Monthly Portfolio Update: All 35 Stocks, Including Cramer’s Top Pick

The CNBC Investing Club recently convened for its June Monthly Meeting, where Jim Cramer and Director of Portfolio Analysis Jeff Marks provided an in-depth look at their 35 portfolio holdings. Cramer also highlighted his top stock pick, Intel, articulating the compelling investment thesis. Here’s a detailed recap of their market insights, with a particular focus on the technology and data center sectors.

**The Evolving “Magnificent Seven” and the Rise of AI Powerhouses**

Cramer believes a significant reshuffling of the “Magnificent Seven” is underway. While the established giants like Alphabet, Amazon, Apple, Microsoft, Meta, Nvidia, and Tesla remain influential, the landscape is rapidly evolving with emerging contenders. Notably, SpaceX, and the not-yet-public but highly anticipated Anthropic and OpenAI, are poised to challenge the status quo. This dynamic shift underscores the high stakes involved, with SpaceX emerging as a particularly formidable competitor in the new era of innovation.

**Deep Dive into Key Technology and Data Center Investments:**

* **Alphabet:** Positioned as a clear winner in the AI era, Alphabet’s strengths lie in its diverse portfolio. YouTube continues to be a dominant force, while the burgeoning robotaxi service Waymo signals future mobility dominance. The core Google Search business, augmented by its Gemini chatbot, reinforces its AI leadership. Much like SpaceX, Alphabet has already secured the necessary capital for its ambitious AI endeavors, providing a stable foundation for future growth.

* **Apple:** Boasting the world’s premier consumer technology with the iPhone, Apple commands an installed base exceeding 2.5 billion users. This extensive user ecosystem allows Apple to leverage its advantageous AI partnership with Gemini, creating a symbiotic relationship that benefits both companies. Furthermore, AI integration is expected to significantly enhance the functionality and user experience of Siri, further solidifying Apple’s position in the smart device market.

* **Nvidia:** Despite a recent plateau in its share price, Nvidia remains a critical player, generating billions in revenue from hyperscalers for its indispensable Graphics Processing Units (GPUs). The company’s pivotal role in powering the AI revolution makes it a must-own stock, rather than a trading commodity. Its current valuation presents a compelling opportunity for long-term investors, making it too attractive to overlook.

* **Amazon:** The dual juggernauts of Amazon Web Services (AWS) and its e-commerce platform are undeniable forces. The company’s custom silicon, including Graviton and Trainium, also showcases its technological prowess. However, an open question remains regarding its AI buildout funding: Will Amazon need to pursue an equity offering akin to Alphabet, or is its existing AI revenue stream already sufficient? Selling stock, while dilutive, could bolster its competitive edge. Despite recent market pullbacks, ample reasons persist to maintain a holding in Amazon.

* **Meta Platforms:** A complex investment, Meta faces unique challenges. While WhatsApp enjoys immense popularity, its monetization potential remains largely untapped. The advertising business is robust, but it remains susceptible to economic sensitivities. Crucially, Meta lacks a cloud-computing business to fully justify its substantial AI investments. The long-term trajectory of Meta’s relevance in the coming years is uncertain. While trading restrictions are in place, the team will re-evaluate potential profit-taking opportunities on any sustained upward price movement.

* **Microsoft:** Another “Mag 7” stock presenting a strategic quandary, Microsoft has experienced recent underperformance. While its Azure cloud unit is strong, a significant portion of its revenue is derived from enterprise software vulnerable to AI disruption. Furthermore, its in-house AI tools, such as Copilot, are not yet as advanced as those offered by OpenAI and Anthropic. A collaboration with OpenAI could be beneficial, but its feasibility is unclear. The approach to Microsoft may mirror that taken with Meta.

* **Salesforce:** The current investment climate favors other sectors over enterprise software. Consequently, the team remains uninterested in acquiring additional Salesforce shares, despite its prolonged downturn.

