We have two trades on Tuesday. We will sell 100 shares of Cisco Systems stock for approximately $87 per share, reduce our weight in the Jim Cramer Charitable Trust from approximately 2.18% to approximately 2%, and reduce the number of CSCO portfolio shares to 900 shares. It will also purchase 30 shares of Alphabet at approximately $318 per share, increasing its weight in the trust from approximately 0.95% to 1.2% and increasing the number of GOOGL shares to 900 shares. 150. Shares of networking equipment company Cisco have risen about 18% since its most recent quarterly report in mid-November, significantly outpacing the S&P 500 index’s rise of about 2% over the same period. The recent rally has pushed the company’s forward price-to-earnings ratio to about 20x. CSCO .SPX Mountain 2025-11-12 Cisco Systems vs. S&P 500 after November 12, 2025 We’ve been calling for a rerating of Cisco since we started buying the stock last July. Acceleration of orders from hyperscale customers and campus updates from enterprise customers led to this reassessment. However, with earnings approaching on Wednesday evening and the stock trading at record highs, at a premium to its historical mid-teens valuation, we believe there is little margin for error here and are taking profits. While we think Cisco’s AI theory is correct, we’re taking some precautions regarding revenue in case rising memory prices hurt the company’s gross margins. Additionally, Cisco’s security business has been weak over the past few quarters, and we don’t expect a quick recovery. Management managed to raise its full-year outlook last quarter despite weakness in the securities sector, but with the stock trading at record highs, it may face more scrutiny this time around. With this sale, the Company will realize a solid gain of approximately 28% on the Cisco shares purchased in July 2025. GOOGL Mountain 2026-02-04 Alphabet after February 4, 2026 We are using the proceeds from the sale of Cisco to buy out Alphabet’s recent weakness. Despite the impressive results, the tech giant’s stock has fallen about 4% since it announced its results last Wednesday night. Google Search revenue showed no signs of cannibalization by AI queries, based on 16.7% year-over-year growth. Google Cloud’s revenue increased about 48% year-over-year, and its backlog increased 55% to $240 billion. With over 750 million monthly active users, the Gemini app has almost completely overtaken OpenAI’s ChatGPT. So what is causing the market’s hesitation? Alphabet said it will invest about $175 billion to $185 billion in capital expenditures this year, well above the $120 billion expected by analysts. Free cash flow, which generated about $73 billion in 2025, is expected to take a big hit due to increased investment spending. The company is also taking on debt to fund these investments, with a new 100-year bond attracting attention. While the market is feeling some uncertainty about whether these big bets will pay off, we’re looking at a rapidly expanding backlog, increased product engagement, and strong search ad revenue growth as signs that Alphabet has become the best of the Magnificent Seven’s mega-cap technology companies at monetizing its investments. (Jim Cramer’s Charitable Trust is long CSCO, GOOGL. See here for a complete list of stocks.) As a subscriber to Jim Cramer’s CNBC Investment Club, you will receive trade alerts before Jim makes a trade. After Jim sends a trade alert, he waits 45 minutes before buying or selling stocks in his charitable trust’s portfolio. If Jim talks about a stock on CNBC TV, he will issue a trade alert and then wait 72 hours before executing the trade. The above investment club information is subject to our Terms of Use and Privacy Policy, along with our disclaimer. No fiduciary duties or obligations exist or arise from your receipt of information provided in connection with the Investment Club. No specific results or benefits are guaranteed.
