Apple Extends Stock Slump, Target Surges, Brin: Google "Definitely Messed Up" 3/5/24

Jim Cramer (0:00)

It's Jim Cramer here. You're listening to the opening bell of CNBC's Squawk on the Street. Don't miss a minute of the action.

Carl Quintanilla (0:08)

Good Tuesday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Jim Cramer, David Faber at Post 9 of the New York Stock Exchange. Futures under some pressure as China's economic targets and stimulus underwhelm. Meantime, some worries in mega-cap tech whether that's AMD, Apple or Tesla. We'll get to all of it, 10 year below 415 Our roadmap begins with Apple shares down again, this time on a report of an iPhone sales slump in China.

David Faber (0:30)

It's a different story for Target. That stock is up sharply on a holiday quarter beat, despite what was a decline in sales and comparable store sales. Sales guidance though did come in above consensus.

AI, of course, also in focus as it always is here. Google co-founder Sergey Brinon speaking out in a rare public appearance saying the company definitely messed up its Gemini image generation watch.

Carl Quintanilla (0:54)

Let's begin with Apple shares down in the pre-market again, following this report that iPhone sales plunged 24% in China year on year for the first six weeks of 2024, facing competition from local smartphone firms like Huawei and Xiaomi. Jim, this is boutique data, but they are on track for five days now losses.

Jim Cramer (1:14)

Yeah, I'm trying to get a confirmation because a lot of these different services you have to take with a grain of salt. I would say that if you take China itself and look at what they're buying, they're all trading down. There's just a lot of things wrong with China. We're gonna get into that. I told club members yesterday, look, you could go to 160 without really a problem. I mean, what are you gonna do? You have one of the greatest performers of all time. You're caught in mid cycle.

David, we don't know if they're gonna have this Samsung-like AI in the next edition, the 16

It's just like one of those things where you just let it rain. I think that there've been periods where you have to suffer through lulls, and this is a lull. Now, lull for other companies are disastrous because it usually means that there's no lull. It's just the end. I think saying that somebody was as a couple billion users that they're a lull, it's for real.

You just, you have to wait it out.

David Faber (2:13)

Right.

Jim Cramer (2:13)

But you would have to take pain. This is a Mr. T situation.

David Faber (2:18)

Okay, forecast calls for pain, yeah.

China still represents roughly 20% of overall iPhone demand. It's a very important market for China. And let's not forget as well, they still manufacture most iPhones in that country.

Jim Cramer (2:33)

By China, for China.

David Faber (2:34)

As well. You know, I'm looking at Dan Ives here, of course, because his channel checks.

Jim Cramer (2:40)

He's over there.

David Faber (2:41)

His channel checks have always been a little different. So but he did say, as we've been in Asia for a few weeks, we've seen with our own eyes some extra discounting around iPhone 15 in the region, which is giving investors more agita on that name, the cherry on the top of the Sunday of bad news from Cupertino, of course, and then the, you know, what we talked about yesterday and last week, the ditching of the car, the focus on generative AI being a part of the phone at some point, but when we don't exactly know, to your point, Jim.

Jim Cramer (3:11)

Yeah, well, the ditching of the car was a good idea because they aren't going anywhere and might as well just put, ship those people over. But look, Carl, I think the biggest problem with Apple is that they're too expensive for China.

By the way, look, we own Starbucks for the travel trust. I fear they're too expensive for China. China is a national trade down with the exception of Richemont watches.

Carl Quintanilla (3:39)

Well, wasn't it Yardeni last night saying, we're specifically tracking Nike, Starbucks and Tesla because of the exposure to China?

Jim Cramer (3:49)

Yeah. Look, I just think that China is a no growth country where they're making up a lot of numbers.

David Faber (3:54)

Well, no growth country. They just came out with a 5% target for this year.

Jim Cramer (3:58)

Demographically no growth.

David Faber (3:59)

Oh, demographically for sure.

Jim Cramer (4:01)

And that historically has really hurt a country. It's also a sign.

David Faber (4:04)

Yeah, but as a market in terms of still moving millions upon millions into the middle class every year as they continue to do.