CNBC’s Jim Cramer told investors Thursday not to be wary of Big Tech’s behemoth stocks, saying their lofty valuations are well-deserved.
“Just because you’ve never seen something like it before doesn’t mean it’s fake,” he says. “They didn’t get trillion-dollar valuations by fooling the majority of people. They got there because there was nowhere else to go but up.”
These dominant stocks include all members of the “Magnificent Seven”: Apple, Microsoft, Nvidia, Amazon, Alphabet, Meta, and Tesla. Some analysts have warned that this level of concentration in the market is reminiscent of the dot-com bubble of the 1990s.
But Kramer disputed those claims, saying all of these tech companies have huge revenue streams to back up their valuations. For Kramer, there’s nothing wrong with these few stocks leading the market, and he says it doesn’t make sense to give them some kind of “handicap” just because they’re strong. said.
He pointed to proven odds for mega-cap stocks, including Apple, Meta and Amazon, three companies that released quarterly results after the bell Thursday. Cramer said the three companies collectively generated more than $300 billion in revenue and nearly $59 billion in net income.
“You might think these mega-cap stocks are somehow misvalued relative to the rest of the market,” Cramer said. “I said we have to take care of them in some way. We can’t just give them a giant haircut because of their sales or profits.”
Sign up now Because CNBC Investment Club tracks Jim Cramer’s every move in the markets.
Disclaimer CNBC Investing Club Charitable Trust owns stock in Apple, Microsoft, Nvidia, Amazon, Alphabet, and Meta.