But the retail landscape has changed, and so has Victoria’s Secret.

After years of declining sales, shifting consumer preferences, and controversies that damaged its reputation, the company is working to reconnect with customers while reshaping its stores and brands for a new generation.

That effort has included significant changes to its physical footprint. While Victoria’s Secret has continued to close stores, it has also been investing in a different kind of in-person experience.

Victoria’s Secret closes 38 stores

Victoria’s Secret (VSCO) closed 38 locations between Jan. 31 and Aug. 1, 2026, bringing its total store count to 1,430.

During the same period, however, the company opened 48 stores, meaning openings outpaced closures.

This has been a pattern for Victoria’s Secret. From Feb. 1, 2025, through Jan. 31, 2026, the company closed 78 stores but opened 111, according to its fourth-quarter fiscal 2025 earnings report.

The numbers reflect a broader strategy that isn’t simply about reducing the company’s physical footprint.

During the company’s earnings call, Victoria’s Secret CEO Hillary Super said stores outpaced digital sales and remain an important competitive tool for the business because they differentiate the company from competitors.

One of the key advantages of its physical stores is the bra-fitting service, which requires an in-store visit.

“I think with bras being at the heart of our business, our service, which I think is industry leading, is critical,” said Super during the earnings call.

“I think what we do in terms of bra fitting in a personal space is unmatched. And so I believe very much in stores.”

Super also said that Gen Z wants a store experience even more than other customer groups, which is partly why the company plans to continue investing in its stores, particularly through its Store of the Future model.

Why Victoria’s Secret is closing stores

Victoria’s Secret has been undergoing a major turnaround since appointing Super as the company’s CEO in September 2024.

The company has focused on managing costs while prioritizing investments in product innovation, brand strength, and customer experience. It has also reduced discounting in favor of more full-price selling.

As part of that strategy, Victoria’s Secret developed a design concept called “Store of the Future” to adapt to evolving consumer demands.

The format includes easy in-store navigation, an enhanced fitting room experience, and updated checkout technology, according to a company announcement.

“We are confident that we are investing in the right ways to reach a new audience. We have a lot more runway ahead of us,” said Victoria’s Secret Chief Marketing and Customer Officer Elizabeth Preis during the company’s latest earnings call.

Preis acknowledged that Victoria’s Secret had significantly more customers at its peak than it does today, but said the company is working to rebuild that audience through its Path to Potential Strategy.

Victoria’s Secret introduced the Path to Potential Strategy in March 2025 as part of its efforts to modernize the brand, strengthen its market position, and appeal to younger consumers.

The strategy is built around four pillars:

• Supercharge Bra Authority: Reassert leadership in bras through product excellence and market leadership.
• Recommit to PINK: Reignite the PINK brand and strengthen its connection with younger consumers.
• Fueling Growth in Beauty: Maximize and expand the fragrance and lifestyle beauty categories.
• Evolving Brand Projection and Go-To-Market Strategy: Refresh marketing, shorten production lead times, and update store formats to create distinct, immersive brand experiences.

The strategy comes as Victoria’s Secret continues trying to rebuild a customer base that has changed significantly from the one that helped make the company a dominant name in lingerie.

Victoria’s Secret has a controversial past

Victoria’s Secret’s current strategy comes after several years of reputational challenges that forced the company to reconsider how it presents itself to consumers.

After a 17-year run, the iconic Victoria’s Secret Fashion Show was officially canceled in 2019, following what was thought to be its final show in 2018.

In 2024, Victoria’s Secret separated its namesake brand and PINK operations following its 2022 merger, allowing the two brands to more clearly differentiate their identities and target audiences.

That same year, Victoria’s Secret brought back its iconic fashion show after a six-year hiatus.

The show had been canceled amid criticism surrounding the company’s approach to inclusivity. In 2019, the retailer’s former marketing chief faced backlash after saying transgender and plus-size models did not align with the brand’s image, Forbes reported. 

In 2022, Victoria’s Secret also faced allegations of sexual harassment and misogyny involving high-level executives, which were detailed in shareholder litigation. According to law firm Quinn Emanuel Urquhart & Sullivan, the company ultimately reached a $90 million settlement with models involved in the litigation.

The fashion show’s return was designed to reflect “who the company is today” while reconnecting with elements that had previously made it a cultural force.

