Tech stocks on the decline are still winning companies, Jim Cramer says

Even though many megacap tech stocks continue to nose dive, CNBC's Jim Cramer on Tuesday told investors not to forget they are still solid companies.
He argued that some investors have soured on Big Tech not because of issues with those companies, but because they want to by stocks set to climb when the Federal Reserve cuts interest rates.

Even though many megacap tech stocks continue to nose dive, CNBC's Jim Cramer on Tuesday told investors not to forget they are still solid companies.

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"It's so easy to just dump all of the great growth stocks that have done so well when you have cycles based on cellphone refresh or P.C. refresh or AI or accelerated computing," he said. "Never forget, though, that you're selling winners, actually bona fide winners, for stocks that were losers just two weeks ago. Selling winners for losers is indeed, longer term, a mug's game, unless you think that this rotation has immense multi-year staying power or you're a hedge fund with the ability to flit in and out all day and all night."

Cramer explained that the Magnificent Seven stocks — Apple, Nvidia, Meta, Microsoft, Amazon, Alphabet and Tesla — and many of their peers can perform well regardless of the interest rate cycle. That's why Wall Street had favored them over the past few years as the Fed kept rates high to combat stubborn inflation, he continued.

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But many feel that rate cuts are on the horizon, and so investors are now drawn to stocks poised to see a boost from a shift in the rate cycle, Cramer said. He pointed to household product and industrial tool maker Stanley Black & Decker, which notched huge gains on Tuesday after reporting a solid quarter. Since the company is tied to housing turnover, Wall Street thinks profits will climb in a lower interest rate environment conducive to more home sales and remodeling, Cramer said.

For now, Cramer argued, Big Tech outfits are "just very strong businesses with suddenly very bad stocks." He said the stocks could continue to decline until shares are low enough that they seem inexpensive compared to the "rate cut winners" currently doing well.

"The Magnificent Seven, the companies, will be doing just fine regardless of where the Fed takes interest rates," Cramer said. "But their stocks? Very different story."