- CNBC's Jim Cramer said Monday that tech companies dominate the market because business customers are more trustworthy than consumers.
- “It's not a question of technology versus something else,” he says. “Our market is made up of companies that sell to companies, and those stocks are doing great.”
CNBC's Jim Cramer said Monday that tech companies dominate the market because their primary customers are businesses with deep pockets, not consumers in need.
“Our market is made up of companies that sell to companies, and those stocks are doing great,” he said. “And while there are more companies serving consumers, the customer base is not very attractive right now, and it's very difficult to own that stock.”
Many businesses are reporting record profits, able to refinance when interest rates are low, and aren't bearing the same inflated costs as consumers, Cramer said.
Kramer used this logic to explain why many of the Magnificent Seven companies, including Amazon, Apple, Alphabet, Meta, Nvidia, Microsoft, and Tesla, have made such big profits. Although Microsoft primarily sells products to businesses, individuals are the company's “small potatoes.” Consumers use their products, but Alphabet, Meta, and Amazon's real customers are advertisers.
But Cramer acknowledged that Apple and Tesla are a little different from other companies. Tesla's disappointing financial results and forecast for slower growth reflect a segment of consumers who can't afford the company's products. Similarly, Apple has little corporate exposure, making its business more susceptible to consumer spending habits.
“I'm not worried about the concentration of winners in the technology industry, because, sadly, it makes sense to be concentrated,” Kramer said. “And it's done in a very bullish way.”
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