CrowdStrike CEO's alarming prediction — plus, the sell-off spreads beyond tech

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 lower as this week's selling goes beyond tech. The Dow is the big loser Friday, down more than 1% as defensive stocks join what has largely been a weaker AI trade this week. There are some bright spots in technology, like cybersecurity and chip stocks, keeping the sector modestly in the green on the day but not enough to keep the S & P 500 and Nasdaq out of the red. Club names Micron and Intel are higher. The only other positive sector is energy, which is having a strong session. That's because oil prices are surging on rising tensions in the Middle East. The U.S. benchmark West Texas Intermediate crude is above $103 per barrel. International Brent topped $116 for a six-month high. These elevated oil levels and recently hotter government price data are keeping inflation fears front and center ahead of next week's Federal Reserve meeting. According to the CME FedWatch tool, the odds are pretty low, just over 10%, for an interest rate hike Wednesday afternoon following the central bank's two-day gathering. The market puts the chances of a December rate increase at nearly 78%. If that happens, it would be the Fed's second rate hike in 2026 following the one in September, which was the first in three years. For the week, the Dow is modestly higher, while the S & P 500 and Nasdaq are modestly lower. Palo Alto Networks and CrowdStrike are our winners Friday and for the week. The reason? Researchers discovered that AI could exploit security flaws in PHP, a programming language used on nearly 70% of websites, among the most widely used server-side languages. The vulnerabilities had been known for years, but exploiting them was considered too difficult and time-consuming for hackers. AI changed that, figuring out how to break into vulnerable servers, potentially steal sensitive information, and take control of websites. The discovery prompted urgent government warnings and a rush to install security fixes after details of the vulnerabilities leaked ahead of schedule. "This affects tens of millions of internet-facing servers," CrowdStrike CEO George Kurtz told CNBC on Friday. Although patches were released Wednesday, many outdated versions of PHP are still in use, and the patch almost certainly didn't fix all of PHP's problems. "You're going to see a lot of breaches happening in the coming months from this," Kurtz warned. The bigger takeaway is that AI is making sophisticated cyberattacks easier and cheaper to carry out, increasing the need for advanced cybersecurity defenses. Kurtz said AI-powered attacks observed by CrowdStrike doubled each month from July through September. "It almost becomes unsustainable unless you're using defensive AI to be able to combat what the offense is doing, and that's what CrowdStrike is focused on," he said. That growing threat reinforces our conviction in cybersecurity as a long-term AI winner. Our decision Friday to trim CrowdStrike after a strong rally was strictly about right-sizing our position, not a change in confidence in the business. CrowdStrike's weighting in our portfolio had swelled to nearly 5%. The trim brought it back down to 4.25% and secured a gain of roughly 187% on stock purchased in late 2024. Next week is the busiest of earnings season . About a third of the S & P 500 is scheduled to report quarterly results, including 11 companies in the portfolio. On Tuesday, it's Boeing before the opening bell. Wednesday features GE Vernova in the morning and Alphabet , Microsoft , and FedEx in the evening. Linde and Eli Lilly report before Thursday's open, while Amazon , Intel, Starbucks , and FedEx Freight are out that evening. (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.