Don’t panic if you hold cash! U.S. financial guru: The AI ​​sell-off is not over yet, but it won’t be a repeat of the dot-com bubble

Jim Cramer, host of the American financial program "Mad Money," pointed out that the plunge in artificial intelligence (AI) stocks will continue, but investors should not panic because this wave of selling is not a repeat of the dot-com bubble.

CNBC reported that after the U.S. midterm elections, opposition to the construction of data centers increased, raising doubts about AI infrastructure spending and causing the stock prices of related companies to plummet. Micron fell 17% on the 5th, GE Vernova fell 7%, and SanDisk fell 22%. The stock prices of these three companies had fallen sharply on the previous trading day.

Cramer warned that there may be room for further declines in the future, but he also said that because the current AI companies are fundamentally different from the speculative enterprises that collapsed during the dot-com bubble, he does not believe that this wave of decline will repeat the dot-com bubble situation.

He said, "Many technology stocks, especially semiconductors, seem to lack support because their stock prices have risen too much. However, regardless of how it feels, this is actually an orderly decline because unlike 2000, these are mostly companies that have made huge profits but whose stock prices have risen too high."

He pointed out that investors had pushed AI stocks too high by assuming that the rapid construction of data centers would continue indefinitely. Smaller developers such as CoreWeave, Iren and Nebius will be at risk because they took out loans to finance the construction of data centers, and now those projects may be delayed by regulations.

"That's my main concern, that's the part that could cause real harm to the stock market," he said. "There's currently no debt defaults by any major companies. The only debt issues are those related to new cloud companies, but that's not enough to bring us down."

Cramer also believes that a quick sell-off may be more effective than a long-term downturn in helping the market digest the excessive impact of the AI ​​boom. He said, "I would rather deal with the impact on the market quickly than try to alleviate it slowly and bit by bit every day."

He recommended that investors maintain sufficient cash. Although semiconductor stocks may face further declines, signs of slowing inflation and the expected end of the Iran war give reasons for optimism. He said, "If you have cash, you will not panic. You will keep a clear head and not be complacent, so that you can reduce capital losses before the situation gets better, and the situation will always get better."