* **Intel:** Cramer’s current favorite, Intel offers substantial upside potential, even exceeding that of Nvidia. Key catalysts include the burgeoning growth of Central Processing Units (CPUs) within data centers. Intel CEO Pat Gelsinger has indicated a trend towards CPU-to-GPU ratio parity, and the company’s third-party manufacturing capabilities are poised for significant expansion as businesses seek alternatives to TSMC. The team recently increased its Intel holdings, aiming to build a more substantial position. While the stock has already seen considerable gains, its fundamental story suggests further upward trajectory.

* **Arm Holdings:** Securing the second spot, Arm possesses extensive intellectual property in power-efficient semiconductors. Historically a licensor to industry giants like Apple and Nvidia, Arm is now developing its own first-party data center CPUs. The stock has experienced remarkable growth since its initiation in April. To manage risk, a strategy of gradually trimming the position to a 1% weighting as it appreciates has been implemented.

* **Broadcom:** Shares surged following a strong defense from a respected chip analyst. Concerns regarding delays or cancellations of Google’s ninth-generation custom chip, co-designed with Broadcom, were forcefully rebutted. Investors currently holding Broadcom are advised to let the stock ride as it navigates its post-earnings decline.

* **Corning:** This stock has seen significant appreciation as the market increasingly values companies involved in the physical infrastructure of data centers. Corning’s optical fibers and connectivity solutions are integral to these facilities. Additionally, the transition of data center operators away from copper presents a long-term growth opportunity.

* **Eaton:** Eaton’s order book is exceptionally strong. As a beneficiary of the AI trade, this industrial company provides essential cooling solutions for data centers and the equipment to connect them to power grids. CEO Paulo Ruiz has demonstrated exceptional leadership in his first year.

* **GE Vernova:** A highly favored stock, GE Vernova presents an attractive entry point for new investors, currently trading well below its record highs. As the leading builder of heavy-duty turbines for electricity generation from natural gas, it is another direct beneficiary of the AI boom. Management is aggressively scaling production capacity to meet unprecedented demand, evidenced by a remarkable $200 billion backlog for 2027, significantly exceeding expectations.

* **Qnity Electronics:** Spun off in November, this former DuPont subsidiary specializes in materials and products critical for semiconductor manufacturing and packaging. Its market capitalization has nearly doubled since its inception, surpassing its former parent company. Increased coverage from tech-focused Wall Street analysts could further boost investor interest.

* **CrowdStrike and Palo Alto Networks:** Both cybersecurity leaders experienced significant declines earlier this year due to concerns that AI models might supplant traditional security vendors. However, the market has recognized that AI models are more likely to be the source of breaches than the solution. The team’s decision to increase its CrowdStrike holding in March proved prescient.

**Healthcare Sector Outlook:**

* **Cardinal Health:** This stock was caught in a broad rotation away from healthcare, experiencing a sharp decline from its March highs. The team maintained its position, asserting no fundamental issues, and has seen the stock largely recover. A small trim was executed last week, with the current intention to hold steady.

* **Eli Lilly:** Eli Lilly stands out with the strongest growth prospects among large drugmakers. Its next-generation weight-loss drug, retatrutide, is generating significant buzz for its muscle-preserving benefits compared to existing GLP-1s.

* **Johnson & Johnson:** Possessing the second-best growth outlook in the pharmaceutical sector, J&J benefits from robust drug franchises in immunology and oncology, alongside promising medical device opportunities in cardiac care and robotic surgery. Further price declines may present an opportunity to increase holdings, given that a high-quality stock declining without an altered earnings outlook becomes cheaper.

**Financials, Industrials, and Beyond:**

* **Capital One:** The team is adopting a more positive stance on Capital One, noting a decline in delinquencies. A framework agreement to end the Iran war and subsequent lower gasoline prices are expected to benefit this major credit card issuer, whose performance is closely tied to the health of the U.S. consumer. It also represents one of the most attractively valued banks within the S&P 500. The stock is currently being allowed to run after recent purchases, with further evaluation pending on its recent acquisitions of Discover and Brex.

