As energy stocks rose on Wednesday after President Donald Trump exited the Iran nuclear deal, CNBC’s Jim Cramer wanted to explain the simultaneous rally in the technology sector.
The “Mad Money” host said it all started with a research note released by Morgan Stanley. The analysts wrote that near-term conditions for semiconductors and the cloud were “exceptional” and reiterated their “buy” rating on shares of chipmaker Micron.
“They identified Micron, symbol MU, as one of the best candidates for dramatic appreciation … thanks to the strength of the data center,” Cramer said.
“That Morgan Stanley call, plus the incredibly rally that seems endless now in Apple [as] the service revenue stream has finally come to the fore, created a situation that was just untenable for most money managers,” he continued. “They couldn’t resist.”
And while the market still harbors some underlying uncertainties tied to U.S. trade policy, Morgan Stanley’s note served as something of a silver lining on Wednesday, Cramer said.
“The Morgan Stanley call on the semis and the data centers seemed to overshadow any worries about trade, at least for today,” he said, adding that he liked the call “because it actually jives with the fundamentals.”
Every day, the “Mad Money” host hears about the rise of e-commerce and the subsequent growing need for data centers and cloud computing capabilities.
Companies are spending millions moving their data to the cloud, and every quarter, cloud providers including Alphabet’s Google, Amazon Web Services and Microsoft Azure reap the benefits.
“It’s the cloud thesis that we talk about endlessly on ‘Mad Money,'” Cramer said, arguing that this thesis has driven the explosion in digital video gaming, Disney’s push to expand its tech offerings and Walmart’s $16 billion stake in Indian e-commerce player Flipkart.
The cloud thesis is also what drove Cramer to create a new stock group, the “cloud kings,” in addition to FANG, his famed acronym for the stocks of Facebook, Amazon, Netflix and Google, now Alphabet — also beneficiaries of the shift to the cloud.
So as investors seemed to set aside their trade-related fears, Cramer doubled down on his flagship theme: there’s always a bull market somewhere, no matter the market’s day-to-day swings.
And, as for the cloud, it’s simply “too good a story to pass up,” the “Mad Money” host said.
Disclosure: Cramer’s charitable trust owns shares of Apple, Alphabet, Amazon, Microsoft and Facebook.
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Source: Tech CNBC
Cramer: Morgan Stanley's call on Micron just saved stocks from trade fears