CNBC Television
Some stocks deserve a higher premium, says Jim Cramer
11/5/2025, 3:44:17 AM
Economic Summary
- The speaker frames the market as three separate markets: a high-growth/high-tech data-center market, the real economy, and a speculative market, arguing they behave differently and should be analyzed separately.
- Data-center and high-growth tech stocks trade at premiums to the S&P 500 average (S&P ~23x next year's earnings), with Amazon ~32x, Apple and Microsoft ~33x, and Nvidia ~30x, implying higher investor expectations for these firms (AMZN, AAPL, MSFT, NVDA).
- Market sentiment can swing violently: despite a strong quarter from Palantir (PLTR), the Nasdaq fell about 2.04%, the S&P lost 1.17%, and the Dow slipped 251 points, illustrating reflexive selling and emotional trading.
Bullish
- Leaders in data centers and AI can justify higher multiples.
- Palantir reported a great quarter, indicating operational strength.
- Some companies deserve premium valuations due to superior fundamentals.
Bearish
- Palantir failing to rally after a strong quarter suggests investor skepticism and potential profit-taking.
- High-growth/data-center stocks trade well above the S&P average, raising valuation risk.
- Broad market pullback (Dow, S&P, Nasdaq) shows sensitivity to overvaluation concerns.
Bullish tickers
PLTRNVDAAMZNAAPLMSFT
Bearish tickers
PLTRNVDAAMZNAAPLMSFT
PLTR
Bullish
Reported a great quarter, which supports its operational momentum and a constructive longer-term thesis.
Bearish
Failed to rally after a strong quarter, suggesting investor skepticism and potential short-term selling pressure.
AMZN
Bullish
Leader in data center and cloud infrastructure, justifying a premium multiple if growth continues.
Bearish
Trades at a high multiple (~32x next year), leaving valuation sensitive to growth disappointments.
AAPL
Bullish
Strong franchise and role in data-center/tech ecosystem can warrant premium pricing.
Bearish
High valuation (~33x next year) may be vulnerable if earnings momentum slows.
MSFT
Bullish
Core enterprise software and cloud position support sustained earnings growth and a higher multiple.
Bearish
Premium valuation (~33x next year) exposes it to market multiple compression.
NVDA
Bullish
Central to AI and data-center expansion, justifying a rich multiple if demand persists.
Bearish
High-growth valuation (~30x next year) could be punished on growth misses or sentiment shifts.
People mentioned
Jim Cramer