares surged on its previous earnings report thanks to strong demand for artificial intelligence, which boosted the company’s cloud business.
“I bet when we hear from them next week, we’ll realize [they are] an AI search winner,” Cramer said of Alphabet.
When it comes to Nvidia, at least, the market should not change its tune quite as often as it does with the other tech giants, Cramer said. He argued the company has sustained a massive market share in the AI chip market that can’t be beat.
“They aren’t playing a game at all. They’re running the game — they’re the house. That’s the best place to be,” Cramer added.
Disclosure: Cramer’s Charitable Trust, the portfolio used by the CNBC Investing Club, owns shares of NVDA, GOOGL, META and MSFT.
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