Jim Cramer Says ‘The Year of Magical Investing’ Is Over—Here’s What To Do Now
December 30, 2025
Key Takeaways
- Jim Cramer told “InvestopediaExpress” podcast listeners that speculative stocks tied to AI hype and data center buildouts are due to “revert” to previous levels.
- He also provided his 2026 playbook: shifting from companies making the technology for AI to established firms usingit to cut costs and boost profits.
CNBC’s “Mad Money” host is waving the yellow flag.
In other words, he’s urging caution: After a run-up in AI and other tech plays in 2025, Jim Cramer says “the year of magical investing” is coming to an end. In a recent interview on the “InvestopediaExpress” podcast, the CNBC star warned that many stocks have soared too high on hype—he name-checked companies tied to quantum computing, autonomous vehicles, and data center buildouts—and are due for a pullback.
Why This Matters to Investors
Only two of the “Magnificent Seven” have beaten the S&P 500’s gains in 2025. Cramer says that’s a warning that the easy gains from AI hype are fading. Cramer suggests that everyday investors can still have a winning portfolio by leaning into quality, staying patient, and not confusing momentum for value when picking stocks.
But Cramer isn’t telling investors to head for the exits. Instead, he suggests shifting from shares of companies building AI systems to blue chips using artificial intelligence to transform their businesses.
We take you through his 2026 to-do list below.
1. Trim the Hype Stocks
Cramer warned “InvestopediaExpress” listeners to review their holdings of stocks tied to speculative themes, such as quantum computing, autonomous vehicles and the AI data center buildout. Many of these stocks were “dramatically lower” not long ago, he said, and have since soared on hype, not fundamentals.
“These stocks are really high and they’re going to revert to where they were before the willy-nilly building of data centers,” he said.
2. Pivot to Companies Using AI, Not Building It
So where should you look instead? Cramer’s answer: avoid the companies racing to build AI and add shares of the legacy players deploying it.
Johnson & Johnson (JNJ) “is so exciting and doing great things,” he said, mentioning its recent use of AI for cancer treatments. He also pointed to Procter & Gamble (PG), which is using Nvidia’s (NVDA) technology to save costs associated with its supply chain.
“One of the reasons why I think next year is going to be a really good year for Procter is you’re going to see all the things that they are doing with the technology,” he said. “It’s not evident yet.”
Fast Fact
Cramer said someone on his recent book tour accused him of “trading people to death.” His response: “I have not advocated that course since 2009.” While he still does lightning rounds for callers on stocks to “buy buy buy,” the message behind his picks has changed.
3. Own, Don’t Trade
Cramer warned against seeing his stock picks as short-term plays. Recalling Warren Buffett, who famously said his favorite holding period is “forever,” Cramer says he believes in buying and holding for the long haul.
He differs with the Oracle of Omaha on what to buy. Buffett has told everyday investors to stick with low-cost index funds. Cramer suggests splitting your portfolio between index funds and four or five individual stocks you believe in, with a non-stock asset on the side for protection.
Those championing index funds often tell regular investors to avoid individual stocks, he told the “Investopedia Express,” “but they’re the dogmatists—they’re the people who are just saying you’re not smart enough.”
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4. Save Some Fuel for a ‘Moon Shot’
“I want you to own, don’t trade, and compound,” Cramer said. It’s Buffett’s lifelong philosophy in three words: buy good companies, reinvest the returns, and wait for the long-term gains to kick in.
Cramer traced that lesson to childhood visits to a Philadelphia paper goods warehouse, where his dad would take him to buy supplies for the family business. The owner—Cramer calls him Mr. Hank, a pseudonym—kept a handwritten ledger of his stock purchases and eventually became a millionaire, he said.
Peter Lynch, the legendary Fidelity fund manager, long argued that ordinary people could beat the pros by investing in what they know. Cramer agrees—but only if they’re willing to do the homework.
“I want people to be able to pick five stocks,” he said. “One is really a moon shot because I feel that it only takes one to change your life.”
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