Jim Cramer warned investors Monday that a semiconductor selloff is being driven by leveraged liquidations rather than a decline in chip fundamentals.
This warning comes as major technology stocks face volatility, signaling that market technicals and high-leverage positions may be overriding the actual business performance of leading AI chipmakers.
During a broadcast of Mad Money, Cramer said the selloff gripping Nvidia, AMD, and Intel has nothing to do with their fundamentals [1]. He said there are "monstrous" sellers behind the price action, urging investors to be cautious and stop trading during this period [2].
Cramer pointed to specific intraday losses as evidence of this trend. He said AMD's 8% drop [3] and Nvidia's nearly 5% drop [1] are leverage-driven liquidations. According to Cramer, these movements do not represent a deterioration in the underlying chip cycle [3].
Despite the current volatility, the sector has seen significant growth earlier this year. AMD recorded a year-to-date gain of 144% [3], while Intel saw a year-to-date gain of 150% [3]. These figures highlight the steep climbs that often precede leverage-driven corrections.
Cramer also touched upon the broader geopolitical landscape affecting the industry. He said that national security comes first [1] when discussing the strategic positioning of these companies.
While some reports suggest Cramer continues to defend his commitment to major technology stocks, his recent guidance emphasizes a need for caution amid the current liquidation phase [1, 2].
“The semiconductor selloff gripping NVIDIA, AMD, and Intel has nothing to do with their fundamentals.”
This situation indicates a divergence between a company's intrinsic value and its stock price. When 'monstrous' sellers—typically institutional investors or hedge funds using borrowed money—are forced to liquidate positions, it creates a domino effect of selling that is independent of the company's actual earnings or product success. For investors, this means the current volatility is a result of market structure and risk management rather than a failure of the AI chip market.
