CNBC's Jim Cramer on Thursday told investors not to be wary of the Big Tech megacap stocks, saying their high valuation is well-earned.
"Just because we haven't seen the likes of them before doesn't make them bogus," he said. "They didn't get their trillion-dollar valuations by fooling the 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 concentration on the market is reminiscent of the dot-com bubble of the 1990s.
But Cramer refuted such claims, saying all of these tech names have hefty revenue streams to back up their valuations. To Cramer, it isn't wrong that these handful of equities are leading the market, and he said it wouldn't make sense to give them some sort of "handicap" just because they're powerful.
He pointed out the proven probability of the megacaps, including three that reported quarterly earnings Thursday after the bell: Apple, Meta and Amazon. Cramer said the three generated upward of $300 billion in revenue and nearly $59 billion in net income combined.
"You may think that these megacap stocks are somehow wrongly valued versus the rest of the market," Cramer said. "I say you have to value them somehow, some way, and you can't just give them a gigantic bigness haircut because of their sales or earnings."
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Disclaimer The CNBC Investing Club Charitable Trust holds shares of Apple, Microsoft, Nvidia, Amazon, Alphabet and Meta.
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