Jim Cramer makes a case for sticking with tech megacaps

CNBC’s Jim Cramer reviewed Monday’s market action and told investors why he thinks it’s a good idea to stay with the tech titans even when their stocks take a hit.

“I will never try to stop you from selling. That’s not my job. I just want you to remember how these individual stocks have generated tremendous wealth for those who have held on,” he said. “You made that money by sticking with them through thick and thin, not by trading in and out of them.”

The averages fell on Monday as Nvidia failed to bolster the tech-heavy Nasdaq Composite, which closed down 0.22%. The Dow Jones Industrial Average declined 0.77% and the S&P 500 lost 0.43%. Wall Street is waiting to hear earnings results from Nvidia, the largest stock on the market, which is set to report on Wednesday.

Cramer acknowledged the concerns surrounding Nvidia ahead of the quarter, namely demand for its chips from China and hyperscalers broadly. He said some investors feel that companies may be losing their appetite for the expensive products, but he reiterated his belief that those who don’t purchase the chips will be “left behind in the great hyperscaler arms race.” According to Cramer, hardware for generative artificial intelligence is the way of the future, and Nvidia is a key part of advancing that technology.

Cramer stressed that he thinks it’s very difficult to sell these huge companies and then get back in, indicating that they inevitably return to growth. When some of the megacaps see losses, they later climb back up quickly, he suggested. Cramer also encouraged investors not to trade stocks simply because others are doing so.

“When it comes to these megacaps, it’s almost impossible to pick your moment to sell and then buy them back later at a lower price,” he said.