Jim Cramer said chip stocks are rising because companies can’t make new chips fast enough. It’s not because they don’t want to. They literally have no tools.
“We don’t have enough equipment to scale up production of these chips and we can’t build them fast enough,” Jim said on CNBC’s segment Friday night.
Micron stock rose 7.76% on Friday. It’s not a small movement. The company manufactures memory and storage technology specifically for artificial intelligence. CEO Sanjay Mehrotra told Jim there is no sign that things are slowing down.
“AI-driven demand is accelerating. It’s real. It’s here. We need more and more memory to keep up with that demand,” Sanjay said. They just started construction on a 600,000 square foot site in upstate New York. This is part of a plan to spend $200 billion on new chip production in the United States.
Micron, Seagate, etc. can’t keep up with AI orders
That huge site? Nothing will be saved tomorrow. That’s many years away. And Jim pointed that out. The only reason this type of construction is happening is because of the CHIPS Act. The legislation would give U.S. chipmakers government support for local manufacturing.
However, by law, concrete cannot be poured. It takes time. That means the shortage won’t go away anytime soon. And as long as demand is hot, prices will continue to rise, Jim said.
In addition to Micron, Jim pointed to other semiconductor stocks that have already seen big gains. Western Digital, Seagate, and Sandisk have all benefited from this crisis. He also said the shortage did not appear suddenly. Last year everyone thought there was too much tipping. now? Complete reversal. According to Jim, there was only one company that expected this to happen: Nvidia.
“Nvidia was the only one who actually saw it coming,” Jim said. “They partnered with the best of the best, Taiwan Semiconductor, to manufacture all the high-end chips they need. There’s no bottleneck there. There’s no shortage, at least compared to memory.”
Markets continue to rise as global turmoil is largely ignored
Despite everything going on in the world, stock prices are still going up. The S&P500 is higher. The same goes for the Dow Jones, which is up 3% this year. The Nasdaq rose 1.2%. Despite President Trump’s talk of military action and Greenland, no one is withdrawing from the market.
Anthony Esposito, who runs AscalonVI Capital, told CNBC that the market hasn’t been concerned about geopolitical risk for some time.
“Israel bombs Iran – S&P 500 drops 1% overnight to close at just 50 bps. US bombs Iran, almost no reaction,” he said. He added that Venezuela and Greenland could even help the US market thanks to energy, rare earths and infrastructure.
Europe’s Stoxx 600 index is up nearly 4%, even as everyone speculates on what President Trump will do with Greenland. In Asia, the MSCI AC Asia Pacific Index is up more than 5% this year and just hit a new high. Japan’s Nikkei 225 and South Korea’s Kospi both also set records.
One last thing. The U.S. Supreme Court is expected to rule on President Trump’s tariffs soon. That hasn’t happened yet. But investors don’t seem to be waiting. They are already adapting to any changes coming out of the White House in 2025.