Cramer says Samsung sell-off may point to AI market rotation

Samsung Electronics’ latest earnings update triggered a 7% fall in its shares and helped pull down AI hardware stocks, while several large technology companies that have lagged this year advanced, CNBC’s Jim Cramer said Tuesday. Cramer said the session suggested investors may be reassessing the market leadership behind the artificial intelligence trade.

On CNBC’s “Mad Money,” Cramer said Samsung’s report was strong in absolute terms but fell short of elevated investor expectations. He said the market read the results as a warning on demand for parts of the AI supply chain, including memory chips.

Memory is central to AI infrastructure because data centers require high-performance chips to store and move large volumes of information as models are trained and used. Samsung is one of the dominant global suppliers in that market, and Cramer said investors extended concerns from its results to other companies tied to the physical buildout of AI computing capacity.

Micron Technology, an Idaho-based memory-chip maker and one of Samsung’s few major competitors in that segment, declined 4.7%, according to CNBC. Cramer said shares of other companies linked to data center equipment and AI infrastructure also came under pressure during the session.

The more notable move, in Cramer’s view, was the destination of the money that left those hardware-linked shares. He said investors bought several megacap technology names, including Amazon, Alphabet, Meta, Apple and Nvidia. He also cited buying interest in enterprise software companies such as Salesforce, Adobe and ServiceNow.

Cramer framed the trading as a possible turn away from suppliers of AI equipment and toward the companies paying for much of the AI buildout. Amazon, Alphabet and Meta have been among the largest spenders on data centers and AI computing resources, while Nvidia remains a leading supplier of the graphics processors used for AI workloads.

That distinction matters for market leadership. Hardware suppliers benefit when cloud providers and internet platforms expand data center capacity. The buyers of that equipment face higher capital spending, but investors can also treat them as long-term beneficiaries if AI tools improve advertising, cloud services, software, commerce or consumer devices. Cramer said Tuesday’s moves indicated that investors may be giving renewed weight to the latter group after a weaker stretch for several megacap technology shares.

He said the AI supply-chain trade may have become crowded after a long period of enthusiasm for chip and infrastructure names. By contrast, he said companies including Amazon, Alphabet and Meta had struggled for much of the year, which may have made them more attractive to investors seeking exposure to AI through different parts of the technology sector.

CNBC noted that Cramer’s Charitable Trust, the portfolio associated with CNBC’s Investing Club, owns shares of Alphabet, Amazon, Apple, Meta, Nvidia and Salesforce.

Cramer cautioned that one session does not establish a durable market rotation. Still, he said Tuesday’s trading stood out because investors sold parts of the AI infrastructure complex while buying companies that had led earlier phases of the technology market.

This story draws on original reporting from CNBC.