Jim Cramer from CNBC noted that Wall Street is taking profits from this year's top AI infrastructure stocks, such as Micron, Western Digital, Seagate, and Sandisk, which have experienced sharp declines after peaking in June. These companies benefited from memory shortages that provided them with exceptional pricing power, but investors are now concerned that these conditions won't persist.
For instance, Western Digital's stock reached an all-time high of $746 per share on June 18, only to fall nearly 40% in the following weeks. Cramer emphasized that this is a typical boom-bust cycle and advised selling during rapid price increases.
Instead of abandoning the market, investors are moving capital into companies less reliant on AI infrastructure spending, with stocks like ServiceNow and Salesforce seeing gains of approximately 11% and 16%, respectively, this month. Additionally, companies like Costco and Walmart are also performing well.
Johnson & Johnson reached an intraday all-time high following a $5.5 billion settlement related to talc product litigation, which was significantly lower than a previously rejected proposal. Despite the downturn in AI-related stocks, Cramer remains optimistic about Nvidia and Intel, citing their sustained demand as a more reliable growth driver.
His portfolio includes shares of Salesforce, Costco, Johnson & Johnson, Intel, and Nvidia