Jim Cramer says the AI sell-off isn't over, but it isn't another dot-com crash

The steep sell-off in artificial intelligence stocks likely has further to go, CNBC's Jim Cramer predicted Thursday — but he urged investors not to panic.

Growing opposition to new data centers following the midterm elections has raised doubts about future AI infrastructure spending, sending shares of companies tied to the buildout sharply lower. Micron tumbled 17%, GE Vernova dropped 7% and Sandisk plunged 22% on Thursday. All three stocks were also crushed in Wednesday's session.

"I wish I could say that today's flush was the bottom," the "Mad Money" host said, before cautioning that there may be more downside ahead, though he didn't believe this was an internet bubble redux. Cramer argued that today's AI companies are fundamentally different from the speculative businesses that collapsed during the dot-com bust.

"But I look at the charts, and there still seems like there's no support for so many Tech stocks, especially the semis, because they ran so much on the way up. However it might feel, it's actually an orderly decline because unlike 2000, these are mostly lucrative companies with stocks that went too high."

Investors had pushed AI stocks too high by assuming the rapid pace of data center construction would continue indefinitely, Cramer said. Smaller developers such as CoreWeave , Iren and Nebius face particular risks because they borrowed money to finance projects that could now face regulatory delays.

"That's what I am chiefly worried about," he said. "That's the real problem. That's what could really hurt the stock market. ... Right now, no one of significance is defaulting on their debt. The only issue with the debt is that it's connected to those neocloud companies that I mentioned. That's not enough to sink us."

Cramer suggested that a swift sell-off could help the market work off the excesses of the AI boom more effectively than a prolonged downturn.

"I for one am glad they are ripping the Band-Aid off this market rather than slowing trying to take it off a little bit each day," he said.

For investors, Cramer recommended maintaining sufficient cash. While semiconductor stocks could face further declines, he pointed to falling interest rates, signs of easing inflation and the possibility of an end to the Iran war as reasons for optimism.

"If you have cash you won't panic," Cramer concluded. "You won't be complacent, either. You will be clear-headed and that's how you will lose less money until things get better. They always do."