GoKawiilCNBC's Jim Cramer said stock sell-offs can be painful for investors, but they can also create opportunities for those willing to look past fear-driven narratives and focus on fundamentals.
"Tailspins can be mighty nasty," Cramer said Tuesday on "Mad Money." "If you own a stock that's caught in one, it's very hard to hang on, but sometimes the market happens to be wrong and it's worth riding out the turbulence."
After a down day like Tuesday's session, where all three major U.S. averages fell roughly 0.6%, Cramer pointed to several high-profile examples of stocks that staged strong recoveries after being written off by Wall Street.
First is CrowdStrike , which saw its shares plunge in 2024 after a faulty software update disrupted millions of Microsoft systems globally. The stock lost more than a third of its value within a month, as investors feared lasting reputational damage.
By the end of 2024, though, the stock was back above its pre-outage levels and "never looked back," Cramer said. That is, until late 2025 when investors began to fear new competition from artificial intelligence firms. Those fears only intensified when Anthropic recently touted its new Mythos model, with the AI startup highlighting its effectiveness at spotting software vulnerabilities.
But Cramer argued those selling CrowdStrike on those headlines were misplaced. Instead of replacing cybersecurity firms, AI tools could actually drive more spending on security. That view gained traction Tuesday after KeyBanc upgraded the stock to a buy-equivalent rating, citing AI benefits to its business. The stock soared 3.8% even as the broader market struggled.
"AI and Anthropic weren't headwinds for cybersecurity," Cramer said. "They were tailwinds."
A similar pattern has played out with Microsoft . After setting an all-time intraday high above $555 in late July, the stock dropped all the way to $356 by late March, weighed down by skepticism around its AI offerings and broader software demand.
Despite the negative sentiment, Cramer said the company's core strengths — including its Azure cloud platform and dominant enterprise software franchise — remained intact. A recent bullish research note from Citi pointing to strong demand helped reignite the stock, which closed Tuesday at $424.16 a share.
"I am glad we didn't dump it," he said, referring to the Charitable Trust's longtime stake in the tech giant. "Could have been a big mistake."
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