Investors who have major tech stocks in their portfolio should prepare for potential volatility this earnings season, CNBC’s Jim Cramer said Thursday.
“If you want to have these stocks right now, you have to be willing to put up with a little bit of pain. You’ll have to see how the rest of the market catches up a bit as they decline in value.” The “Mad Money” host predicted. “But at some point, they will return, because these are in fact the best companies on Earth.”
Cramer’s comments anticipate a profit-packed schedule next week, with tech giants Apple, Facebook and Alphabet, Google’s parents, slated to report. Ecommerce giant Amazon is also ready to report.
All of this will take place in the context of this week’s reports from Microsoft and Tesla, which saw selling pressure after releasing their quarterly numbers, Cramer said. A similar situation occurred for Netflix, he added.
“All of these Big Tech stocks are traded together, and when you start the earnings season with such a disappointing stock, well, it doesn’t bode well for the rest of the group,” Cramer said.
But Cramer said long-term investors in these shares should not be overly concerned about the potential sale of these shares. It may be that they are reaching the quarter “too hot,” he said. Furthermore, he said, CEOs of Apple, Google, Amazon and Facebook are set to testify before Congress early next week.
Wall Street reacted poorly to Netflix’s quarter, mainly as a result of weak guidance for new subscribers, Cramer said. Some analysts expressed concern about Microsoft’s Windows forecast, he said, while others expressed concern about Tesla’s revenue from the sale of carbon emissions regulatory credits to other automakers.
Regardless of the qualms that may have contributed to the downward pressure on those two actions, Cramer said he did not believe they believed at the suggestion that the companies had a fundamental problem.
“The shares have become too high for the moment. The fundamentals had nothing to do with this mass sale,” Cramer said. “Unfortunately, they also had nothing to do with the last 10 to 15 percentage points higher, which is why [these] names are very vulnerable. ”
Disclosure: Cramer’s Charitable foundation It owns shares in Apple, Amazon, Facebook and Alphabet.
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