CNBC’s Jim Cramer said Tuesday that investors often miss important market truths. The theory is that even if a company performs well, its stock price declines not because the company did anything wrong, but simply because expectations were too high.
Cramer said some popular stocks have taken a big hit in recent trading, indicating the market may have gotten ahead of itself after a strong run. He dismissed Wall Street’s standard label of “profit-taking,” arguing that it was insufficient to explain the disconnect between strong fundamentals and weak stock reactions.
Kramer pointed out that GE Vernova As an example. The energy company, which plays a key role in powering AI data centers, reported solid order growth and gave a bullish outlook. CEO Scott Strzyk even hinted at a possible relationship with OpenAI, a name that has caused other tech stocks to soar. But GE Vernova stock, which had risen nearly 80% since the beginning of the year, plummeted 50 points.
“It wasn’t enough that they (GE Vernova) had incredible order growth; the stock price was already expecting more,” Cramer said.
VertiveAnother data infrastructure provider faced a similar fate. Despite having one of the strongest quarters of the year, with organic orders up 60%, the stock initially soared and then quickly reversed. Cramer said investors were already expecting a monster quarter, and even “great” results weren’t enough.
“I wonder what would have happened if we hadn’t blown the doors off all the metrics,” Vertiv Chairman Dave Cote quipped at the beginning of the company’s conference call. Kramer said that’s a valid point. When the bar is set so high, it is difficult for reality to catch up.
in contrast, intuitive surgery Shares soared 14% after surprising Wall Street with faster-than-expected processing growth. A key detail was that the company saw an increase in after-hours usage of its Da Vinci robotic system. This points to increased efficiency and demand that has not yet taken hold. The reacceleration was not expected, which is why the stock rose 14%, Cramer said.
Cramer also warned of continued pain in speculative stocks. Companies that have never been profitable are issuing new shares to survive, and insiders are cashing in. However, he remains bullish on the name of the real economy, pointing out that: capital one As an example. Credit card companies rebounded with a surprisingly strong quarter, showing a decline in credit problems despite widespread concerns.
“I don’t think speculative stocks are going to go back to the highs they were two weeks ago,” Cramer said. “That’s why I continue to encourage you to reduce your stake in the companies you own and are losing money.”
