Why memory chip stocks are getting hit hard for the second day in a row

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. Stocks are falling as uncertainty over the conflict in Iran continues to weigh on the market. President Donald Trump said on Truth Social early Thursday that Iran "better get serious soon" about peace talks. The five-day ceasefire announced Monday by Trump expires at the end of Friday, with markets growing concerned about a potential escalation afterward. The S & P 500 hasn't posted a gain on a Friday since before the conflict began, underscoring investors' caution about what could unfold over the weekend. We're holding off from buying for now and waiting to see if the S & P Oscillator moves back into oversold territory. A few sectors are trading higher. Energy stocks gained as WTI jumped 5% and traded above $95 per barrel. Defensive sectors that investors typically flock to when they fear an economic slowdown largely held up, with utilities, health care, consumer staples, and real estate flat to modestly lower. Communication services was the worst-performing sector, driven by declines in Meta Platforms and Alphabet . Industrials sold off hard, too. Memory and memory equipment stocks are getting hit for the second day in a row after a Google researcher announced a new way to optimize memory in large language models on Wednesday. The group in focus is Micron , Western Digital , SanDisk , and equipment stocks Lam Research and Applied Materials . Morgan Stanley came to the group's defense, calling the selling a "healthy pricing in of durability concerns," and characterizing the Google news as "evolutionary development." The analyst's thesis is that memory is the bottleneck in the AI buildout, and it isn't showing signs of slowing any time soon. How long the memory cycle lasts will remain a market debate for many quarters to come, but if prices do come down, it would be a tailwind for IT hardware and consumer electronics companies like Apple , Cisco Systems , and Dell (which is in the Bullpen). Both Apple and Cisco traded higher on Thursday, bucking the broader market sell-off. There are no major earnings reports after the closing bell on Thursday. Cruise line operator Carnival reports before the opening bell on Friday, and the market will be interested to see if booking patterns have changed since the breakout of the war in Iran. On the data side, we'll see the final read on the University of Michigan consumer sentiment survey and 1-year inflation expectations. (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.