CNBC’s Jim Cramer warned investors Tuesday against chasing the rally in data storage stocks. But all is not lost, Cramer said, and investors should instead consider owning companies that can help alleviate the memory shortage.
“If you don’t already own one, I think it’s too late considering how far it’s been running already,” Kramer said. micron, western digital, seagate and sandiskfour leading companies in the global data stage and memory industry.
A surge in AI-related demand and limited supply has seen the stock prices of all four companies more than triple in the last year, giving them immense pricing power. 2026 will also be off to a strong start. “Even the smallest disruption could crush these stocks” as investors look forward to big gains, Cramer said.
Instead, Kramer pointed to semiconductor capital equipment manufacturers such as: ASML, applied materials, KLA Corporation and ram research as a “relatively safe way” to play the same theme. That’s because every time there’s a chip shortage, companies start buying more manufacturing equipment to increase production. In fact, Micron is spending billions of dollars building new chip factories.
“If you want to address the memory and data storage shortage without chasing stock prices that have tripled or quadrupled in just over a year, I think semiconductor capital equipment makers are going to be the more durable winners here,” Cramer said, noting that memory chip makers aren’t the only ones competing to add manufacturing capacity. for example, intel also suggests increasing spending on semiconductor tools.
ASML is up 54% in the last year, and Applied Materials is up 58%. KLA soared 93% and Lam Research soared 137%.
Cramer said investors could consider making a quick move on ASML, Lam Research or KLA if the stock drops on this week’s quarterly earnings report. Applied Materials won’t release results until next month.
Kramer said he expects all of these companies to report solid numbers, but the bar is very high given their performance. “I hope their stocks go down, so you can buy them for the long term,” he added.