Here’s some of my previous coverage of store closures:

• Nearly 200-year-old retailer exits an entire market
• Major mall retailer closes more stores in 2026
• 102-year-old fashion, lifestyle retailer confirms 180 more closures

The comeback generated significant attention for the brand.

Within four weeks of its airing, the fashion show reached approximately 61 million viewers, up over 60% from the prior year. Victoria’s Secret gained nearly nine million new social media followers, generated 51 billion media impressions, and saw site traffic increase more than 60% year over year. 

The company said the event contributed to a more than 15% increase in new customers.

“By showing up in the moments that matter most to her and creating compelling products and experiences, we are building the emotional connections needed to win her loyalty for the long term,” said Victoria’s Secret CEO Hillary Super in the company’s third-quarter fiscal 2025 earnings call.

Victoria’s Secret sees early signs of improvement

Victoria’s Secret is beginning to see signs that its turnaround strategy is gaining traction.

During the second quarter of fiscal 2026, Victoria’s Secret reported:

• Net sales: Increased 10.4% year over year to $1.6 billion
• North America store sales: Rose 8.9%
• Comparable net sales: Climbed 9%

The results provide an early indication of improving sales performance, although Victoria’s Secret still has work to do to fully rebuild the customer base and brand strength it enjoyed at its peak.

Related: Popular women’s fashion brand closes dozens of stores nationwide

Valued at a market cap of roughly $1 trillion, Mircon (MU) stock is also down 21% from all-time highs. 

New 13F data show that Citadel Advisors, the hedge fund run by billionaire Ken Griffin, has been quietly trimming a huge chunk of its Micron position even as the stock kept climbing.

According to 13F filings reviewed by me, Citadel cut its Micron stock holdings by 86.93%, dropping from roughly 4.6 million shares to 600,523 shares. 

Citadel reduced its exposure to the chipmaker by four million shares over the last three months, even as the AI company continues to grow rapidly. 

Ken Griffin cuts exposure to Micron stock

The Micron reduction was not an isolated move. The same filing shows Citadel also slashed its stake in Taiwan Semiconductor Manufacturing by 86.97%, cutting roughly 3.5 million shares. 

STMicroelectronics saw a similar cut in exposure, with Citadel trimming that position by 44.25%, or just over three million shares.

Taken together, these three names represent a clear theme.

Citadel meaningfully pulled back its exposure to semiconductor and chip manufacturing stocks, even as demand for AI infrastructure and memory chips has been running hot. 

More Micron:

• Michael Burry increases his bet against popular chip giant
• Bank of America doubles down on Micron stock after AI bombshell
• Micron stock jumps as investors look beyond GPUs in AI chip trade
• Who owns Micron Technology? A look at its top investors

The filing does not explain why the fund made these moves, and hedge funds routinely adjust positions for reasons unrelated to a company’s outlook, including portfolio rebalancing, risk management, or simply locking in gains after a huge run.

That said, the pattern is not limited to chips. 

Citadel’s filing shows sizable cuts across a wide range of sectors too, including General Electric (down 72.02%), Citigroup (down 62.90%), Merck (down 49.40%), Tesla (down 41.39%) and Meta Platforms (down 38.77%). 

This broad-based trimming suggests Citadel may have been reducing overall risk across many positions rather than making a specific bearish call on Micron or the memory chip market. Still, the size of the Micron and TSM cuts stands out even against that backdrop.

Why Micron stock price is on the move

Micron’s business has been on a tear.

The company’s fiscal third quarter 2026 revenue hit $41.5 billion, up 346% year over year, marking its fifth straight quarterly revenue record.

Gross margin rose to 85%, allowing the company to beat consensus earnings estimates for seven consecutive quarters. 

Related: Micron CEO is doubling down on a cycle-free future

CEO Sanjay Mehrotra told investors on that call that DRAM and NAND industry demand continues to exceed industry supply significantly, and that Micron expects tight conditions to persist beyond calendar 2027. 

Mehrotra added:

“We are excited to announce that we have now signed 16 Strategic Customer Agreements, or SCAs, which we expect will fundamentally transform our business model. The memory industry has been structurally transformed by the proliferation of AI.”

The company guided fiscal fourth quarter revenue to $50 billion, plus or minus $1 billion, and non-GAAP earnings per share to $31, plus or minus $1.

