CNBC’s Jim Cramer said investors need to be more selective in the semiconductor rally.
cerebrumThe chipmaker, which focuses on artificial intelligence workloads, completed its largest IPO of the year on Thursday. The stock was trading at $185 on Wednesday night, but it’s now trading around $350, temporarily valuing the company at about $107 billion. The stock closed on the day at $311 per share, giving it a market capitalization of about $95 billion.
“There’s a word for it, and that word is fanciful,” the “Mad Money” host said, referring to Cerebras’ blockbuster debut. “Today’s actions are exactly what happened in 1999.”
For Kramer, the move reflects a broader rush into everything related to artificial intelligence, a trend he still strongly supports, but which he believes now requires greater discipline from investors.
“I have always supported this semiconductor rally,” he said. “The Fourth Industrial Revolution, hook, line and sinker, driven by NVIDIA CEO Jensen Huang.”
he pointed to Cisco He feels comfortable owning the name after the company achieved what he called “extraordinary results,” including accelerated sales and earnings related to spending on AI infrastructure. Cisco makes networking chips that are used to transmit data throughout data centers.
“Cisco deserves to lose this case,” Kramer said. “Today’s 13% rise was completely justified, and then to some degree justified after that.”
Mr. Kramer also emphasized Nvidiaargues that the stock remains an attractive value despite the significant rise.
“Based on future earnings expectations, Nvidia’s stock price is now very likely at a discount to the average S&P 500 stock price,” he said. “That’s unreasonable.”
He added names for memory and storage: micron, sandisk and western digital It will also continue to be a reasonable stock to hold as long as supply remains short and demand for AI computing is strong.
“I don’t care if stock prices go up significantly due to shortages,” he said.
The bottom line? Investors shouldn’t abandon semiconductor stocks, but they should be more cautious about which stocks they buy amid the growing enthusiasm around AI, Cramer said.
“Please be disciplined,” he said. “Understand what these companies are doing and why it’s not worth it.”
