CNBC host Jim Cramer on Thursday defended holding the Magnificent Seven tech stocks despite recent underperformance, predicting a rally when one company announces raised forecasts due to AI products. The Magnificent Seven stocks—Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla—have struggled in 2026 after powering market gains during the generative AI boom in prior years. Cramer argued investors unfairly lump these companies together despite vastly different businesses and AI strategies, stating on Mad Money that when AI profitability is proven, investors will favor these hyperscalers over commodity semiconductor stocks.
Cramer Predicts Rally When AI Profitability Emerges
Cramer told viewers that one of the Magnificent Seven companies will eventually announce on a conference call that it is raising forecasts because of its AI products, triggering a rally across all the stocks. The Mad Money host said this rally will be so powerful that investors will regret missing out. Cramer's Charitable Trust, the portfolio used by the CNBC Investing Club, owns six of the Magnificent Seven constituents, with Tesla being the outlier. He urged investors to stop comparing the stocks and start thinking about their individual merits, noting the companies have vastly different businesses and AI strategies.
Meta Plans AI Chip Manufacturing Later This Year
Reuters reported Thursday that Meta plans to begin manufacturing its own AI chip later this year, part of the Facebook and Instagram parent's broader push to grow its computing footprint into next year. Cramer said the market initially disliked the news because it signaled that capital expenditures are unlikely to slow anytime soon. The report follows last week's news that Meta is working on a new business to sell compute capacity, terrain dominated by cloud giants Amazon, Alphabet, and Microsoft. While some investors question whether Meta can compete against those heavyweight incumbents, Cramer argued the company may have advantages Wall Street is overlooking, stating that CEO Mark Zuckerberg knows more about his company's prospects than investors do and has demonstrated that time and again.
Cramer Highlights Alphabet's YouTube and Waymo Value
Cramer made a similar case for Alphabet, saying investors are too focused on its massive AI spending and competition from ChatGPT, Claude, and other chatbot creators, while overlooking the value of businesses such as YouTube and Waymo. He acknowledged the megacap technology stocks will likely continue trading together, with weakness in one often dragging down the rest. However, Cramer said that same dynamic could eventually work in their favor once one company proves AI can become a meaningful profit driver. He stated that once one of these heavy hitters says its AI business is now profitable, investors will forget about owning commodity semiconductor stocks and instead go for the hyperscaler that is generating so much cash flow it will not even know what to do with the money.
FAQ
What did Jim Cramer say about the Magnificent Seven stocks on Thursday?
Jim Cramer defended holding the Magnificent Seven tech stocks on Thursday despite their recent underperformance in 2026. He predicted that when one of these companies announces raised forecasts due to AI products on a conference call, it will trigger a powerful rally across all the stocks. Cramer's Charitable Trust owns six of the seven stocks, excluding Tesla.
Why did Meta's AI chip manufacturing news initially receive a negative market reaction?
According to Cramer, the market initially disliked the news that Meta plans to begin manufacturing its own AI chip later this year because it signaled that capital expenditures are unlikely to slow anytime soon. Reuters reported this development on Thursday as part of Meta's broader push to grow its computing footprint into next year.
What Alphabet businesses does Cramer believe investors are overlooking?
Cramer argued that investors are too focused on Alphabet's massive AI spending and competition from ChatGPT, Claude, and other chatbot creators, while overlooking the value of businesses such as YouTube and Waymo. He suggested investors should recognize the broader value these segments provide beyond the AI narrative.
