Here’s why Jim Cramer thinks semiconductor stocks can rise

as micron CNBC’s Jim Cramer explained why he thinks there’s still room for some semiconductor stocks to rise as stocks surged 7.76% on Friday.

“But can these stocks continue to rise?” asked Cramer. “The answer is yes, and the main reason is that we don’t have enough equipment to scale up production of these chips, and we can’t assemble them fast enough.”

Micron develops memory and storage technology for artificial intelligence. Chief Executive Officer Sanjay Mehrotra told Mr. Kramer there is huge demand for the company’s products and detailed plans to spend $200 billion to expand domestic manufacturing capacity. The company broke ground Friday on a 600,000-foot facility in upstate New York.

“AI-driven demand is accelerating,” Mehrotra told Kramer on CNBC’s “Squawk on the Street” Friday morning. It’s here and we need more and more memory to meet that demand. ”

Cramer noted that construction of the fab was made possible by the CHIPS Act, a Biden administration-era initiative that provides massive subsidies to domestic semiconductor manufacturing. He suggested that the chip shortage would not be addressed immediately because the factory could take years to build. Kramer said he expects prices for these products to continue rising unless demand abates.

In addition to Micron, Kramer cited a number of similar stocks that have already seen big gains this year. western digital, seagate and sandisk.

Kramer suggested that it’s not easy to predict shortages of specific semiconductors for data centers, noting that a year ago there appeared to be an oversupply of the technology. He suggested that NVIDIA is a leading semiconductor name that predicts such high demand.

“Only NVIDIA really saw it coming. They partnered with the best of the best, Taiwan Semiconductor, to manufacture all the high-end chips they needed,” Cramer said. “There’s no bottleneck there. There’s no shortage, at least compared to memory.”

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Disclaimer CNBC Investing Club Charitable Trust owns shares of Nvidia.