A big driver behind this demand surge is artificial intelligence. 

Micron executive Sumit Sadana explained at the KeyBanc Technology Leadership Forum on Aug. 10, 2026, that AI system performance is now fundamentally tied to memory chip capacity and speed, not just processor power. 

He also pointed to Micron’s Strategic Customer Agreements, long-term supply contracts that now cover about a quarter of the company’s projected revenue, as a major shift in how the memory business operates.

Also read: Is Micron Technology a good long-term investment? What buy-and-hold investors should know

Micron stock faces a short bet

Not everyone is convinced the rally has room to run. 

• Michael Burry, the investor known for correctly predicting the 2008 housing crash, has been adding to his short position against Micron even as the stock price climbed toward $1,000. 
• Burry said his goal was to reduce gross exposure and free up cash while keeping his overall bearish stance intact, and he acknowledged the short position was roughly break-even but tipping toward a loss as the market rallied.
• Burry explained that the memory chip industry has historically moved in sharp boom-and-bust cycles, and Micron’s capital spending is ramping fast, with fourth-quarter capital expenditures guided near $10 billion. 

Despite the rally in MU stock price, it trades at 9.5x forward earnings, which is reasonable. Yahoo Finance data suggests Micron has a beta of 2.2, meaning it is twice as volatile as the broader market in either direction.  

Out of the 32 analysts covering Micron stock, 31 recommend “Buy”, and one recommends “Hold”. The average MU stock price target is $1,555, 63% above the current price. 

For now, Citadel’s filing shows the fund trimmed exposure broadly, and Micron and its chip peers took some of the largest cuts. 

The filing doesn’t say whether that reflects caution about the memory sector specifically or a broader move to reduce risk across the portfolio. 

Either way, the timing puts Griffin’s fund on the sidelines of a trade that Micron’s own leadership insists still has years of growth ahead.

Related: Jim Cramer has strong message for Micron stock investors

More on Micron & its stock:

• History of Micron: The story behind the computer memory giant
• Does Micron pay dividends? Its yield and payouts explained
• Micron Technology’s stock buybacks explained
• How many employees does Micron have in 2026? Its workforce, locations, and layoffs explained
• Where is Micron Technology’s headquarters? All about its Boise, Idaho base

Below, we break down the latest mortgage data alongside perspectives from major real estate platforms Zillow and Redfin, which highlight the ripple effects on home purchasing and renter activity.

“While the daily index rose into the 6.9’s today for the first time in more than year, many borrowers are already seeing rates at 7% or higher,” wrote Mortgage News Daily (MND).

The weekly mortgage rate reflected the uptick, but Freddie Mac noted a silver lining.

“The 30-year fixed-rate mortgage averaged 6.71% this week,” said Sam Khater, Freddie Mac’s chief economist. “Purchase demand has remained relatively stable indicating steady interest from buyers adapting to evolving market conditions.”

The average daily rate, MND explained, is an ideal scenario that doesn’t necessarily indicate the reality homebuyers face.

“When we reference average, daily, top-tier 30-year fixed rates, it is for an ideal scenario that rarely exists in the wild,” MND wrote. “The average scenario will always involve slightly higher effective rates (i.e., even if the rate is the same as national averages, it would involve additional upfront costs).”

“As a reminder, our daily rate index accounts for upfront costs whereas Freddie Mac’s weekly survey rate does not.”

Beyond mortgage rates, Zillow reports interest in renting

High mortgage rates can be a major factor in spurring interest in rentals — and Zillow says there are key things people consider.

“Renting is often how people try out a new community before committing,” said Mischa Fisher, chief economist at Zillow. “When we see a market with a growing share of rental searches coming from outside the metro, that tips us off to a developing pipeline.”

More on housing market:

• Zillow sees change in housing market, home values
• New home-selling strategy poses threat to buyers
• Goldman Sachs issues major prediction for U.S. housing market

Zillow points to specific cities to which people are looking to move.

“Prospective renters are looking beyond their own backyards, and new Zillow data reveals where they’re setting their sights,” Zillow wrote.

“An analysis of rental listing page views found that out-of-town interest is growing fastest in Buffalo, Chicago and Houston. The share of searches coming from renters outside these markets has surged over the past year — an early signal of where relocation demand may be heading next.”

