CNBC’s Jim Cramer highlighted a select group of mega-cap tech stocks, which he fondly dubbed the “Magnificent Seven,” as the only ones capable of competing effectively with the bond market. These seven tech giants are Apple, Alphabet, Meta, Amazon, Microsoft, Nvidia, and Tesla.
In a market environment where most stocks struggle against the gravitational force exerted by rising bond yields, Cramer emphasized that these particular Nasdaq Composite stocks have the resilience to hold their ground.
Cramer elaborated on his selection, explaining that these companies possess robust balance sheets and enjoy sustained demand for their products, which sets them apart from the rest of the market. These Magnificent Seven stocks not only have substantial cash reserves but are also generating substantial income from these reserves.
Cramer noted the irony of how, in the past, the focus was on these companies’ large cash positions and their efforts to earn extra income from their cash holdings, which were considered somewhat abstract. However, in the current landscape, these practices have turned into significant profit generators. Cramer even suggested that their financial reports may soon include a line item showcasing the income generated from their cash, which could offset some of their losses caused by currency exchange fluctuations.
As an example, Cramer pointed out that Nvidia’s valuable graphics chips have made it the envy of many companies in the artificial intelligence sector, even among other tech mega-caps. Companies like Microsoft, Alphabet, Meta, and Apple have diligently accumulated cash over the years, and now they are reaping the rewards of their foresight. Cramer believes that these stocks no longer need to worry about inflation or long-term value concerns. When the bond market eventually stabilizes, he anticipates that these companies will be duly recognized for their financial strength and resilience.
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