AI stocks face hurdles before rebound can hold, CNBC's Cramer says

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AI stocks rebound hurdles

Highlights

Nasdaq Composite rises 1.1% and S&P 500 gains 0.5% Monday after a steep Friday sell-off drove major tech indices below their 50-day moving averages.
Bearish technical signals, including double tops in VanEck Semiconductor ETF and Roundhill Memory ETF, and head-and-shoulders formations in select stocks, keep market sentiment cautious until indices reclaim technical levels.
Upcoming earnings from SpaceX, Meta Platforms, Alphabet, Microsoft, and Amazon, as well as the timing of the U.S. midterm elections and a potential Anthropic IPO in November, are seen as key tests for sustaining an AI stock rebound.

Technical signals and earnings remain key tests

As reported by CNBC, Cramer says he is not ready to turn aggressively bullish on AI data center stocks even after Monday's rebound in the sector. He argues that both technical and fundamental pressures are still in place, and that investors should wait for several conditions to improve before treating the pullback as a buying opportunity.

The Nasdaq Composite rises about 1.1% on Monday as investors return to technology shares after last week's sell-off in AI buildout beneficiaries. The S&P 500 gains nearly 0.5%, while the Dow Jones Industrial Average trades nearly flat. The move follows a steep Friday decline that pushes the Nasdaq Composite and Nasdaq 100 below their 50-day moving averages, while the Cboe Volatility Index, or VIX, climbs above 22 for the first time in four months.

Cramer says the VanEck Semiconductor ETF and Roundhill Memory ETF appear to have formed double tops, a bearish pattern that can indicate a rally has run its course. He adds that some other stocks show head-and-shoulders formations, another negative chart signal, and says technicians also want to see the Nasdaq Composite and Nasdaq 100 regain their 50-day moving averages before confidence improves.

He also says upcoming earnings need to show that large technology companies remain committed to AI spending and that those investments continue to generate returns. SpaceX and Meta Platforms report this week, followed by Alphabet, Microsoft and Amazon next week, with cloud growth seen as a particularly important measure of whether AI spending is paying off.

Election timing and Anthropic IPO could shape sentiment

Cramer says the U.S. midterm elections in early November are another hurdle for the sector. He says growing political opposition to data centers has weighed on the industry, although he expects some of that pressure could ease after Election Day on Nov. 3, even if the results initially trigger more selling.

He also points to a possible Anthropic IPO, which media reports say could come as soon as November, as a final test for the market's confidence in the AI investment chain. In his view, the offering would help show whether AI can support a sustainably profitable business model worth backing, although he cautions that a major listing could also pull capital away from other AI names.

Despite his near-term caution, Cramer says he remains a long-term believer in the AI trade. For now, however, he says investors should watch for clearer market charts, fresh spending signals from hyperscalers, reduced political uncertainty and a solid public debut from Anthropic before returning to the group in force.

In our earlier article on the Nasdaq 100’s pullback, we highlighted how the index slipped below key short- and medium-term moving averages after hotter-than-expected U.S. inflation data, signaling rising near-term selling pressure. We also noted the unusual backdrop of falling Treasury yields alongside the equity drop, and outlined critical levels traders were watching to judge whether the rebound could stabilize or remain vulnerable.

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