Starbucks, Oracle, and the Supply Overhang

Starbucks rose more than 1% Wednesday, making it the best performer in Jim Cramer's portfolio. The move followed a Bloomberg report that the company is exploring strategic options for its Japanese business, including a potential stake sale that could value the unit at roughly $2.5 billion.

CEO Brian Niccol used a similar playbook in China, where Starbucks formed a joint venture with Boyu Capital. Japan is a different market. Low-cost rivals like Luckin Coffee have squeezed margins in China. Japan has been a reliable growth market. Niccol told analysts on the April earnings call that the country delivered "an outstanding quarter" driven by record New Year sales, strong tourism traffic, and menu additions.

Cowen analysts said Wednesday they liked the "industrial logic" of monetizing Japan. The business is not core to the US turnaround, they argued. A deal would let management focus on the domestic recovery Niccol was hired to execute.

Starbucks has not commented on the report. The company's board has given Niccol broad authority over strategic decisions since he took the CEO role in August 2024.

Oracle reports after the close

Oracle reports fiscal fourth-quarter results after the bell Wednesday. The market will focus on three numbers: the AI infrastructure backlog, capital expenditure guidance, and free cash flow visibility.

Oracle has been one of the bigger AI infrastructure plays, competing with Microsoft and Amazon for cloud contracts tied to large language model training. The stock hit year-to-date highs in May but has pulled back in June as the broader tech sector sold off on rate concerns. The company's stock market analysis page shows the stock carrying an Alpha Score of 56 out of 100, a Moderate label that reflects mixed signals on valuation and momentum.

Analysts expect Oracle to report cloud revenue growth above 20% year over year. The question is whether the company can sustain that pace while spending heavily on data center expansion. CFO Safra Catz has previously guided for capital expenditures to roughly double in fiscal 2026, a level that will test the company's ability to generate cash without taking on excessive debt.

The macro backdrop

The broader market was under pressure Wednesday. The S&P 500 and Nasdaq were headed for back-to-back losses as oil prices rose on renewed Iran war tensions. The consumer price index came in at its highest reading in over three years, pushing bond yields higher. Most of the inflation was concentrated in energy costs. That should ease when the Strait of Hormuz reopens. The immediate effect was a rotation out of rate-sensitive growth stocks.

Jim Cramer said he is more focused on the wave of new stock supply coming to market. SpaceX is expected to price its IPO Friday. Anthropic and OpenAI offerings are likely later this year or early next. Large secondary sales from Alphabet and other tech companies to fund AI spending add to the supply overhang. The Investing Club has been trimming positions and building cash, which now sits at roughly 12.4% of the portfolio.

Linde gets a SpaceX lift

Redburn analysts raised their Linde price target to $560 from $550 Wednesday, citing the SpaceX IPO as a catalyst. More rocket launches mean more demand for industrial gases. Linde is one of the dominant suppliers to the space industry. Redburn projects the company will generate $6 million per launch by 2028, up from under $4 million in 2024. SpaceX's next-generation Starship burns more oxygen than its Falcon rocket, increasing the gas requirement per mission.

Linde CFO Matthew White said on the first-quarter call that the space end-use market "continues to see strong double-digit percent growth." The company has said it will break out space sales as its own end market once commercial space reaches at least 5% of total revenue.

Space is a positive for Linde. It is not the main reason the stock has held up better than most industrials. The company serves healthcare, electronics, and food and beverage markets, giving it diversification that most industrial gas peers lack. Pricing power across those segments and disciplined capital allocation have allowed Linde to deliver consistent returns regardless of the macro environment.

What to watch Thursday

Weekly jobless claims and the May producer price index are on the economic calendar. No major earnings are scheduled before the open. Oracle's after-hours report will set the tone for tech stocks heading into Friday's SpaceX IPO.

For Starbucks, the Japan story is worth tracking. A deal would validate Niccol's strategy of simplifying the portfolio and concentrating resources on the US turnaround. The stock's SBUX stock page shows an Alpha Score of 18 out of 100, a Weak label that reflects the challenges still ahead. A Japan monetization would not fix the core business. It would give Niccol more financial flexibility and fewer distractions.