With the major averages slipping from their highs on lingering trade-war concerns, CNBC’s Jim Cramer wanted to go against the grain and take a look at what’s winning.
“One word: tech. Tech is what’s working,” the “Mad Money” host said on Monday from CNBC’s 1Market in San Francisco. “The truth is, tech has been on fire for a long time — this is now the seventh straight week of gains for this group.”
Tech’s first tailwind on Monday came in the form of an analyst upgrade. Nomura Instinet released a report that raised its price target on shares of Micron to $100 from $55.
Shares of Micron, an Idaho-based chipmaker specializing in DRAM — dynamic random-access memory — and flash memory chips, ran up nearly 9 percent on the news.
“I’ve been telling you that something like this was on the horizon,” Cramer said. “Micron’s the backbone of everything from the personal computer, which has gotten a second wind, to the data center, which is the strongest part of the entire food chain.”
Many market-watchers thought Micron was approaching the “bust” part of its boom-bust cycle. Because DRAM and flash memory chips are so easily replicated, they worried that the market would become over-saturated.
“But Micron’s been adamant that this time is different, that their chips are now more specialized and proprietary, harder to make,” Cramer said. “However, as I say often, … the graybeards simply refuse to believe that anything can ever be different.”
“In the case of Micron, it turns out that this time it is different,” he quipped.
Not only are Micron’s chips not being replicated, but they are in short supply, Cramer said. With personal computers selling again and data centers becoming increasingly essential to business, chips are needed more than ever, he said.
But Cramer found one overlooked winner that people might be forgetting as other stocks in its cohort rally: Intel, the semiconductor giant reportedly considering a bid for Broadcom.
“I think that the rumors that Intel is going to buy Broadcom, rumors that we first heard last Friday, are, for lack of a better word, total poppycock,” Cramer countered. “You’re getting a chance to buy one of the best companies in the world at an unjustified discount.”
While the “Mad Money” host didn’t think Intel’s stock could race to $100 per share, like Nomura predicted for Micron, he did see an opportunity in its stock, which has failed to rally with the rest of its group.
And while Intel’s argument for the takeover is that a Broadcom-Qualcomm deal could allow Intel to snag Apple as a customer, Cramer argued that Broadcom CEO Hock Tan doesn’t want to sell.
“It’s foolhardy to wager that this deal will come to fruition, which leads me to the one Micron-related stock that’s at a discount that I would buy tomorrow, and that’s Intel,” Cramer said. “Everything else in that group is up except Intel. This time is different. Intel’s a buy.”
Disclosure: Cramer’s charitable trust owns shares of Broadcom.
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