AI disruption fears slam new corners of the market, and Google reminds us why we own it

CNBC Finance

4 min read

Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch â an actionable afternoon update, just in time for the last hour of trading on Wall Street. Stocks are selling off Thursday, with the Dow Jones Industrial Average , S & P 500 and Nasdaq all down more than 1%. When the market was on a steadier footing early in the session, we said on the Morning Meeting that we planned to take some profits and raise cash in a market that was beginning to look overbought. Sure enough, the market tumbled shortly after our program ended. Fortunately, we were still able to lock in profits in Eaton and Procter & Gamble into their double-digit percentage gains this year. To answer the question of why the market moved sharply lower, there's fear across numerous industries about AI disruption.Â It's hitting software again, the financials , office real estate stocks, and even trucking and logistics names. AI models are getting smarter and becoming more advanced by the day, and investors would rather shoot first and sell stocks that may be in crosshairs before finding out how real the risks are. One tech stock hanging in during the broader sell-off was Alphabet . The stock edged higher Thursday after the company announced what it called a major upgrade to its Gemini 3 Deep Think reasoning model. Google said the latest version of Deep Think can now solve modern science, research, and engineering challenges. It's the latest sign that Alphabet has the lead in the ongoing AI frontier model horse race. We made one small buy of Alphabet this Tuesday, and we're interested in adding again on weakness, as indicated earlier Thursday. Existing home sales in January fell 8.4% month over month to a seasonally adjusted rate of 3.91 million, the National Association of Realtors said Thursday morning. Sales were 4.4% lower than in January 2025. For comparison, in December, sales were up 5.1% from the prior month to a seasonally adjusted rate of 4.35 million; and on an annual basis, they were up 1.4%. On its face, the January report may appear to dent hopes of a housing-market comeback lifting the fortunes Club name Home Depot . But we're not willing to go there just yet. For starters, the seasonal adjustments intended to smooth out monthly variance in home-buying activity don't compensate for abnormal weather â and if you live anywhere east of the Rockies in the U.S., you know January was unusually cold . So, while we generally try not to read too much into one single report, the bitter cold adds another wrinkle â something that the top economist at the National Association of Realtors even called out. "The below-normal temperatures and above-normal precipitation this January make it harder than usual to assess the underlying driver of the decrease and determine if this month's numbers are an aberration," NAR Chief Economist Lawrence Yun said in a press release. Another reason we're not fretting the January data: Since it measures closed sales, the downtick in the 30-year fixed mortgage rate â to around 6.1% on average in January from 6.19% in December â isn't going to move the needle. We need to see a sustained moved lower to bend the trend in Home Depot's direction. We're hopeful that President Donald Trump's intervention in the mortgage market makes a difference. Plus, as Jim Cramer wrote earlier Thursday morning, the looming shakeup in leadership at the Federal Reserve â following Trump's heavy pressure on the central bank to cut rates â could be another catalyst that drives mortgage rates lower. The bottom line is that considering we took profits in Home Depot last week and downgraded our rating to a hold-equivalent 2, there's no reason to change our view on the stock in light of the weak January sales data. Up next , after the closing bell, we'll see earnings from Coinbase, Arista Networks, Toast, Expedia, Dutch Bros, Draft Kings, Applied Materials, and Pinterest. Before the opening bell Friday, Moderna, Advance Auto Parts, and Enbridge reports. As for the data, we'll see the January CPI report on Friday. (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.

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AI disruption fears slam new corners of the market, and Google reminds us why we own it

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