On Monday, Jim Cramer urged investors to dial back their exposure to technology stocks, warning that the artificial intelligence trade has become too volatile while maintaining his long-term confidence in industry leaders Nvidia Corp. (NASDAQ:NVDA) and Intel Corp. (NASDAQ:INTC).
Jim Cramer Says AI Trade Has Become Too Volatile
Cramer cautioned that investors should avoid aggressively adding to artificial intelligence-related stocks, arguing that the sector has become increasingly unpredictable after a massive rally earlier this year, CNBC reported.
"If you own too much tech, you’re going to be slaughtered, and you won’t even know what hit you," the Mad Money host said, warning against portfolios that are overly concentrated in technology.
Cramer said the recent weakness in semiconductor and AI-related stocks underscores the risks of chasing momentum in one of Wall Street’s hottest trades.
Instead, he believes investors should look for opportunities in industries that offer more stability while the AI sector works through its volatility.
"For the moment, it’s time to go to other sectors. They can make you money, without the volatility," he said.
Cramer Favors Banks, Industrials And Transportation Stocks
Rather than buying into every swing in AI stocks, Cramer said investors should consider established companies outside the technology sector.
He pointed to firms such as Goldman Sachs Group Inc. (NYSE:GS), Wells Fargo & Company (NYSE:WFC), FedEx Corp (NYSE:FDX), FedEx Freight Holding Company Inc (NYSE:FDXF), Honeywell International, Inc. (NASDAQ:HON) and Boeing Company (NYSE:BA) as examples of high-quality businesses that could offer attractive returns with less turbulence than many AI-related names.
Why Cramer Still Likes Nvidia And Intel
Despite his near-term caution, Cramer made clear he is not abandoning the AI investment theme.
He reiterated his bullish view on Nvidia, saying the company remains the dominant force in AI infrastructure despite customers increasingly developing custom chips.
"Nvidia is at the heart of the data center," Cramer said, adding that the company’s AI server racks are "the envy of the world" and only Advanced Micro Devices, Inc. (NASDAQ:AMD) comes close.
Cramer also reaffirmed his positive outlook on Intel ahead of its upcoming earnings report, describing the chipmaker as a "triple play" because of its CPU business, advanced chip-packaging capabilities and expanding third-party foundry operations.
Calling Intel "a national treasure," Cramer said he plans to wait for a broader pullback in technology stocks before putting additional money to work in the AI sector.
Price Action: Shares of Nvidia closed 0.23% higher at $203.28 on Monday, while Intel gained 2.13% to close at $97.06, according to Benzinga Pro.
According to Benzinga Edge Rankings, Intel is in the 98th percentile for Momentum, highlighting a strong medium- and long-term price trend despite recent short-term weakness.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo courtesy: katz / Shutterstock.com
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