Key Takeaways:
Jim Cramer told investors to pause new AI bets and rotate into high-quality non-tech stocks as semiconductor volatility reaches extreme levels.
The artificial intelligence trade has become too unpredictable for fresh capital, CNBC's Jim Cramer said Monday, urging investors to rotate into six non-technology names while waiting for a broader tech washout.
"If you own too much tech, you're going to be slaughtered, and you won't even know what hit you," the "Mad Money" host said. "For the moment, it's time to go to other sectors. They can make you money, without the volatility."
Cramer recommended Goldman Sachs, Wells Fargo, FedEx, Honeywell and Boeing — all holdings in his Charitable Trust portfolio — as alternatives to the whipsawing AI trade. Semiconductor and AI-related stocks have come under pressure in recent weeks after surging to records earlier this year, with daily swings crossing into extreme territory that demands a changed approach to buying, he said.
The call to rotate comes as investors grapple with whether the AI-driven rally that powered the broader market through early 2026 has further to run. Cramer said he remains bullish on Nvidia, calling the chipmaker "the envy of the world" in data center AI servers, and reiterated a positive view on Intel ahead of its earnings report. But he is waiting for a broader technology selloff before adding meaningfully to the sector.
Cramer advised investors to use "wide scales" when buying AI stocks into weakness — purchasing gradually at predetermined price levels with relatively large gaps between each buy, rather than accumulating full positions at once. The strategy, which he described as "pyramid styles as you build down," increases the size of each purchase as the stock falls further, lowering the overall cost basis.
For example, an investor seeking to build an 80-share position in a stock like Intel could use a double-down pyramid: buy 10 shares to start, double down with another 10 at a lower price, then 20, then 40. If the stock rallies at any point, the buying stops and the smaller position rides higher.
"The increased volatility requires you to wait for larger declines between each purchase than you would in a less up-and-down market," Cramer said. He suggested widening the gap between buys from 5% to as much as 10% for the current environment.
Intel's 'Triple Play' Case
Cramer reiterated his bullish stance on Intel ahead of the chipmaker's earnings, calling it a "triple play" because of its central processing unit business, advanced chip-packaging capabilities and burgeoning third-party foundry operations. "Intel is a national treasure," he said.
Still, Cramer stressed he is not abandoning artificial intelligence. He said Nvidia remains at the heart of the data center market despite customers' efforts to develop their own chips, and that only Advanced Micro Devices comes close to competing with its AI server racks.
The broader message: wait for a washout in technology before committing new money, and in the meantime, collect returns from high-quality names outside the sector.
This article is for informational purposes only and does not constitute investment advice.
