Leave it to the cloud to save the day. We know there is weakness everywhere. Ford Motor's (F) credit rating just dropped to junk. Macy's (M) canned its dividend. Cheesecake Factory's (CAKE) not paying its April rent. Oil can't get out of its own way. Demand's non-existent for so many goods save toilet paper and Clorox (CLX) .
But then last night the sun came out in the form of Micron (MU) , the maker of DRAM and flash memory chips, which reported a very strong quarter when many anticipated a weak one. Sure there was the usual worry about cell phones. We know that there's weakness in the internet of things related to autos.
Buried within the gloom, though, is the following statement from CEO Sanjay Mehrotra: "In China lower consumer demand was offset by stronger data center demand due to gaming, e-commerce and remote work activity." It gets better: "Looking into the third quarter, as these trends also take shape worldwide, data center demand in all regions look strong and is leading to supply shortages. In addition we are seeing a recent increase in demand for notebooks used in commercial and educational segments to support work from home and virtual learning initiatives occurring in many part of the world." And then the coup de grace: "We are also encouraged to see manufacturers in China increasingly returning to full production and we have recently started to see China's smartphone manufacturing volumes recover."
That's some awesome pin action.
So let's unpack Micron's news. When Sanjay says the data center's good that means great things for Nvidia (NVDA) and AMD (AMD) . You can buy 'em, especially when he says that gaming is strong and notebooks are good.
It also means that despite what you may hear about Facebook (FB) , its uses is going up, something we know is true and will get better as Mark Zuckerberg said to me as it helps back stay at home businesses. Alphabet's (GOOGL) YouTube use must be up. You have to think that Amazon (AMZN) Web Services is on fire. Don't forget Alibaba (BABA) , the lone Chinese stock I like.
I get a better feel for Intel (INTC) from the notebook comments. We already know that Western Digital (WDC) , Micron's competitor, is doing well in flash, something confirmed by David Goeckeler, the new CEO.
And 5G? I am liking Marvell Tech (MRVL) and Qualcomm (QCOM) , two very inexpensive stocks. Skyworks (SWKS) should be bought off this for certain as we know from when we spoke to CEO Liam Griffin attested to the other night.
Oh and look at Broadcom (AVGO) , a company that allegedly reported a weaker quarter but has a stock that is now well above where it was when the quarter was reported.
If you are getting all these semiconductor stocks doing well then you know they will need new equipment to meet this newfound demand. So you will place orders with Lam Research (LRCX) and Applied Materials (AMAT) .
As businesses thrive at home you know that the inexorable adoption of the cloud will just get stronger. Adobe (ADBE) , ServiceNow (NOW) , Salesforce.com (CRM) all come to mind. There are so many implications to the stay at homes. You need a new layer of cyber security. Think Crowdstrike (CRWD) . Think Zscaler (ZS) . The cloud theme truly does transcend Covid-19, especially now that China's back on-line. DocuSign (DOCU) becomes integral. Overnight shipping becomes a priority, think UPS (UPS) and FedEx (FDX) .
It's a paradigm shift that all started with Zoom (ZM) and Cisco's (CSCO) Webex. It's early innings. And even the dreaded all powerful Covid-19 hasn't been able to stop it. Now that's saying something.
(Clorox, Nvidia, Facebook, Alphabet, Amazon, Marvell, Broadcom and Salesforce are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells these stocks? Learn more now.)