Alphabet slumps on more AI brain drain. We're not too worried
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. The S & P 500 is trading around the flatline on Wednesday, while the tech-heavy Nasdaq is down 0.4%, as investors take a breather after big rallies over the past week. Increased optimismof a deal to reopen the Strait of Hormuz, a critical shipping route for energy supplies, lifted stocks earlier in the week. Although a formal agreement has not yet been reached, the steady decline in oil prices suggests investors are upbeat that a framework will be reached. Nvidia is up more than 4% after Elon Musk said that SpaceX would exclusively use the company’s AI chips when building its computing infrastructure. The ringing endorsement reinforces Nvidia’s dominance in AI infrastructure even as some big tech companies roll out their own custom chips. Eli Lilly stock jumped about 4% after earnings proved demand for its weight-loss and diabetes drugs is still growing. Alphabet shares slumped midday after the company announced a leadership change and the departure of some of its top AI talent. Demis Hassabisis stepping down as chief executive of Google DeepMind, the AI research lab he co-founded in 2010, to become its chairman and chief scientist. Google DeepMind CTO Koray Kavukcuoglu will step into a new role overseeing all AI model development. Jeff Dean, Google’s current chief scientist, is leaving with three other company veterans to co-found Discovery Loop, an independent public-benefit corporation focused on machine learning (ML), AI science, and engineering. For months, Alphabet has been battling the perception that it will lose its edge in AI because a couple of its top AI researchers had left for rival firms. Wednesday’s news only adds to that narrative. A reported delay in the release of its most powerful Gemini model only intensified those concerns. We’re mindful that Alphabet has lost several highly regarded AI leaders recently, but the foundation for long-term success remains firmly in place with Demis Hassabis involved in a leadership role at DeepMind and Thomas Kurian running Google Cloud. Honeywell Aerospace reports after the closing bell on Wednesday, giving the management team an opportunity to speak publicly for the first time since it separated from Honeywell Technologies at the end of June. Aerospace’s results were reported inside former parent Honeywell a few weeks ago, and the numbers left some room to be desired. The call will give management a chance to provide color on the quarter and explain its plan to improve organic sales growth and adjusted earnings before interest and taxes (EBIT) margins. Other companies scheduled to report are Sandisk , Western Digital , AppLovin , elf Beauty , Axon Enterprise , and Dutch Bros . Before the opening bell on Thursday, we’ll see earnings from ConocoPhillips , Constellation Energy , Fiserv , Howmet Aerospace , and Keurig Dr Pepper . On the data side, we’ll see the Challenger job cuts report. (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.
