CNBC's Jim Cramer on Thursday told investors not to be wary of Big Tech stocks, saying their high valuation is well deserved.
“Just because we've never seen them before doesn't make them fake,” he said. “They didn't get their trillion-dollar valuations by fooling most people. They got there because there was nowhere else for them to go but up.”
These dominant stocks include all members of the “Magnificent Seven” – Apple, Microsoft, Nvidia, Amazon, Alphabet, Meta, and Tesla. Some analysts have warned that this level of market focus is reminiscent of the dot-com bubble of the 1990s.
But Cramer refuted such claims, saying all of these tech names have huge revenue streams to back their valuations. For Cramer, there's nothing wrong with this group of stocks leading the market, and he said it wouldn't make sense to give them some sort of “handicap” just because they're strong.
He pointed to the definite possibility for major companies, including the three companies that reported quarterly earnings on Thursday after the bell: Apple, Meta, and Amazon. The three generated $300 billion in revenue and nearly $59 billion in net income combined, Cramer said.
“You might think that these mega stocks are misvalued against the rest of the market,” Cramer said. “I'm saying you have to value them in some way, and you can't give them a huge haircut because of their sales or profits.”
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Disclaimer The CNBC Investing Club Charitable Trust owns shares in Apple, Microsoft, Nvidia, Amazon, Alphabet and Meta.
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