Redfin sees homebuyers gaining power anyway

Mortgage rates and high housing costs are the biggest challenge for prospective buyers, but there are positive signs for homebuyers.

“The typical U.S. home-sale price rose 2.2% year over year, while the average weekly mortgage rate was 6.66%, near its highest level in the last year,” real estate technology company Redfin wrote.

In a seasonally adjusted basis, newly listed U.S. homes for sale grew 2.1% week-over-week, hitting a four-year high, according to Redfin.

“The total number of homes for sale ticked up 0.4% week over week,” Redfin wrote. “That’s welcome news for house hunters, who have increasingly more options and negotiating power.”

Pending home sales remained virtually unchanged (-0.1%) week-over-week, hovering at their lowest point since February.

“The disconnect between growing listings and sluggish sales is exacerbating the buyer’s market we’re seeing in most of the country,” Redfin wrote.

Daily mortgage rates drop slightly

On Sept. 3, the average daily 30-year fixed-rate mortgage dropped slightly to 6.88% from the Sept. 2 average of 6.91%, according to Mortgage News Daily.

“Mortgage rates finally had a decent day on Thursday after spending the previous three days inching into the highest levels in more than a year,” MND wrote. “Part of the improvement was due to comments from Fed Governor Chris Waller, who said that it wouldn’t be necessary to hike rates at the next meeting unless inflation data surprises to the upside.

“Before that, the underlying bond market was already showing some resilience in overnight trading,” MND continued.

“The prevailing pattern has been a fairly reliable correlation between bond yields and oil prices. But this time around, yields held fairly steady in the overnight session even though oil prices moved higher.”

Related: Zillow predicts major mortgage rate, housing market change

Shares of the chipmaker have already climbed sharply this year, riding a wave of demand tied to artificial intelligence.

Valued at a market cap of $1.76 trillion, Broadcom (AVGO) stock has returned more than 300% over the last three years.

After accounting for dividend reinvestments, cumulative returns are closer to 2,500% over the past decade. 

Morgan Stanley just raised its price target on Broadcom stock after the company’s fiscal third-quarter results (ended in July), citing surging AI chip revenue and a customer list that includes the biggest names building frontier AI models.

Why Broadcom stock keeps climbing

Broadcom makes custom AI chips, known as XPUs, along with networking gear that connects massive data centers. 

Its biggest customers include Google, Anthropic, OpenAI and Meta, companies racing to build out computing power for their AI systems.

That race has turned into a windfall for Broadcom. 

During the company’s earnings call on Sept. 2, CEO Hock Tan said AI semiconductor revenue grew 221% from a year earlier and jumped 54% from the prior quarter. 

Total company revenue rose 86% year over year to $29.6 billion. Operating income grew even faster, up 92% year over year, with margins rising to 68%. 

Non-GAAP earnings per share came in at $3.32, beating both Wall Street’s estimate of $3.22 and Morgan Stanley’s own forecast of $3.24, according to the bank’s research note shared with me.

Broadcom also guided fourth-quarter revenue to $34.8 billion, ahead of Street estimates of roughly $34.66 billion.

Morgan Stanley raises AVGO stock price target 

Morgan Stanley analyst Joseph Moore raised his price target on Broadcom stock to $505 from $502, while keeping his Overweight rating, according to the firm’s Sept. 3 research note.

Moore’s team pointed to a few things driving the increase:

• Third-quarter results and next quarter guidance beat prior company guidance.
• Broadcom’s 2027 AI revenue outlook of $115 billion tracks closely with the bank’s own $120 billion estimate.
• Two AI labs are expected to be Broadcom’s largest customers by calendar 2028, signaling growing customer breadth beyond Google.
• Gross margin pressure from pricier memory chips is offset by strong operating leverage.
• The stock still trades at a discount to many AI-focused chip peers, even after this year’s rally.

Moore’s team wrote:

“We highlighted in our preview some expectations issues that may limit near term upside, but the results are impressive.”

More Bank Stock Resets:

• Bank of America revamps AMD stock price target for 2026
• Morgan Stanley resets Microsoft stock forecast ahead of earnings
• Goldman Sachs revamps SpaceX stock price target for 2026

The report added that AI revenue growth of more than triple in the back half of the year, along with plans to double again next year, is remarkable given the size of Broadcom’s business.