* **Wells Fargo:** Despite being a significant gainer since the last meeting, there is little reason for enthusiasm regarding Wells Fargo’s overall performance. The bank has not realized sufficient value from its substantial investments in new investment banking talent. The team has been reducing its position on the way up and will likely divest further when restrictions are lifted.

* **Goldman Sachs:** Demonstrating exceptional performance, Goldman Sachs has excelled in the initial public offering (IPO) market. Its pivotal role in taking SpaceX public last week signifies a substantial revenue increase for its core investment banking division. Goldman Sachs’ upward trajectory is expected to continue.

* **Boeing:** For investors not yet holding this stock, consideration for purchase is recommended. Boeing is poised for a significant uplift, with its valuation intrinsically linked to free cash flow, which appears to be improving as monthly deliveries have risen. Deliveries are a key indicator of free cash flow as they represent the point at which customer payments are received. Concerns regarding order cancellations seem to be overstated.

* **Honeywell:** The industrial conglomerate is set to split into two entities, separating its aerospace business by the end of the month. Honeywell Aerospace is anticipated to perform comparably to GE Aerospace. Honeywell Technologies, the remaining automation unit, is expected to experience substantial growth driven by the rebuilding of liquefied natural gas (LNG) plants affected by Iranian attacks.

* **FedEx and FedEx Freight:** FedEx, the logistics and package delivery giant, is significantly outperforming rival United Parcel Service (UPS) and is expected to have a strong second half of the year. The recently spun-off FedEx Freight is poised for margin and sales improvements as a standalone entity. FedEx Freight specializes in less-than-truckload (LTL) services. The team intends to increase its exposure to both FDX and FDXF, acting on this with an FDXF purchase.

* **Dover:** A strategic trim is warranted for Dover. Its recent advance provided an opportunity to fund the FDFX purchase. The expectation of further M&A activity from Dover has not materialized, making it less compelling in a market with numerous attractive investment alternatives.

* **DuPont:** Similar to Dover, DuPont has not made significant portfolio changes since spinning off Qnity. CEO Lori Koch needs to focus on increasing healthcare and water sector exposure. The team prefers not to hold an excess of stocks with self-help narratives.

* **Linde:** This stock represents the best growth cyclical in the portfolio. Linde’s significant exposure to high-growth markets such as semiconductor manufacturing, healthcare, and food and beverage makes it a consistent performer regardless of macroeconomic conditions. As a provider of essential gases for rocket launches, Linde is also a key beneficiary of events like the SpaceX IPO.

* **Starbucks:** While high expectations persist for Starbucks, the company is delivering a series of smaller, consistent improvements under CEO Brian Niccol. The turnaround is gradual but demonstrably occurring.

* **Costco:** Despite its historical track record of consistent gains, Costco needs to show stronger membership growth to avoid potential valuation compression.

* **Home Depot:** This stock is directly leveraged to potential interest rate cuts by the Federal Reserve, which could stimulate a rebound in the housing market. An eventual rate cut could propel Home Depot to $400 per share, representing a 20% upside from current levels.

* **TJX Companies:** The off-price retailer has experienced a notable rally this month, recovering from a post-earnings pullback. The struggles of traditional department stores are benefiting T.J. Maxx and Marshalls, while HomeGoods delivered robust 9% same-store sales growth.

* **Nike:** A lack of significant new developments has been a disappointment for Nike. The upcoming quarterly earnings report on June 30 will be a critical juncture for the stock. The continued insider buying has yet to translate into meaningful stock price appreciation.

* **Procter & Gamble:** This stock serves as a hedge against a potential economic slowdown, and its inclusion remains pertinent amid ongoing discussions of potential Federal Reserve rate hikes. While tempted by existing profits, the team is holding on, having executed a small trim last week for discipline.