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After the opening bell, we will sell 100 shares of Broadcom at approximately $247.20. Following trading, Jim Cramer’s Charitable Trust will own 650 shares of Broadcom, reducing its weighting from 5.15% to about 4.50%. In addition, we are selling 375 shares of Advanced Micro Devices at approximately $124.23. After the sale, the Trust will own 300 shares of AMD, reducing its weighting from 2.35% to about 1%. Now that our trading restrictions are cleared, we can take profits on Broadcom. Stocks were parabolic from Friday to Monday, rallying roughly 38% on Hock Tan’s bullish AI forecast on his earnings call. Broadcom’s custom AI chip business is on fire, and Tan believes it will grow significantly by 2027, predicting an available market of $60 billion to $90 billion between its three current AI customers. These are believed to be Alphabet’s Google, Meta Platforms and TikTok parent ByteDance. Even more striking was the fact that Tan believes Broadcom has two new custom chip customers. If recent media reports are correct that those two clients are Apple and ChatGPT creator OpenAI, then these will be significant wins. Love the Broadcom stories, but we’re taking a 190% gain on shares bought in August 2023 after the parabolic move. This cut will also adjust our position, as the two-day rally has pushed Broadcom’s weighting above 5% of the total portfolio. We also have a change from what was covered in the Monday Morning Meeting and Homestretch. We are more than halving our AMD position and downgrading our rating to 3, which is a strong sell. Our understanding of the AI chip industry has developed a lot in the past week. After listening to Tan and then Marvell Technology CEO Matt Murphy on “Mad Money” Monday night, it became clear that hyperscalers prefer custom silicon over Nvidia’s market-leading graphics processing units (GPUs). These custom chips are cheaper, optimized for individual customers and much more energy efficient. AMD CEO Lisa Su convinced us that the company had a very competitive GPU roadmap and that the MI300 series would be much more competitive with Nvidia and at a cheaper price. Our confidence in Nvidia’s share of the leadership was never wavered, but we thought there was plenty of room for AMD to move up as well. However, the lack of new customer wins suggests that its product is not being delivered as quickly as promised. Therefore, we are less optimistic about the company’s ability to increase its AI chip sales to the level expected by the market. To mitigate future losses, we are reducing the position to a much smaller one. We will have a heavy loss of about 27% on the shares we bought in July. (Jim Cramer’s Charitable Trust is long AVGO and AMD. See the full list of stocks here.) As a subscriber to the CNBC Investing Club with Jim Cramer, you’ll receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a share in his charitable trust portfolio. If Jim has talked about a stock on CNBC TV, he will wait 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTMENT CLUB INFORMATION IS SUBJECT TO OUR SPECIFIC TERMS AND CONDITIONS AND PRIVACY POLICY, WITH OUR DISCLAIMER. NO FIDUCIARY OBLIGATION OR OBLIGATION SHALL BE CREATED, OR CREATED, FOR ANY INFORMATION ENTERED INTO WITH THE INVESTMENT CLUB. NO SPECIFIC RESULTS OR PROFITS ARE GUARANTEED.
