Jim Cramer Says Oracle And OpenAI Face Harsh Reality As The Year Of 'Magical Investing' Loses Steam

Recent market sell-offs have raised concerns of a slowdown in the strong momentum witnessed so far this year, which Cramer calls the year of “Magical Investing.”

• In another post on X, earlier on Friday, Cramer noted that it was tough to reverse things in tech “when there are so many financings being done to keep dubious ventures afloat.”
• Leading figures in the financial world, such as Michael Burry, have highlighted concerns about certain big-name tech stocks. 
• On Wednesday, the former hedge fund manager and host of Mad Money on CNBC, Cramer, said that Wall Street is now looking towards more profitable companies and trying to stay clear of AI investments.

Jim Cramer warned on Friday that the year of “Magical Investing” was hitting Oracle and OpenAI the hardest as markets turn cautious about the valuations of large technology companies, particularly in light of the recent surge in their investment in artificial intelligence (AI).

“Until the market forces the hands of Oracle and OpenAI to be more disciplined we may have to endure this spasm of selling,” Cramer said in a post on X.

Investors Weary Of AI Bubble

Recent market sell-offs have raised concerns of a slowdown in the strong momentum witnessed so far this year, which Cramer calls the year of “Magical Investing.”  

Leading figures in the financial world, such as Michael Burry, have highlighted concerns about certain big-name tech stocks. “The Big Short” legend Burry of Scion Asset Management has placed a short bet on Nvidia Corp and Palantir in early November.

On Wednesday, the former hedge fund manager and host of Mad Money on CNBC, Cramer, said that Wall Street is now looking towards more profitable companies and trying to stay clear of AI investments, particularly due to concerns regarding their large investments and ability to scale AI growth.

In another post on X, earlier on Friday, Cramer noted that it was tough to reverse things in tech “when there are so many financings being done to keep dubious ventures afloat.”

“BUT, that's how you end up with a stronger market. Just stick with growth,” he added.

What Is Retail Thinking?

Retail sentiment on Oracle remained unchanged in the ‘bullish’ territory, with message volumes at ‘high’ levels, according to data from Stocktwits. While sentiment on OpenAI was also in the ‘bullish’ territory, with message volumes at ‘high’ levels.

Shares of Oracle were down nearly 2% in premarket trading on Friday. Meanwhile, U.S. equities fell before the bell. At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was down 0.79% and the Invesco QQQ Trust ETF (QQQ) fell 1.21%.

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