Amazon CEO makes a big prediction on AI — plus, Salesforce hikes prices and a housing market update

CNBC

4 hours ago

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. Markets: Stocks were lower across the board Tuesday afternoon, as investors monitor a flurry of headlines around the Israel-Iran conflict. President Donald Trump threatened the Iranian leader Ayatollah Ali Khamenei in a series of social media posts, and also he made clear what he wants from Iran : "UNCONDITIONAL SURRENDER!" Oil prices rose throughout the session and were up more than 4% as of 3 p.m. ET. As we wrote on Monday , oil is an important barometer to watch during the Middle East conflict because energy-price shocks have the potential to dent economic growth. Jassy speaks: Amazon CEO Andy Jassy on Tuesday provided some of his views on the advancement and adoption of generative AI at Amazon. Jassy's full letter can be read online here — but one specific portion deserves extra attention, carrying ramifications for both Amazon shareholders and the economy overall. "As we roll out more Generative AI and agents, it should change the way our work is done," Jassy wrote. "We will need fewer people doing some of the jobs that are being done today, and more people doing other types of jobs. It's hard to know exactly where this nets out over time, but in the next few years, we expect that this will reduce our total corporate workforce as we get efficiency gains from using AI extensively across the company." While this is just one CEO's prediction, we have no doubt that management teams across the world are looking into how they can leverage this new technology to achieve a leaner workforce. This is something that, as investors, we need to watch closely in the coming months, quarters and years. Home Depot readthrough: Lennar's earnings call Tuesday left us with one big takeaway: The housing market is still hurting, and there's no new indications of a near-term change. The homebuilder's commentary came after reporting mixed quarterly results the prior evening. While revenue topped expectations, profits, new orders and average home prices all missed the mark. The update from Lennar is not the best news for our Club retailer Home Depot, which benefits from a robust housing market. We don't have that right now, as stubbornly high mortgage rates and low inventory put pressure on affordability. That's forced Lennar to dig into its own profit margins, as it offers up incentives and discounts to get buyers to closing day. Also on Tuesday, we learned that homebuilder sentiment fell in June and is nearing pandemic-era lows, according to the latest index from the National Association of Home Builders. To be sure, we're not giving up on Home Depot, and there was actually a longer-term silver lining discussed on Lennar's conference call. Executives discussed the importance of lowering its own structural costs to navigate frostier housing cycles — and that helps them keep supply coming online. Historically, Lennar chose to protect "margin as market conditions stalled," co-CEO Stuart Miller said. "But we learned through those times that once we step backwards, and lose momentum, it becomes increasingly more difficult to restart, and recapture volumes. The machine slows and does not restart easily." He continued, "We have concluded that by maintaining volume, we can create new efficiencies, and new solutions that are durable for the future, and will result in meaningful long-term efficiencies in our cost structure." Part of Lennar's efficiency plan relies in part on technology, and more specifically a portfolio name in Salesforce . In addition to using Salesforce to reduce customer acquisition cost and manage home prices, Miller said the company is working to develop AI-based "agents" that can assist salespeople, even during off-hours. Outside the portfolio, Lennar said it's working with Palantir on tech-driven land management system. Price bumps: Speaking of Salesforce, the software giant said earlier Tuesday that it will raise list prices by an average of 6% on the Enterprise and Unlimited Editions of some of its applications. Specifically, the company called out Service Cloud, ​Field Service, and select Industries Clouds as being impacted by the change. Salesforce also announced the general availability of Agentforce AI add-on tools that can be added on for certain users starting at $125 a month, along with a higher level offering referred to as Agentforce 1 Editions that starts $550 a month and includes the regular add-on tools along and a few extra goodies for users to maximize their use of the Salesforce platform. Up next: There's not much to speak of on the earnings front. However, on the economic front, we will get a check up on the housing market Wednesday morning with the release of the May housing starts numbers, along with initial jobless claims, which, as a reminder, will be out a day early this week due to markets being closed Thursday for Juneteenth. The big event on Wednesday, of course, is the Fed's interest rate decision at 2 p.m. ET and Chair Jerome Powell's press conference at 2:30 p.m. ET. (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.