Jim Cramer says investors aren't ditching tech — they just want cheaper stocks
CNBC's Jim Cramer said investors aren’t abandoning AI or technology stocks — they’re rotating out of high-multiple names and into cheaper stocks.
Investors are not turning their backs on artificial‑intelligence or technology shares, but they are shunning the most expensive names, CNBC’s Jim Cramer said on Wednesday. The “Mad Money” host explained that rising bond yields are prompting money managers to replace high‑priced tech stocks with cheaper alternatives, rather than abandoning the sector altogether.
Tech Valuations
Cramer emphasized that the market’s aversion is not aimed at data‑center or AI companies per se, but at stocks carrying lofty forward price‑to‑earnings multiples. A forward P/E ratio divides a company’s current share price by its projected earnings for the next twelve months; a higher figure indicates investors are paying more for each expected dollar of profit. When yields climb, managers tend to dump those high‑multiple positions in favor of lower‑priced opportunities.
High Multiple Stocks
The database‑software firm MongoDB illustrates the trend. Trading at roughly 52 times forward earnings, the stock slid about 13 % on Wednesday even after posting earnings that beat expectations and issuing upbeat guidance. By contrast, Dell, which trades near a 16‑times forward P/E, surged 16 % after delivering strong results on Tuesday. Cramer pointed to the divergent moves as proof that investors remain eager for technology and AI exposure when valuations appear reasonable.
Dell and Nvidia Contrast
Nvidia provides another data point. The chipmaker, a centerpiece of the AI boom, is valued at about 17 times forward earnings—considerably cheaper than many slower‑growing tech peers. Cramer said the modest multiple reflects lingering doubts about the sustainability of Nvidia’s rapid earnings expansion and questions about the long‑term pace of data‑center spending. He argued those worries are overstated, citing Dell’s performance as evidence that customers are beginning to see tangible returns from their AI investments.
Cramer’s View
According to Cramer, the recent pullback does not signal a broken AI trade. Rather, investors are becoming more selective about the price they are willing to pay for exposure to the sector. He dismissed headlines that claim investors are fleeing AI, abandoning technology, or that the momentum trade has collapsed, labeling such narratives as “wrong.” While the symptoms—selling pressure on high‑multiple names—are real, the underlying cause, he said, is simply a demand for more attractive pricing.
In sum, the shift appears to be a valuation‑driven rotation within the tech arena, not a wholesale retreat from AI or data‑center businesses. As long as companies can demonstrate solid fundamentals at reasonable multiples, Cramer expects the sector to continue attracting capital despite the current yield environment.
Source: CNBC · 2026-09-02