Investors who own the likes of Apple, Facebook, Microsoft and Amazon need to remember why they bought those stocks in the first place if they’re going to survive the tech giants’ earnings reports, CNBC’s Jim Cramer said Monday.
Alphabet,” he said on “Mad Money.” “Don’t be distracted by short-term problems that can vanish overnight like we saw with these winners. Focus on the long term, and the next time one of these terrific stocks sells off, then you know it’s time to buy.”
Apple’s stock, for one, got some reprieve after the company’s negative first-quarter pre-announcement. Expectations were so low ahead of its late-January earnings report that the iPhone maker actually managed to surprise to the upside.
But for much of last month, Apple’s stock was trading close to its 52-week lows, only catching fire after the company released its latest results. Shares of Apple ended Monday up 2.84 percent, at $171.25.
And while Cramer wasn’t sold on J.P. Morgan’s suggestion that Apple buy a company like Activision Blizzard, Sonos or Netflix, maintaining his call that the tech giant should get into health care, he stressed Apple’s positive long-term outlook.
Investors saw “the same kind of whiplash behavior” in the stock of Facebook ahead of its report. The embattled social media giant also surprised Wall Street when its earnings results showed little impact from its data privacy scandals.
“Yes, Facebook did a lot of shady stuff, but when we saw the numbers, we realized it didn’t matter to the people who do matter, which are the users. More than 2 billion people use some form of Facebook every day. The advertisers love them, it seems, more than ever. You may hate Facebook — I think a lot of people do — but it’s not going anywhere,” Cramer said. “Its stock turned out to be the steal in the tech group.”
Microsoft’s earnings report showed some less obvious weakness: a chip shortage put pressure on the company’s personal computer business, which prevented it from blowing away analysts’ estimates, Cramer explained.
“The chip issue wasn’t surprising. Somehow, though, it surprised the people who owned Microsoft, which is why they unceremoniously bailed out on it,” he said. “To me, that’s a huge mistake — you shouldn’t sell Microsoft because of a temporary short-term issue when the long-term story, particularly Azure, is so strong. Sure enough, the stock rallied nicely today.”
Amazon’s problems were even less clear, but Cramer saw the sellers seize on two particular ones: a new rule in India that poses an obstacle to Amazon’s business, and an overarching concern that the e-commerce company’s retail gross margins have peaked.
“No one seemed to notice the dominance of Amazon Web Services. Remember that? That was supposed to matter. No one cared about the growth of the advertising business,” the “Mad Money” host said, likening Amazon chief Jeff Bezos to an NFL coach. “Why would you assume that Jeff Bezos won’t change his game plan, come up with something new? He’ll adjust to the gross margin pressure. He’ll figure out another way to win.”
“Of course, that does require patience, something that’s in real short supply in this market,” Cramer continued. “But that’s good news for anyone who’s willing to think long term and buy high-quality stocks into weakness.”
Disclosure: Cramer’s charitable trust owns shares of Apple, Facebook, Microsoft, Amazon and Alphabet.
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- ^ Apple (www.cnbc.com)
- ^ Facebook (www.cnbc.com)
- ^ Microsoft (www.cnbc.com)
- ^ Amazon (www.cnbc.com)
- ^ Jim Cramer (www.cnbc.com)
- ^ Alphabet (www.cnbc.com)
- ^ “Mad Money.” (www.cnbc.com)
- ^ first-quarter pre-announcement (www.cnbc.com)
- ^ surprise to the upside (www.cnbc.com)
- ^ J.P. Morgan’s suggestion (www.cnbc.com)
- ^ should get into health care (www.cnbc.com)
- ^ we spoke to [CEO] Tim Cook (www.cnbc.com)
- ^ the possibility of positive trade talks (www.cnbc.com)
- ^ its earnings results (www.cnbc.com)
- ^ Amazon’s problems (www.cnbc.com)
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