CNBC’s Jim Cramer said Wednesday that this week’s activity on Wall Street is a reminder of the importance of portfolio diversification, as technology-only portfolios are battered amid heightened volatility.
“Technology is an important part of the market, but suddenly a lot of these stocks just aren’t as valuable as we thought they were. Part of the reason is because the whole enterprise software cohort has fallen out of fashion thanks to AI,” Cramer said.
S&P 500 and Nasdaq Composite In recent years, some investors have come to believe that tech stocks are “the only investable part of the stock market,” Cramer said. In contrast, blue-chip companies Dow Jones Industrial Average The company, which is made up of many old economy companies, added 260 points, or 0.5%, on Wednesday.
Wednesday, chip designer advanced micro device Shares plunged 17% after some investors called the outlook for the first quarter disappointing. other chip manufacturers broadcom and micron technology It also fell. It also dealt a further blow to some software stocks, which have been the focus of tech selling in recent days due to concerns about AI disruption. oracle Although it decreased by 5%, iShares Enhanced Technology Software Sector ETF It fell for seven consecutive sessions.
Still, there are winners elsewhere in various industries. campbells, pepsico, smuckerseven Kraft Heinzfurther rose despite the threat of GLP-1.
In healthcare, johnson and johnson, Merckand amgen It has performed well while providing value to investors.
“Even after the stock has gone up this year alone, it’s still not expensive, at least relative to the market,” Cramer said.
Kramer noted that banks have also made progress in recent days. He noted that this may be because investors believe that banks are the type of companies that would benefit from the efficiency improvements brought about by artificial intelligence. The same goes for industrial products. honeywell, doverand emerson electricity.
“Think about what they have. They have revenue, they have dividends. They’re not that expensive, at least for high-tech products. They’re happy with stock buybacks. They’re not overpaying people with stock options,” Cramer said.
“Plus, during earnings season, they can pull off some big upside surprises, and their stocks will pay off this year. That’s how the stock market is supposed to work.”
Disclosure: Cramer’s Charitable Trust, a portfolio used by CNBC Investment Club, owns stock in AVGO, HON, and DOV.
