CNBC’s Jim Cramer said Tuesday that technology stocks are losing many of the qualities that made them the market’s dominant leadership group over the past three years.
“A real bull market has leaders, and those leaders have terrific characteristics,” the “Mad Money” host said. “They make a lot of money, there’s a limited number of them, and there aren’t too many shares around because these companies constantly buy them back.”
Following the mini banking crisis in 2023, tech stocks led the market higher. According to Cramer, the Magnificent Seven, semiconductor companies, and enterprise software firms generated massive cash flow, maintained fortress-like balance sheets, and consistently reduced share counts through aggressive buybacks. That combination of financial strength and limited stock supply, he said, helped fuel the sector’s leadership and support higher valuations.
But Cramer argued that the landscape is changing.
“There is no longer a scarcity of tech,” he said.
A major reason is the growing wave of artificial intelligence-related fundraising. Cramer pointed to upcoming offerings from companies such as SpaceX, Anthropic and OpenAI, which he believes could flood the market with new supply and absorb investor capital that previously flowed into publicly traded technology stocks.
“Nothing can kill a bull market like an oversupply of stock,” Cramer said. “We’re about to have supply coming out of our ears.”
The shift extends beyond new IPOs. Cramer noted that many of the technology giants that once distinguished themselves with pristine balance sheets and large buyback programs are now spending heavily to fund AI infrastructure. Alphabet recently raised $80 billion through an equity offering after years of aggressive buybacks, and Cramer suggested Amazon, Meta, and Microsoft could eventually face similar decisions as data center costs continue to climb.
“Too much supply. Tattered balance sheets. Gunner shareholders. No scarcity value.,” he said. “The exact opposite from when the Mag Seven were anointed.”
The changing dynamics have led Cramer to become more cautious on stocks.
“I’m so worried about this flood of stock supply. The only cure for too much supply is lower prices, so low that companies don’t want to sell stock anymore,” he said. “We’re not there yet. We’re only on day two of the period of oversupply. But there’s not much that can be done until these deals get through the python.”
