How these 2 portfolio names staved off Tuesday’s software stock rout
Every weekday, CNBC Investment Club with Jim Cramer publishes Homestretch, an actionable afternoon update just in time for the final hour of trading on Wall Street. Stocks were mostly lower on Tuesday as investors digested the latest consumer inflation data, big bank profits and rising geopolitical tensions abroad. Financials suffered a major lag for the second consecutive session as the group struggled to stabilize after President Donald Trump announced plans to impose a 10 percent interest rate cap on credit cards. The market also got its first look at fourth-quarter bank earnings as the nation’s largest bank, JPMorgan, kicked off the season. Although JPMorgan’s results were generally better than expected, it turned into a news sell-off. This usually happens when investor expectations get too high and the group starts making gains. Ironically, all the talk at the start of 2026 was financial matters as many bank stocks like JPMorgan continued to hit record highs. Now this is the only sector that is negative this year. But the fear of being greedy led us to make some sales. On Tuesday, we transferred shares of Wells Fargo and Goldman Sachs. Enterprise software names were also under pressure as the market continued to struggle with the risks of AI-driven disruption. Club’s holdings of Salesforce were down nearly 7% in the afternoon, while ServiceNow fell to a new 52-week low. Meanwhile, Adobe shares fell 5% after Oppenheimer downgraded it to the equivalent buy-grade rating. Tuesday’s decline extends the group’s difficult 2025 performance. The cybersecurity sector is also part of the broader software business, but club names Palo Alto Networks and CrowdStrike survived Tuesday’s selloff. Instead, Palo Alto rose after Citi added the stock to the firm’s “analysts’ focus list.” Analysts say Palo Alto could reach a market cap of $200 billion, up from its current valuation of about $134 billion. How can he get there? Analysts noted the continued consolidation of cybersecurity budgets, the downside of monetizing AI products, and the positive developments resulting from the pending CyberArk acquisition. Citi also likes CrowdStrike shares. Analysts raised their price target to $610 from $595 and maintained a buy rating on the shares. Citi’s CrowdStrike recommendation comes a day after KeyBanc downgraded the recommendation from a buy to a hold-equivalent rating. Next up: No major earnings reports after the closing bell. Wells Fargo, Citigroup and Bank of America will report before the opening bell on Wednesday. On the economic data side, we will take the December producer price index. We’ll also see if the Supreme Court rules on Trump’s tariffs. (See here for a complete list of stocks in Jim Cramer’s Charitable Trust.) When you subscribe 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 trading alert before buying or selling a stock in his charitable foundation’s portfolio. If Jim talked about a stock on CNBC TV, he waits 72 hours after issuing the trading alert before executing the trade. THE ABOVE INVESTMENT CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, TOGETHER WITH THE DISCLAIMERS. NO CIVIL OBLIGATIONS OR DUTIES EXIST OR SHALL BE RESULTING FROM YOUR RECEIVING ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTMENT CLUB. NO SPECIFIC RESULT OR PROFIT CAN BE GUARANTEED.