Morgan Stanley’s risk-reward framework lays out a base case of $505, a bull case of $640 if AI revenue growth surprises to the upside, and a bear case of $300 if new customer chip programs fail to reach full production.

Moore is a 5-star analyst as per TipRanks. Over the last 12 months, following Moore’s trades would have helped investors generate a 24.70% average return. 

What Broadcom’s CEO is telling investors

On the earnings call, Tan leaned into the scale of what’s happening with Broadcom’s biggest AI customers. 

He described the company’s role in helping Anthropic and OpenAI fund the enormous cost of building AI infrastructure, comparing it to helping talented students get through college.

He then explained why Broadcom is willing to keep investing so heavily to support them.

Related: BMO sees writing on the wall for Broadcom stock after earnings

“Every gigawatt of compute they deploy, they could achieve $30 billion of ARR, annual revenue per gigawatt,” Tan said. “That is a hell of a business model. For us, that is a great investment to focus on doing.”

Tan also gave investors a rare multi-year outlook, telling analysts that fiscal 2027 AI semiconductor revenue is expected to double to roughly $115 billion, then double again to $230 billion in fiscal 2028. 

He framed those figures as conservative estimates based on secured supply chains, not a promise of maximum demand.

“We are very careful, and to be honest, we try be conservative,” Tan told analysts when asked about supply constraints.

What comes next for Broadcom stock

Broadcom’s next earnings report is scheduled for after market close on Wednesday, Dec. 9, when the company will report full fourth quarter and fiscal year 2026 results. 

Related: Marvell vs. Broadcom: the custom silicon shift

Investors will watch whether demand from Google, Anthropic, OpenAI and Meta continues at the pace Tan described, and whether supply bottlenecks tied to memory chips, factory capacity and data center construction ease as the company expands its manufacturing footprint in Singapore.

Based on consensus estimates compiled by Tikr.com:

• Analysts tracking AVGO stock forecast revenue to increase from $106 billion in fiscal 2026 to $358 billion in fiscal 2030. 
• Over that period, free cash flow is projected to improve from $49 billion to $197 billion. 
• If AVGO stock is priced at 20x forward FCF, which is reasonable, it could return over 100% within the next three years. 

Out of the 29 analysts covering Broadcom stock, 26 recommend “Buy”, and three recommend “Hold”. The average AVGO stock price target is $518, 45% above current levels. 

For now, Morgan Stanley’s revised price target signals continued confidence that Broadcom’s AI chip business still has plenty of room to run, even after a run-up that has already reshaped how investors value the stock.

That treasure-hunt habit has powered The TJX Companies (TJX) for decades.

So when the company’s flagship Marmaxx division posted its softest sales growth in years, shoppers and shareholders both noticed.

The stock has slid, down about 16% over the past month as of Sept. 3.

Yet one major bank is telling clients to look past the dip.

Why Morgan Stanley still rates TJX stock a buy

In a Morgan Stanley research note shared with me, analyst Alex Straton reiterated an Overweight rating and a $178 price target on TJX.

Straton, who leads Morgan Stanley’s softlines and off-price retail coverage and rates rivals Ross Stores (ROST) and Burlington (BURL), frames TJX as a “consumer compounder.” 

It refers to a business that keeps growing profits steadily through good times and bad.

Overweight is Morgan Stanley’s version of a buy call. It means the bank expects the stock to outperform its retail peers over the next 12 to 18 months.

The $178 target sits roughly 35% above where TJX traded in early September, near $131.

What actually went wrong inside Marmaxx stores

Marmaxx is TJX’s largest segment, combining TJ Maxx, Marshalls, and the smaller Sierra chain, whose sales are folded into Marmaxx’s results.

Comparable sales there rose just 1% in the second quarter, according to TJX‘s earnings report, well below the 6% to 7% growth logged at HomeGoods, TJX Canada, and TJX International.

Morgan Stanley points to three fixable problems rather than a broken business.

1. Empty racks despite full backrooms

Understaffed teams and messy storage rooms meant inventory sat hidden in the back instead of moving onto the sales floor. That left shoppers staring at gaps on the shelves, even when the product existed in the building.

