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Phil Scott and Jim Atwood, formerly of JPMorgan, left the bank in October to start their own wealth management venture. Their stated goal is to preserve clients' concentrated stock portfolios, many of which are heavily weighted toward AI-related companies, rather than pushing diversification as larger firms typically advise.
Jim Cramer said on CNBC's Mad Money that a two-day sell-off in AI-related stocks stems from investors' inability to value companies tied to data center growth. The decline hit chipmakers and infrastructure suppliers broadly, with the iShares Semiconductor ETF falling 10% Thursday after a 3% drop Wednesday, and GE Vernova and Sandisk sliding 7% and 22% respectively.
CNBC's Jim Cramer said Thursday's slide in AI-related stocks, which saw Micron fall 17%, GE Vernova drop 7% and Sandisk plunge 22%, likely isn't finished. He attributed the declines to rising local opposition to new data centers after the midterm elections, which has raised doubts about continued AI infrastructure spending, but said he does not view this as a repeat of the dot-com crash since most affected companies are profitable.
Apple shares fell in premarket trading after the company's revenue beat expectations but its margin outlook disappointed investors, adding pressure to an already shaky tech sector. Separately, oil prices surged overnight following reports of an attack on Iran's Qeshm Island, while Asian and European chip stocks slid as the Nasdaq-100 remained in correction territory after closing more than 10% below its October 6 peak.
US stocks swung from early-week gains to steep losses, with the Nasdaq falling 1.4% Thursday and nearly 3% Friday after weak tech earnings, ending the week down 2% and October down 5.3%. The S&P 500 dropped roughly 2% for the week while the Dow, buoyed by a shift into defensive stocks, lost under 1% weekly but gained 1.7% for the month. Chipmakers initially rallied on Anthropic's IPO filing and SK Hynix's record profit, but Intel's weak outlook sent its shares down more than 28% Friday, and Fed Chairman Kevin Warsh's hawkish comments on inflation added to investor unease.
Tech stocks extended gains for a second session, with optimism over Anthropic's planned Nasdaq listing continuing to lift AI-related shares in Asia, Europe and the US. Anthropic's S-1 filing reportedly spans more than 300 pages and outlines a governance structure giving founders outsized control relative to everyday shareholders. Separately, the Federal Reserve begins a two-day meeting today, with a policy decision due Wednesday at 2 p.m. ET.
Gains tied to artificial intelligence companies have contributed an estimated $138 billion to the investment portfolios of 13 public pension funds since 2022, according to reporting on the funds' performance. The rally has helped these funds recover from losses tied to the last financial crisis, even as some politicians grow more critical of the AI industry.
South Korean data-center startup Elice saw its stock fall as much as 36% in afternoon trading on its first day as a publicly listed company in Seoul. The sharp decline came despite the company's AI-infrastructure focus, an area that has generally drawn strong investor interest.
The Nasdaq posted its worst weekly performance since June, falling 4.5% and ending a four-week winning streak, while the S&P 500 dropped 2%. The Dow Jones Industrial Average rose 0.7% as investors shifted toward healthcare and consumer staples. The decline accelerated after September's consumer price index rose 3.7% year-over-year and producer prices jumped 6.3% annually, the largest gain since 2022.
Jim Cramer explained that increasing borrowing costs are creating a divide in the stock market, with traditional sectors facing constraints while AI-related companies remain largely unaffected. The recent Treasury bond auction, which saw strong demand and a brief yield spike, underscored the importance of borrowing costs for equities. AI firms like data centers, semiconductors, and cybersecurity companies continue to access financing easily, contributing to their market outperformance.
Global markets sold off Monday after Anthropic CEO Dario Amodei and other prominent tech figures publicly urged a slowdown in AI capability development. Chipmakers and hyperscalers bore the brunt: Samsung, SK Hynix, ASML, Nokia, Infineon, Micron, Intel and Nvidia all dropped sharply, while SoftBank fell 10% in Tokyo trading. The rout followed a heated online dispute sparked by a former Anthropic/OpenAI researcher's resignation over safety fears, which escalated when an Anthropic safety researcher estimated a greater than 10% chance AI could wipe out humanity within a decade.
Jim Cramer said on 'Mad Money' that despite rising oil prices hitting retail, staples and discretionary stocks like Comcast, Procter & Gamble and Stanley Black & Decker, he remains optimistic about the broader market. All three major indexes fell for a third straight session, but Cramer pointed to strong AI-related semiconductor stocks, resilient bank shares, and the potential for oil prices to ease as reasons for his continued confidence.