Apple's China breakthrough on AI provides another tailwind for its stock

An important development from the financial markets: 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 market is slightly higher on Wednesday. The second cooler-than-expected inflation print in as many days boosted sentiment at the start of the session, bringing Treasury yields down.

However, semiconductor and AI-related stocks started to slide shortly after the open, and the selling intensified as the day wore on. The flip side of the selling in those bottleneck and shortage names was a rally in the companies paying for their products — hyperscalers Amazon , Meta Platforms , Alphabet , and Microsoft were some of the biggest gainers in the market. It's unclear what specific catalyst caused this sell-off in semis, but the group has been extremely volatile over the past few weeks and is still sitting on hefty gains this year.

Economic Details

Corning was the biggest decliner in the portfolio on Wednesday. On Monday's Homestretch , we said we were not ready to buy the dip just yet, despite positive research from Wall Street. We mentioned $162 as a level at which we would look to purchase the stock we sold in June, at progressively higher prices.

Corning shares are close, but not there yet. Apple was the biggest gainer in the portfolio , and its shares hit a new record high after the company received approval to use Apple Intelligence in China. CNBC has confirmed that Apple will use Alibaba's models to power the AI features on Chinese devices.

Apple is also working with Baidu. No formal launch date has been set, but Apple Intelligence's upcoming availability matters because access to these new AI features gives consumers another reason to upgrade to the latest iPhone models. Older generations don't have enough processing power to use it.

Analyst Views

The rollout could provide another tailwind in China , where Apple has already been gaining market share. Although China's overall smartphone market contracted in the second quarter due to higher prices on memory and components, Apple's market share rose to 18. 9% a year earlier, according to IDC.

United Airlines and J. Hunt report after the closing bell on Wednesday. Before the bell on Thursday, we'll see earnings from Taiwan Semi , GE Aerospace , Abbott Labs , UnitedHealth , Prologis , and State Street .

On the data side, we'll see June retail sales and pending home sales. (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.

Financial markets are tracking the development closely as investors assess the likely impact.