What caused the pre-holiday chip stock slump and what to do about it
Anthropic. Information. The session before a long holiday weekend. It was a toxic combination that crushed chip stocks on Thursday. The market was closed on Friday for July 4th celebrations; So Thursday’s trading volume was understandably light, making stocks vulnerable to big swings. Here’s what happened: Tech media outlet The Information published a report on Thursday that Anthropic is in talks with Samsung to produce a custom AI chip. Anthropic’s prowess as a maker of leading AI models is already setting the company up for one of the biggest IPOs of all time. While it’s not far off for Anthropic to want its own custom chips like other AI-forward companies Alphabet and Amazon, The Information’s report was short on details about what a potential Anthropic chip would be (GPU or CPU) or how it would be used. Anthropic told another tech news site TechCrunch that it uses chips from Alphabet’s Google, Amazon and Nvidia for its computing power. TechCrunch said Anthropic had nothing to add regarding its specific chip targets. It didn’t matter. Every hedge fund manager needed to take action because who knew what the Anthropic chip would become. Next, every traveler who knows what he has will have to get rid of the names Micron, Seagate, Western Digital, Sandisk and Advanced Micro Devices (AMD), as well as Nvidia and Intel Club. These stocks have weak owners who initially do not know how things work. They don’t know how exhausted everyone is. They don’t know how much it will cost. They don’t realize that if Samsung were to use a new chip for Anthropic, it would require billions of dollars of semiconductor capital equipment; It would be tremendous insurance if it actually existed. Antropik would have to make a stock offering right now to at least get into this queue, which is fairly backed up. Despite the love for Anthropic, the company is not afraid to claim that it will do everything and rule everything. I don’t know who made these claims, if they were made at all, but I do know that Anthropic’s word is law and the Knowledge story is Anthropic’s work. The problem is that we’ve seen this horror movie before. In January, when CrowdStrike fell from $138 to $110, we learned that this major cybersecurity company was “goosebumps” because Anthropic was believed to disrupt the industry. (These prices on CrowdStrike shares account for the 4-for-1 stock split that took place on Thursday.) I immediately asked CrowdStrike CEO George Kurtz to come in and talk about the possibility of a new player with a superior product. George immediately rejected this. From where? Because even if Anthropic wanted to play that role as both a provider of a hackable service and a foil to cyberterrorists, the insurance companies that determine who gets coverage would never allow it. “You can’t do both,” George said. This will not happen. It didn’t matter at all at the time. CrowdStrike’s fillet continued to be filled. An unstoppable force of negativity was something that lasted until Anthropic launched Project Glasswing; This demonstrated the hopeless nature of the level of cybersecurity that only CrowdStrike and Palo Alto Networks have. By then, CrowdStrike had fallen to $90 due to repeated panics. But people are starting to realize that Anthropic’s new Mythos model is a real threat to cybersecurity; maybe the best thing to do for this. From there, CrowdStrike rose to $190, a $100 gain from the bottom. Fast forward for now. So I want to revisit the game plan we put in place last winter when we decided this was too much and cyber stocks didn’t deserve punishment. Now I’m picking Intel because it has CPUs, builds foundries (that’s semiconductor for manufacturing facilities), and creates a packaging business that will give Cadence a run for its money. Antropik won’t do any harm. I don’t know if Anthropic will damage anything; I choose Intel because it has the most advantages. Believe me, I’d rather choose Nvidia, but not a day goes by when someone tries to raid Nvidia’s parade, and I’m sick of the deluge. Anyway, here you are. Repeat of cyber operation. It was very bad. It took several months. You needed plenty of dry powder to make it work for you, and we have it then and we have it now. (Jim Cramer’s Charitable Trust is long GOOGL, AMZN, INTC, NVDA, CRWD, PANW. See here for a complete list of stocks.) When you subscribe to the CNBC Investment 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. 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