2. Missed calls on basics and back-to-school

Rivals leaned harder into everyday apparel basics and moved earlier on back-to-school goods, so Marmaxx was caught with the wrong mix at the wrong time.

3. Beauty complaints and pricing pressure

According to Reddit discussions tracked by the bank, shoppers noticed damaged packaging in the beauty aisle, threatening what is normally a highly profitable section.

Straton also questions whether Marmaxx’s reputation for low prices is shrinking as other retailers cut prices more aggressively.

CEO Ernie Herrman was blunt on the earnings call, calling the shortfall “self-inflicted and within our control,” Investing.com reported.

How the rest of TJX covered the shortfall

Even with its biggest division stalling, TJX still beat expectations across the board.

Overall comparable sales rose 4%, adjusted earnings per share climbed 11% to $1.22, ahead of the $1.19 analysts expected, and the company’s management raised its full-year profit outlook.

HomeGoods did the heavy lifting, with comparable sales up 7% and net sales jumping 10% to $2.5 billion.

Three signs the wider portfolio held up:

• HomeGoods, Canada, and International each grew comparable sales 6% to 7%.
• Adjusted pre-tax margin widened to 11.9%, up 50 basis points from a year earlier.
• Management lifted its long-term store target by 500 locations, to 7,500 stores.

That variety of brands is the whole argument. When one engine slows, the others keep the profits growing.

What Morgan Stanley’s price target really assumes

The $178 target is not a single guess. It sits at the midpoint of two scenarios the bank models.

• Bull case, $197: TJX fixes Marmaxx quickly and holds mid-single-digit comparable sales across every banner.
• Base case, $158: Execution problems drag on, and medium-term comparable sales fall below the roughly 4% the bank expects.

Even Morgan Stanley’s more cautious $158 outcome would still put TJX above its early-September price, and its optimistic case implies a much larger gain.

TJX stock vs. the broader market

Here is how TJX has traded against the S&P 500.

The company still generates steady free cash flow and pays a dividend yielding about 1.4%, with a quarterly payout of $0.48 a share.

What still needs to happen before the recovery sticks

Management says Marmaxx improved in August and expects comparable sales there to climb back toward 2% to 3% by the fourth quarter.

Getting there is not free. The company will likely spend more on store labor, marketing, and sharper pricing to win shoppers back.

More Retail Stocks:

• Ross Stores customers will soon feel a notable change in stores
• Major mall retailer closes more stores in 2026
• Target takes big step to be more like Costco

There are also near-term costs to watch. 

TJX flagged higher fuel and freight expenses in the back half, and inventory grew 7% heading into the holidays, so that merchandise needs to sell.

That matters because American shoppers are working with tight budgets. Discount chains usually see more business when money is tight, and competitors are experiencing this directly. 

What TJX investors should watch next

Morgan Stanley’s message is that one weak quarter at Marmaxx does not undo the case for TJX.

The company beat expectations, widened margins, and raised guidance even while its largest division stumbled, which is exactly what the bank wants a diversified retailer to do under pressure.

The risk is real. If Marmaxx’s sales remain slow through the holiday season and higher operating costs reduce profits, the base case target of $158 becomes the most likely result. 

If that happens, long-term investors may have to wait longer to see a return. 

For now, the buy call rests on one question. Can TJX get the right products back on the floor before the crowds arrive? 

The company’s management says the solution is already underway, and Morgan Stanley is betting it works.

Related: Costco makes key move to expand membership base

The five names, Alphabet, NVIDIA, Apple, Caterpillar, and Eli Lilly, span four sectors and would appear well-balanced under standard sector classification, 247 Wall St. reported.

Cramer’s response flagged a structural shift in revenue that most investors in industrial stocks have yet to absorb.  

With Caterpillar reclassified as a data center stock, four of Jeff’s five positions, Alphabet, NVIDIA, Apple, and Caterpillar, all draw revenue from AI infrastructure spending. 

The portfolio spans four sectors on paper but is increasingly a concentrated AI bet in practice.

Caterpillar’s second quarter revealed a company in transformation

Caterpillar reported its first $20 billion quarter in Q2 2026, with revenue reaching $20.5 billion for a 24% gain over the prior year. Adjusted earnings per share came in at $8.17, as Caterpillar disclosed in its August 4, 2026, earnings release.

