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CNBC's Jim Cramer said Wednesday that signs of excessive speculation are creeping back into the market
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"Remember what happened last year when speculative stocks took over the market," the "Mad Money" host said, pointing to a wave of speculative companies that surged on hype before they ultimately capsized, taking their investors down with them.
Key facts
- The stock tumbled 36% Thursday, but still ended the day at $10.91 a share, well above its $2.49 closing price before the frenzy
- Call Cramer: 1-800-743-CNBC Want to take a deep dive into Cramer's world
- The former shoe company on Wednesday announced its plans to pivot its business to AI compute infrastructure, sending shares up an astounding 582% in the session to $16.99 a piece
- Disclosure: Cramer's Charitable Trust, the portfolio used by the CNBC Investing Club, owns shares of GE Vernova, Honeywell and Nvidia
Summary
CNBC's Jim Cramer said Wednesday that signs of excessive speculation are creeping back into the market, echoing patterns that previously led to painful losses for investors . After a powerful broader market rally in recent weeks, Cramer said he believes enthusiasm may be starting to outpace discipline. "They think that anything they buy goes higher … They have lost all discipline and they are cocky," Cramer said. However, he said he's concerned that many of the smaller, pure-play names lack viable business models today. He highlighted companies like Constellation Energy and GE Vernova as more credible ways to gain exposure, citing their experience and scale. Constellation Energy is a diversified energy provider with a strong nuclear fleet alongside hydro, wind and solar assets.
Rather than place a bet on Allbirds, or NewBird AI, as it will be called, Cramer recommended investors look to formidable semiconductors like Nvidia, Taiwan Semiconductor and Intel to play the AI compute boom. "The bottom line is this one's a speculative bridge too far," he said.