CNBC’s Jim Cramer said Tuesday that today’s stock market is far from the bubble it was before the dot-com crash.
On the other hand, the following companies: space x Kramer argued that they were an exception to the rule rather than representative of the broader market, which could fuel a perception of excess.
“There are always outliers,” the “Mad Money” host said. “There’s some bubbles, but the bubbles don’t represent what we’re trading. They don’t represent what we own.”
The frenzy surrounding artificial intelligence has fueled huge stock gains in semiconductor and other AI-related companies, pushing stocks to new highs over the past year. memory chip manufacturers micron and sandisk This year, they are up more than 243% and 644%, respectively. The rally has some investors questioning whether the market is overheating compared to the dot-com boom of the late 1990s.
Mr. Cramer disagreed, citing lower interest rates, stronger corporate earnings and a much more reasonable valuation than investors saw during the tech bubble.
He noted that Tuesday’s latest consumer price index report, which was weaker than expected, allayed concerns that the Federal Reserve may soon have to raise interest rates.
“You don’t get a dot-com crash scenario without a series of spectacular rate hikes. We’re not there yet. New Fed Chairman Kevin Warsh spoke today and it seemed like he’s not going to tighten if CPI stays at this level,” Cramer predicted.
Kramer also argued that valuations are much more reasonable than they were at the peak of the dot-com era. Towards the year 2000, S&P500 The company trades at more than 25 times forward earnings, compared with about 20 times today, according to FactSet data.
“That’s a big difference, $20 is not cheap, but it’s certainly not as expensive as $2,000,” he said.
He also noted that some of the largest companies in the market are reporting strong earnings but are trading at valuations that he considers attractive. bank of america, goldman sachsand JP Morgan He said all companies reported strong profits, sales were higher than Tuesday and were trading at around 12 to 18 times forward earnings. Cramer’s Charitable Trust, a portfolio managed by CNBC’s investment club, owns Goldman Sachs stock.
“These are all incredibly cheap,” Kramer said. “So, do you think it’s bubbly?”
The same argument applies to technology, he says. Kramer pointed out SK Hynix Micron trades at about 4 times expected 2027 earnings, while Micron trades at 6 times expected 2027 earnings. NvidiaMeanwhile, despite its dominant position in artificial intelligence, it trades at a multiple similar to the broader market, he said. Cramer’s Charitable Trust owns stock in Nvidia.
“What’s unique about this market is that so many large-cap stocks are undervalued,” he said.
