GoKawiilCNBC's Jim Cramer on Tuesday provided investors a handful of beaten-down stocks that he believes could outperform if the artificial intelligence trade begins to cool.
"These are the stocks that will start going higher if tech retreats," the "Mad Money" host said. "You'll wish you had some of these when the time comes and the momentum tech stocks run out of, well, momentum."
The comments come after Nvidia CEO Jensen Huang's keynote at Computex fueled fresh gains in data center and AI-related stocks. But Cramer said signs of fatigue in some software names — coupled with a looming flood of stock supply coming into the market from Alphabet and the expected mega IPOs of SpaceX, Anthropic and OpenAI — have him considering opportunities in largely abandoned sectors.
"Tech seems full of vulnerabilities ... I want to find an antidote in some other sectors where growth stocks in non-growth sectors are being thrown away," Cramer said.
Cramer pointed to JPMorgan Chase as one potential opportunity. Financials have been the worst-performing sector in the S&P 500 this year amid concerns about credit quality and a slowing economy, leaving JPMorgan trading at roughly 13 times forward earnings. That's down from roughly 15 at the start of the year, according to FactSet data.
"You normally don't get to buy this stock so cheap, and no one would regard it as a lousy franchise, even as the stock's down 7% year-to-date," he said.
Healthcare, which is the second worst performing sector in the S&P 500 this year, is another area Cramer believes has become excessively out of favor. While he remains positive on Eli Lilly , he said Johnson & Johnson may offer a more attractive opportunity given its drug pipeline, growing medical technology business and recent acquisitions.
"Buy this one slowly because, like the banks, there's very little support for the stock here," Cramer said. "We don't know when the rotation will end."
Cramer's Charitable Trust, the portfolio used by the CNBC Investing Club, owns both Lilly and J&J.
He also highlighted consumer staples company Kimberly-Clark , citing its portfolio of household brands, attractive dividend yield and planned combination with Tylenol and Band-Aid parent Kenvue .
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