CNBC’s Jim Cramer on Monday told investors that while most stocks can’t withstand the “gravitational pull” of the bond market, several prominent mega-cap tech stocks with cash in reserve are able to hold their own.
Cramer has referred to this block of Nasdaq Composite stocks as his Magnificent Seven, and they include Apple, Amazon, Meta, Alphabet, Nvidia, Tesla and Microsoft.
“We’re in an unusual situation, but skyrocketing bond yields are bad news for the vast bulk of the market. The mega-cap techs are the one big exception. You want to make it through this difficult moment?” Cramer asked. “You need the Magnificent Seven, and then the rest.”
To Cramer, few companies have the balance sheets and product demand to withstand the bond market competition. The Magnificent Seven stocks aren’t hurting for money, he said, and are actually “coining a fortune with their considerable cash hoards.”
“It’s funny, we used to look at their gigantic cash positions and their cash management attempts to try to bring in a little extra income as just a kind of waste of time, an abstraction,” he said. “Now they’re huge winners and I think you’ll begin to see a line item in their quarters, the money they make off their cash, that could finally offset some of their miserable losses from that darn strong dollar.”
For example, Nvidia’s valuable graphics chips make it the envy of most companies interested in artificial intelligence, even the other tech mega caps, Cramer said. Microsoft, Alphabet, Meta and Apple have hoarded cash for years and are now reaping those rewards, he added. To Cramer, these stocks no longer have to deal with worries about inflation or long-term value. When the bond market calms down, he said, these companies will be recognized for their solvency.
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Disclaimer The CNBC Investing Club Charitable Trust holds shares of Apple, Amazon, Meta, Alphabet, Nvidia and Microsoft.