- There are many reasons to buy shares of those chipmakers, but a play on cryptocurrencies is not one of them, Jim Cramer says.
- Bitcoin and ethereum miners use powerful graphics processing units to generate new cryptocurrency units.
There are many reasons for investors to buy chipmakers Nvidia and Advanced Micro Devices, but the recent rush for an indirect way to play skyrocketing cryptocurrencies and ethereum should not be one of them, CNBC's Jim Cramer said Friday.
"One of the reasons why AMD and Nvidia have been going up is their chips are used for mining, for cryptocurrency mining," Cramer told "Squawk on the Street." But he warned, "Do not play it for this is what I'm saying. But it is being played for that."
Bitcoin and ethereum miners use powerful graphics processing units — or the computer chips on graphics cards — to generate new cryptocurrency units, which can then be sold or held for future appreciation.
Cramer cited a recent note from RBC Capital Markets, which said the growing cryptocurrency mining market has contributed $100 million worth of GPU sales for Nvidia in the past 11 days alone. "AMD chips are the best ones for the ethereum platform," he added.
"Of course there are so many other uses for their chips, but a lot of retail people love bitcoin and are looking for a way to play it," Cramer said.
In the past 12 months, bitcoin has soared about 325 percent to around $2,703 per unit as of midmorning trading on Friday. Ethereum, the smaller bitcoin rival, has skyrocketed about 2,240 percent to around $328.
In the past month, as the cryptocurrency surges have been more widely reported, AMD shares have soared 33 percent and Nvidia stock has gained about 15 percent.
"You play Nvidia for artificial intelligence, for GPUs, for autonomous cars, and for gaming," he said. "You play AMD for gaming and they have a faster chip than Intel."
Buying the stocks for those reasons, not because of cryptocurrency mining, makes sense, Cramer concluded.