Within the Power and Energy segment, power generation revenue climbed 29% due to demand for reciprocating engines and turbines used in data center applications.

Retail sales to power generation customers surged 72% year over year, and the company’s backlog expanded to a record $72 billion, Utility Dive reported.

Some customers are placing equipment orders as far out as 2030, reflecting the depth of demand for data center construction, Joe Creed, Chairman of the board and CEO at Caterpillar, noted on the earnings call. 

That growth profile prompted Cramer to pull Caterpillar out of Jeff’s portfolio entirely.

The market has priced in the shift, with Caterpillar shares up roughly 36% year to date and about 86% over the trailing 12 months through September 2, 2026, Yahoo Finance reported. 

The stock trades at a forward price-to-earnings ratio of 23.94, as of September 2, 2026, a multiple more typical of technology names than of industrial peers, Guru Focus confirmed.

Record S&P 500 concentration amplifies the hidden overlap

Caterpillar’s transformation fits a broader pattern, changing what diversification means for investors who hold index funds or build their own stock portfolios.

The ten largest S&P 500 stocks now control nearly 41% of the index’s total market capitalization at the end of 2025, eclipsing the dot-com bubble’s peak of about 27%.

RBC Wealth Management data show the top-10 weighting hovered between roughly 18% and 23% from 1990 through 2015. It has nearly doubled over the past decade, driven largely by AI-linked gains in a small group of mega-cap names.

More Personal Finance:

• Schwab warns of 5 money traps risking savings, investments
• Lenders still make small business loan promise FTC banned
• Dave Ramsey has a simple fix for stalled debt payoff

Nearly 50 cents of every dollar invested in the S&P 500 now flows into AI-linked stocks, the Kobeissi Letter estimated in a May 2026 analysis.

That means even investors who never bought a single Caterpillar share may have the same hidden AI tilt through a standard index fund. 

John Patrick Lee, Product Manager at VanEck, called it an unintentional active sector bet via ETF Trends, while direct holdings like Jeff’s only compound the overlap.

“Investors don’t have to think there’s an AI bubble to be concerned about the concentration risk that AI has wrought,” Morningstar Indexes strategist Dan Lefkovitz warned.

How Cramer proposed to rebalance the portfolio

That concentration profile is exactly what Cramer set out to fix in Jeff’s portfolio. After reclassifying Caterpillar, Cramer needed replacement stocks whose revenue doesn’t rise and fall with data center capital expenditure cycles.

His first pick was TJX Companies, the off-price retailer that posted second-quarter fiscal year 2027 adjusted earnings of $1.22 per share. 

Comparable-store sales rose 4%, and TJX raised its full-year adjusted earnings guidance to a range between $5.15 and $5.20 per share.

TJX shares were down roughly 13% year-to-date at the time of the segment, a setup Cramer viewed as an opportunity while management still executes, Yahoo Finance reported.

Christine Benz, director of personal finance and retirement planning at Morningstar, said in an interview that investors who overweight mega-cap growth and technology should consider repositioning toward small-cap value.

<strong>Small-cap value has kind of persistently underperformed the large-cap growth stocks, and I think that arguably there's a pretty good value there, so investors might do a little bit of repositioning so they're not so heavily tilted toward those mega-cap growth and technology stocks,</strong>

Cramer’s second pick was Wells Fargo, which reported second-quarter 2026 earnings of $2 per share on $22.6 billion in revenue, the earnings release showed. 

Net interest income rose 5% year over year, while the bank returned $3.0 billion to shareholders through buybacks. The stock serves as a financial-sector anchor, with earnings tied to loan demand and interest rate spreads.

What Caterpillar’s shift means for your next portfolio review

Caterpillar’s shift illustrates a gap between how companies are classified by sector and where their revenue growth originates, one that standard labels alone cannot close.

Lefkovitz noted in his Morningstar analysis that sector classifications can obscure how closely mega-cap holdings are linked. AI concentration cuts across stocks, sectors and themes, making traditional diversification metrics less reliable.

Investors can spot hidden AI overlap by checking each company’s latest 10-Q for revenue details and comparing its forward P/E to that of similar companies. 

When multiple positions depend on the same spending cycle, Benz recommended shifting toward non-AI sectors such as off-price retail or regional banking.

Related: Jim Cramer reveals his 20% rule for winning stocks