CNBC’s Jim Cramer on Monday disputed talk of sector bubbles, saying investors should be prepared to buy if there’s a sell-off and undervalued stocks pull back.
“I will be ready to buy if this market sells off,” he said. “Just raise some cash and be ready to do some buying if and when the market has its inevitable pullback after this incredible run.”
Cramer disputed several “so-called bubbles,” saying he believes the sector gains are justified.
He opined about the burgeoning artificial intelligence sector, saying that despite its current popularity, investors may not yet conceive of how influential this new technology will be. He conceded that some AI stocks may be overinflated, but said that doesn’t mean they can’t go higher. Cramer also pointed to Nvidia — which recently closed above the $2 trillion market cap — and said the company hasn’t been overvalued. Instead, Wall Street’s estimates have been too low, Cramer said, allowing Nvidia to consistently blow past earnings expectations.
“Over and over again, it turns out Nvidia’s been selling at absurd levels,” he said. “Absolutely low. So, if Nvidia keeps trouncing the estimates, then I bet it ends up looking cheap once again—now isn’t that the opposite of a bubble?”
According to Cramer, drug companies like Eli Lilly and Novo Nordisk that make GLP-1 medications — which are used to treat diabetes and obesity — deserve their high valuations. He said this new class of drugs could be the most important since antibiotics and cited research that suggests they can also be used to treat hypertension and liver ailments.
Cramer suggested there may be a buying opportunity on Friday when the labor report comes out, predicting the figures may be stronger than Wall Street would like.
“Strong job numbers could take a summer rate cut off the table and cause some serious concern that might lead to a sell-off,” he said. “I’m not fretting, I’m just expecting, and I have my shopping list of what to buy on weakness for the charitable trust.”
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Disclaimer The CNBC Investing Club Charitable Trust holds shares of Nvidia and Eli Lilly.
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