Jim Cramer analyzes three major sectors of this economy

CNBC’s Jim Cramer on Wednesday identified and examined three different aspects of the current economy and explained how these dynamics are impacting market movements.

“We currently have three economic regions,” he said. “Two of them are doing well, but one shouldn’t be. The third one is in a lot of pain and needs help right now.”

He began by pointing to the rapidly growing areas related to artificial intelligence and data centers. JP Morgan Survey results suggest that AI-related stocks account for 75% S&P500 Since late 2022 after the launch of OpenAI’s ChatGPT, 80% of revenue growth and 90% of capital investment growth have translated into profits. He listed some of the industry’s “heavy hitters.” meta, alphabet, Amazon, microsoft, Nvidia, tesla, broadcom, micron, AMD, Dell and oracle. Mr. Kramer dismissed investor concerns that today’s data center hype resembles the ill-fated dot-com boom of 25 years ago. He said he doesn’t think the tech giants will fail because most of them are profitable and have deep pockets, even though the former high flyers of the dot-com era had little revenue or income.

Another area is the “so-called real economy,” which includes a wide range of business sectors such as retail, housing, freight, automotive, travel and leisure, Cramer said. Many companies in these categories are struggling, Cramer continued, and even normally reliable consumer staples stocks are struggling. He continued that despite Wall Street’s lack of recent economic data as the government shutdown continues, there are signs that things are not going well for the economy, citing a Tuesday report from analysts at investment giant Carlyle that suggested job growth was roughly flat in September. Cramer said some companies, such as banks, have strengths, but it will take multiple rate cuts by the Federal Reserve to improve this aspect of the economy.

Cramer said another key part of the economy is that a number of speculative stocks are overpriced, especially because many of the group’s most frothy companies don’t have solid earnings. He identified several companies related to nuclear power, cryptocurrencies, and quantum computing. Cramer suggested that the field is more similar to the dot-com boom than the AI ​​field, saying, “This speculative group has to be stopped before its bubbles overwhelm everything else.”

“The real bubble is these speculative stocks, not the role of AI,” Cramer said. “But if you listen to the bears, you’ll never know they’re mixing it all up.”

Subscribe to CNBC Investing Club today to follow Jim Cramer’s every move in the markets.

Disclaimer CNBC Investing Club Charitable Trust owns stock in Nvidia, Amazon, Microsoft, Meta, Nvidia, and Broadcom.