CNBC’s Jim Cramer on Tuesday suggested that sellers have been conspicuously absent on Wall Street, even as the market faces economic trends may have brought them out in years past.
“Last year, we would’ve had sellers coming out of the woodwork,” he said. “Now, though, I think the short-sellers have been obliterated, and almost everyone who wants to sell seems to have already gotten out. That’s how you get such a strong stock market despite a not-so-hot environment.”
The Federal Reserve’s relentless interest rate hikes should have crushed the economy and lead to substantial selloffs, but this hasn’t happened, Cramer said. According to him, sellers may have been present in 2022 and parts of 2023, but they’ve now “run out of ammo,” perhaps because the Fed is stalled on its next move.
Cramer added that the artificial intelligence craze has not played out as many on Wall Street thought it would. He said he’s never seen an inflated concept like AI, and conventional wisdom suggests “true believers in AI would eventually be left holding the bag as the whole house of cards collapsed.”
But so far, AI companies don’t seem to be on the verge of disaster, with outfits like Super Micro Computer and Nvidia reporting solid earnings and seeing their valuations soar over the past year. Enterprise in general seems primed to pay top dollar for Nvidia’s graphics chips, Cramer said, pointing out that Meta indicated it was willing to spend billions on the products during recent conference call.
“In short, not only was AI not a bubble, the short-sellers who bet against it, well they just got steamrolled,” he said. “I know Big Tech was down today, but I think they’re just taking a breather after an unsustainably parabolic move.”
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Disclaimer The CNBC Investing Club Charitable Trust holds shares of Nvidia and Meta.