Artificial intelligence has been the dominant stock market narrative so far this year. But with the first six months of 2023 almost in the books, two of the most-loved Club stocks on Wall Street aren’t stereotypical AI plays: Oilfield services provider Halliburton (HAL) and industrial gas supplier Linde (LIN). Here is the entire top five, along with the percentage of buy, or buy-equivalent ratings, from analysts who cover the stock, according to FactSet: Halliburton: 97% Amazon (AMZN) : 91% Alphabet (GOOGL): 91% Palo Alto Networks (PANW): 88% Linde: 86% It’s a diverse mix of companies — three techs, an industrial and an energy firm — with varied year-to-date performances so far. Halliburton, with nearly all its analysts recommending investors buy its stock, has fallen around 20% in 2023 and been among the worst-performing Club stocks. Palo Alto Networks, on the other hand, has been a standout, climbing more than 73% and setting fresh all-time highs. We keep a close watch on the Wall Street firms for good reason. But a word of caution also is in order: It’s not always a good thing to see near-consensus buy ratings. It could be a sign of a crowded trade. And with everyone on one side of the boat, a beloved stock may struggle to find new, incremental buyers that help push it higher. It’s a fine line between appropriately adored and excessively hyped. Now, here’s where we stand on these five Club holdings. HAL YTD mountain Halliburton’s year-to-date stock performance. Even after a roughly 9% gain in June, Halliburton shares are down about 20% this year. The analyst community hasn’t bailed on the company despite investor selling. It’s grown even more popular since January, when 25 of the 29 analysts who cover the stock had a buy, or buy-equivalent, rating. Now, it’s 28 of 29 — 97%. Halliburton’s robust capital returns program — with at least 50% of annual free cash flow going to dividends and buybacks — is a reason to stay invested. But a sustained rally in oil prices might be what it takes for Halliburton’s stock to really get going, and it’s hard to say when, or if, that will happen in the near term. A potential overhang on Halliburton has been commentary during first-quarter earnings season from exploration-and-production firms, including Club holding Coterra Energy (CTRA), about services pricing peaking. That raised questions about the durability of Halliburton’s pricing power, which it’s been able to flex in recent quarters amid strong demand and tight capacity. For its part, Halliburton has maintained that prices aren’t moving down. Its second-quarter results, set to be released July 19, will provide insight into this bull-bear debate. AMZN YTD mountain Amazon’s year-to-date stock performance. Amazon’s business is on solid ground heading into the second half of the year; the Federal Trade Commission’s complaint this week targeting Amazon Prime subscription tactics doesn’t change that . The revenue growth rate in its main profit driver, Amazon Web Services, is poised to reaccelerate in the coming months , thanks in part to artificial intelligence spurring greater need for cloud-computing services. The fruits of Amazon’s cost-cutting measures, meanwhile, should begin to show up in its core ecommerce business with expanding margins. Still, Amazon’s stock has already soared 55% this year, so it’s understandable to question whether near-term upside will be muted. But we’re confident Amazon’s looming profit inflection will be significant for the stock. GOOGL YTD mountain Alphabet’s year-to-date stock performance. Google’s parent company has soothed a great deal of our angst around its AI strategy, which earlier this year left much to be desired as fellow Club holding Microsoft (MSFT) went on the offensive. We’re not alone in this view — Alphabet shares climbed nearly 19% in roughly the four weeks following its big AI day on May 10. The tech giant’s stock has been digesting that pop ever since. After closing at a 2023 high of $127.31 on June 6, Alphabet shares have fallen about 3% through Thursday’s close. That’s lagged many other large-cap tech peers over the same stretch, including Club stock Nvidia (NVDA), which climbed 11%, and Adobe (ADBE), which advanced 10%. Shares of Alphabet may no longer be sizzling hot, but we’d still recommend waiting for bit more cooling before stepping in to buy more. PANW YTD mountain Palo Alto Networks’ year-to-date stock performance. We locked in profits on Palo Alto Networks last week following an official announcement that it would soon join the S & P 500 . We also downgraded the stock to our 2 rating , believing it’d be best to wait for a pullback before buying again. The cybersecurity stock has been one of our top-performing stocks in June — up more than 16% this month as of Thursday’s close — and for the year overall. Palo Alto is a best-of-breed company with a bright future because it’s well-positioned to ride the consolidation wave in the cyber industry. Our trim earlier in the month was simply about discipline now that a key catalyst, inclusion in the S & P 500, is in the rearview mirror. LIN YTD mountain Linde’s year-to-date stock performance. In what’s been the year of AI, industrial gas powerhouse Linde has proved a strong performer. The stock has set a series of all-time highs, most recently on June 15 when it closed at $376.44 per share. We trimmed our position a session later, locking in roughly 49% profits on stock purchase in February 2021; alongside the trade, we lowered our Linde rating to a 2. Our view remains that investors should wait for additional weakness to buy. Big picture, we’re thrilled to own Linde. The company has proven to be a steady earnings grower, posting a nearly 14% compound annual growth rate over the past five years, according to FactSet. And there’s potential for more, due to global trends around decarbonizing energy and large investments in semiconductor manufacturing in the U.S. and Europe. (Jim Cramer’s Charitable Trust is long HAL, AMZN, GOOGL, MSFT, NVDA, PANW and LIN . See here for a full list of the stocks.) 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.
Artificial intelligence has been the dominant stock market narrative so far this year. But with the first six months of 2023 almost in the books, two of the most-loved Club stocks on Wall Street aren’t stereotypical AI plays: Oilfield services provider HalliburtonLinde
