Mad Money

Cramer Remix: These tech titans aren’t breaking the bank - let them spend

Key Points
  • With market volatility the new norm, Cramer said there are plenty of reasons for market watchers to invest cautious before looking for bargain stocks.
  • But the 10-year Treasury reaching 3 percent is not one of them.
  • Cramer also shares his thoughts on today's hot stocks.
Cramer Remix: These tech titans aren’t breaking the bank - let them spend

Large-cap technology companies continue to invest like crazy. But most of Wall Street doesn't like it. But CNBC's Jim Cramer said it's not a bad thing.

"Throughout this earnings period I've been struck by just how oblivious many investors are to the new tech food chain and how valuable it is" the "Mad Money" host said.

He pointed out how Amazon Prime has racked up 100 million viewers. YouTube adoption and cloud building are causing Alphabet to buy billions of dollars in capital equipment to meet the demand of YouTube, as capital expenditures increased by 121 percent compared with last year.

"When you're looking at tech, you want innovative companies with so many opportunities that they don't want to just save the money or shell out big dividends," Cramer said.

And while many investors are abandoning the big tech sector as the 10-year Treasury hits 3 percent, Cramer said he will not.

"The next time you blanche when you see insane levels of spending from these tech titans, remember, they're doing it for a reason," he said. "This spending is necessary, imperative even, if these companies are going to keep generating phenomenal sales and amazing earnings growth, which is exactly what we want them to do. They're doing what they're supposed to do, people. Don't run from it, embrace it."


A trader pauses while working on the floor of the New York Stock Exchange.
Jin Lee | Bloomberg | Getty Images

Savvy market watchers use volatility to fatten their portfolios with bargain stocks. But Cramer warns that this might not be the best move.

"If we get more strength tomorrow, I think you should use it to take some profits and re-position rather than getting all excited and going all in," the "Mad Money" host said on Wednesday.

"I don't want you to give up and go home, let alone sell everything," Cramer said. "But there are very good reasons to be concerned here."

Tariffs, geopolitical issues and pricey tech stocks are just a few of the red flags investors need not ignore, Cramer said.

The 10-year Treasury yield

Getty Images

The 10-year Treasury yield reached 3 percent Tuesday morning for the first time in five years, causing all major indices to plunge. But Cramer said there's no reason to start selling.

"You now have lots of investors and commentators acting like this is indeed the end of the world, or, at the very least, I should say, the end of the bull," the host of "Mad Money" said on Wednesday.

But, he said, "I think their fear is misplaced."

In fact, Cramer said the 3 percent mark is more of a psychological barrier for investors.

While rates are rising, Cramer recommends putting money into financial stocks like J.P. Morgan, large-cap technology companies such as Amazon and Facebook, and industrial companies like Boeing.

Voice of Cramerica

Jacob W. Frank | Getty Images

Volatility continues amid geopolitical threats, fear of increased regulation in the technology sector and a rising 10-year Treasury yield. The Dow Jones industrial average closed nearly 425 points lower Tuesday, only to rebound 100 points Wednesday and closing nearly 60 points higher.

"There's always a bull market somewhere," Cramer said Wednesday. "But this one's a wild one. Not as easy to grab the bull by the horns."

But many market watchers remain on edge. Cramer said a safe bet is Facebook. Unlike other large-cap technology companies, Facebook has little exposure in China and will not be affected in the event of a trade war.

Cramer and Wapner talk Ackman and Icahn

Scott Wapner on CNBC's "Halftime Report."
Adam Jeffery | CNBC

Legendary investor Bill Ackman made an incredibly risky move when he bet that nutrition giant Herbalife would be shut down by the government, CNBC's Scott Wapner said on Wednesday.

Ackman had bet that he would make $1 billion in his short against the nutrition-selling company, accusing it of being a pyramid scheme.

"It was a binary bet and it's dangerous. He was betting that the government was going to intervene and shut Herbalife down," Wapner told Cramer. "There was no in-between."

Wapner's new book, "When the Wolves Bite: Two Billionaires, One Company, and an Epic Wall Street Battle," chronicles Ackman's five-year-long battle against another iconic activist investor, Carl Icahn.

Lightning round

First-quarter earnings season is now in full swing. The Street is expecting a record season.

Cramer helped callers quell their fears on a few key stocks.

U.S. Steel:

The company posts earnings on Thursday. But Cramer said he's not a buyer of the steel company. "We like Nucor," he said on "Mad Money" Wednesday. Cramer said Nucor has great number, "it just seems that people don't care."

Ball Corporation:

"I think Ball's a big winner," Cramer said, pointing out that in the can industry, there are not a lot of players.

Teva Pharmaceuticals:

"Not good enough," Cramer said, comparing it with other drug companies. Better to pass, he said.

—CNBC's Lizzy Gurdus contributed to this report.

Disclosure: Cramer's charitable trust owns shares of Amazon, Alphabet, J.P. Morgan, Facebook and Nucor.

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