The tech bloodbath intensified Wednesday as chip stocks cratered and software names extended their losing streak, but CNBC's Jim Cramer sees a silver lining in the carnage. While Advanced Micro Devices plunged 17% on a tepid outlook and the iShares Expanded Tech-Software Sector ETF notched its seventh straight loss, old-economy stalwarts are staging a comeback. The Dow Jones Industrial Average gained 260 points even as the Nasdaq Composite slid, proving tech isn't the only game in town anymore.
Wall Street's tech darlings are getting a reality check, and Jim Cramer thinks it's long overdue. The CNBC host used Wednesday's brutal sell-off to hammer home an old investing gospel that too many portfolios forgot: diversification matters, especially when your entire bet is on one sector.
Advanced Micro Devices took the biggest hit, plummeting 17% after delivering what investors saw as a disappointing first-quarter outlook. The chip designer's stumble sent shockwaves through the semiconductor space, pulling down Broadcom and Micron Technology in sympathy. It's the latest sign that the AI infrastructure buildout investors have been counting on might not be the sure thing they thought.
But the pain runs deeper than chips. Enterprise software has been hemorrhaging for a week straight, with the iShares Expanded Tech-Software Sector ETF marking its seventh consecutive session in the red. Oracle shed 5% Wednesday as fears mount that AI will cannibalize traditional software businesses faster than anyone expected. "The whole enterprise software cohort has gone out of style thanks to AI," Cramer told viewers during his show.
While the and slid, the told a different story, climbing 260 points or 0.5%. The divergence underscores a fundamental shift happening beneath the surface. Investors who thought tech was "the only investable part of the stock market" are scrambling to rotate into sectors they'd written off as dinosaurs.
