We’re buying 25 shares of Eaton at roughly $300 each and selling 10 shares of CrowdStrike at roughly $404. Following Tuesday’s trades, Jim Cramer’s Charitable Trust will own 300 shares of Eaton, increasing its weighting to 2.5% from 2.25%. The Trust — used as the portfolio for the CNBC Investing Club — will also own 245 shares of Crowdstrike, decreasing its weighting to 2.7% from 2.85%. Shares of the electrical equipment maker Eaton have gotten slammed over the past two sessions, falling 18% from about $369 last Friday to $300 on Tuesday as part of the DeepSeek selloff. The market marveled at the supposed low cost the Chinese AI startup needed to develop its large language model and then questioned if fewer data centers are needed to support the AI buildout than previously thought. If that’s the case, it’s the same thesis with electricity growth because these data centers require tremendous amounts of energy and energy management to power AI computing. ETN 1Y mountain Eaton 1 year This updated view has put an overhang on Eaton because data centers are its fastest-growing end market and second largest by revenue. Although we understand there’s plenty of uncertainty about DeepSeek and acknowledge the risks, we think this nearly 20% pullback over two days reflects a lot of downsides. While it’s likely AI costs will come down in the future, we don’t expect the pace of new data center builds to slow in the immediate term. Outside of data centers, it’s always good to remember that Eaton is at the heart of so many other megatrends like electrification, the energy transition, digitization, infrastructure spending, reindustrialization, and green regulations. We’re taking advantage of the recent pullback and upgrading the stock to our buy-equivalent 1 rating . We’re purchasing the same number of shares we sold at higher levels in late October at around $345. CRWD 1Y mountain CrowdStrike 1 year As for CrowdStrike, the cybersecurity software maker is being viewed as a beneficiary of the commoditization of AI under the idea that as artificial intelligence capabilities become cheaper and more efficient, its adoption will become more widespread and usage will increase. Cybersecurity stocks were flying Tuesday. Palo Alto Networks , also a Club name, was jumping more than 3.5% and nearing record highs set in December. CrowdStrike was rallying over 8% and crossing above $400 for the first time ever. We’re keeping $400 as our Club price target because CrowdStrike shares were nearly there before cratering on July 19 due to a technical glitch that led to a worldwide IT outage. Admittedly, we did not think the stock would get here this fast. Even when we most recently added to our position two weeks ago at $336, it had just gone through an 8% slide, and it seemed like the long knives were out for tech. We remain long-term believers in cybersecurity, which is why we own two CrowdStrike and Palo Alto Networks in the portfolio. But with Crowdstrike shares up about 20% over the past 11 trading sessions, we would feel like pigs if we didn’t take profits on this big win. We’re downgrading the stock to our 2 rating and realizing a great 30% gain on stock purchased in October 2024. (Jim Cramer’s Charitable Trust is long CRWD, PANW. 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.
