CNBC’s Jim Cramer Monday cautioned investors against dumping high-quality stocks in a market he says is being driven more by fear rather than fundamentals.
“Stocks go down for all sorts of reasons, some good, some bad. Lately we’ve had a lot of bad, and tonight I want to straighten some things out,” Cramer said on “Mad Money.” “Because a bad tape causes individuals to dump great stocks, usually when they should be buying more.”
Stocks ended Monday mostly lower reversing early gains and ended a bit off session lows. The S&P 500 and Nasdaq finished 0.39% and 0.73% lower while the Dow Jones Industrial Average eked out a 0.11% gain.
While the broader market gave up early gains despite rising oil prices, Cramer said the bigger story is the disconnect between stock moves and underlying business realities — especially in technology.
He pointed to cybersecurity as a key example. Concerns that artificial intelligence from private AI company Anthropic could replace traditional cybersecurity firms have pressured shares of Palo Alto Networks and CrowdStrike.
“That is just dead wrong,” Cramer said. “In reality, the rise of AI should be a tailwind … for Palo Alto and CrowdStrike, because these same AI agents can be programmed by hackers to take over your network very easily. They are the vulnerability. Without the help of traditional cybersecurity, you’re more vulnerable than ever,” he added.
He explained the insider confidence reinforces that view, noting Palo Alto CEO Nikesh Arora recently bought $10 million worth of stock. “I don’t think a CEO would buy 10 million dollars’ worth of stock if he thought AI was an existential threat to the business model,” Cramer said.
Cramer also addressed the steep drop in social media giant Meta Platforms after recent legal rulings, arguing investors are overreacting.
“I thought that the sell-off based on these lawsuits was strange,” he said, adding that such cases are often overturned on appeal.
His bottom line: “Sometimes stocks sell off for bad reasons, or fully bogus reasons, and at those moments, I’d rather be a buyer than a seller of CrowdStrike or Meta.”
