CNBC's Jim Cramer on Monday warned that the AI trade has become increasingly fragile and urged investors trading with borrowed money to exit data center-related positions. The 'Mad Money' host advised margin traders to 'sell it no matter what' at 9:30 a.m. the next morning, stating he no longer believes they will 'get out alive.' Cramer's warning comes as AI infrastructure and data center stocks have started to pull back amid investor concerns about whether the pace of data center spending can continue, while the amount of margin debt has increased sharply over the last year.
Cramer Advises Immediate Sale for Margin Traders in AI Stocks
'If you're borrowing money to buy something related to the data center, then tomorrow morning, 9:30 a.m., sell it no matter what,' Cramer said on Monday. 'You won't regret it.' He emphasized the urgency for margin traders specifically: 'If you're on margin, get off it. I no longer feel that you'll get out alive.' Many AI infrastructure and data center stocks have run up sharply over the past year, but the cohort has started to pull back as investors question whether the pace of data center spending can continue.
Margin Trading Risks Amplified by AI Stock Volatility
Cramer said the volatility in AI stocks that has stemmed from spending uncertainty makes investing with borrowed money—known as margin trading—especially dangerous. Buying stocks on margin involves borrowing money from a brokerage to increase the size of an investment. While the strategy can amplify gains when share prices rise, it also magnifies losses. Sharp declines can trigger a margin call, forcing investors to either deposit additional cash or sell holdings—potentially at worse prices.
Cramer Recommends Diversified Companies Over Data Center Plays
Rather than concentrate portfolios in data center plays, Cramer said investors should look for companies with more diversified sources of growth. He pointed to building materials supplier CRH as one example, noting that while the company supplies materials used in data center construction, most of its business comes from roads, bridges, and office complexes. 'We want tech, but not the kind of big tech investors used to buy,' Cramer said. 'We want materials tech and we want science tech.'
Quality Tech Holders Not on Margin May Weather Volatility
Cramer added that investors who own quality technology stocks outright may still be able to weather the volatility. 'Now, if you own terrific tech stocks, and you're not on margin, you could be fine, assuming you can handle some pain,' he said.
FAQ
What did Jim Cramer advise margin traders to do on Monday?
Jim Cramer advised investors borrowing money to buy data center-related stocks to sell their positions at 9:30 a.m. the next morning, stating 'you won't regret it' and warning he no longer believes margin traders in AI stocks will 'get out alive.'
Why did Cramer warn about margin trading in AI stocks?
Cramer said the AI trade has become increasingly fragile as AI infrastructure and data center stocks have started to pull back amid investor concerns about whether the pace of data center spending can continue, making the volatility especially dangerous for margin traders whose losses are magnified.
What alternative investment strategy did Cramer recommend?
Cramer recommended investors look for companies with diversified sources of growth rather than concentrating portfolios in data center plays, pointing to building materials supplier CRH as an example of a company with exposure to data centers but most business from roads, bridges, and office complexes.
