Jim Cramer’s Wednesday market watch focused on whether the US midterm elections had cleared a major source of uncertainty for investors. Dow futures pointed to a sharply higher open, while Nasdaq futures indicated a smaller gain, after having risen more than 2% overnight. Cramer noted that Democrats winning both chambers of Congress had been viewed as a potential headwind for AI-related stocks, though investors may also have been waiting for the election to pass before putting money to work.
The results also reflected public concerns about the expansion of data centers. Cramer said a slower buildout could benefit established technology companies, and pointed to morning gains in Microsoft and Amazon as a possible sign of how investors were weighing that prospect.
Chip stocks were under pressure, and Advanced Micro Devices had surrendered its post-earnings gains. Cramer nevertheless described AMD’s quarterly results as far stronger than expected, citing its server business and gains against Intel. CEO Lisa Su also warned that PC shipments could fall by a double-digit percentage next year. Cramer linked pressure on PC demand to high memory prices and raised the possibility that any freed-up supply could benefit Apple. Bernstein lifted its price target on Apple to $380 from $370 and maintained a buy rating.
Networking company Arista Networks rose more than 5% after beating expectations for third-quarter revenue, operating margin and earnings per share. Its fourth-quarter outlook also exceeded consensus, with demand for networking switches remaining strong. Arista is expanding into “scale-up” networking within server racks, and Cramer said the data-center trade remained robust despite the election.
Qnity Electronics, the DuPont spin-off that supplies products used in semiconductor manufacturing, also reported a strong quarter and raised its full-year revenue and adjusted earnings outlooks. Organic revenue grew 22%, supported by advanced chip nodes, thermal management, advanced packaging and AI-related printed circuit boards.
CVS Health said it plans to separate into two businesses. CEO David Joyner characterized the move as coming from a position of strength, while Cramer noted that the insurer Aetna and pharmacy benefit manager Caremark would be able to operate independently. CVS also posted a third-quarter earnings beat, but its shares were down 4% in morning trading.
Novo Nordisk shares gained 6% after the Danish drugmaker raised its full-year sales and operating profit forecasts, citing stronger sales of diabetes and obesity medicines. Its Wegovy pill exceeded estimates. Cramer contrasted the launch with Novo’s lost ground to Eli Lilly in injectable treatments; Lilly had reported strong results the previous week and closed at a record high on Friday.
Bank of America raised its rating on Constellation Brands to hold from buy after the election, without changing its estimates. The analysts said immigration was less likely to add to downside risks for beer volumes, making the risk-reward outlook more balanced. Cramer said immigration enforcement had been a significant problem for the Modelo brewer.
McDonald’s reported a mixed quarter: earnings and same-store sales growth topped estimates, while overall revenue fell short. Its shares rose more than 2.5% in morning trading and were up 14% from the Oct. 7 close, according to Cramer.
Sources: CNBC Markets.