We’re downgrading Alphabet after its rough quarter. Here’s where we’d buy again

Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street. The S & P 500 and Nasdaq are moving lower Thursday, pressured by post-earnings sell-offs in several technology stocks, including Alphabet , ServiceNow and Fortinet . Alphabet's soft search results weighed on other internet names, such as Amazon. ServiceNow's two-penny-per-share earnings miss and mixed outlook took down other enterprise software names. Fortinet's disappointing outlook took down other cybersecurity stocks, although we caution against reading too much into it, as larger, best-of-breed vendors like CrowdStrike and Palo Alto Networks continually take share from other companies that cannot offer a full suite of cybersecurity products. Semiconductor stocks fell after Microsoft trimmed its full-year capital expenditure outlook due to delays at third-party compute providers. As tech stocks sold off, money rotated into other areas of the market — a theme that has become quite common during these Nasdaq downdrafts. Defensive stocks like healthcare and consumer staples, and interest rate-sensitive groups like real estate and utilities, outperformed, limiting the damage to both the S & P 500 and the club portfolio. Following up on Alphabet, we do not want to throw in the towel and exit the position despite Wednesday's disappointing results. That's because we like the momentum in its Cloud business. At the same time, we are not ready to buy the dip just yet, so we are downgrading our rating to 2, from 1, and trimming our price target to $350 from $400. We would be buyers again if the stock's price-to-earnings multiple falls from around 19x today to the 17x-18x range, based on estimates we are more confident Alphabet can meet. We would also like to see improved AI mode monetization rates that better support the transition from traditional Search. It's another big earnings night for the portfolio with Amazon, Intel , Starbucks , and FedEx Freight reporting. Other notable companies reporting after the bell include Mondelez , Stryker , Ingersoll Rand , Veralto , Dexcom , and First Solar . Before the opening bell on Friday, we'll see earnings from Exxon Mobil , Chevron , Abbvie , AstraZeneca , Sanofi , General Dynamics , AutoNation , Colgate-Palmolive , and Regeneron . Kenvue also reports in what could be its final quarterly report as a standalone company before its acquisition by Kimberly-Clark . There are no major economic releases scheduled for Friday. (See here for a full list of the stocks in Jim Cramer's Charitable Trust.) 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.