Jim Cramer Says Chip Demand Still Supports Stocks After Six-Session Sell-Off

Semiconductor stocks have fallen sharply, but Mad Money host Jim Cramer said Tuesday that sustained demand for computing power and memory continues to support the industry’s long-term growth.

The VanEck Semiconductor ETF fell 7.2% over six consecutive sessions. Cramer said higher oil prices and interest rates could prolong the decline, while semiconductor stocks have increasingly traded together despite differences in their fundamentals, obscuring the demand behind the sector’s rally.

He pointed to increasingly advanced consumer devices as evidence that chip demand remains broad. Products with more personalized digital assistants and sophisticated smart-home features require additional computing power and memory, creating opportunities for semiconductor companies.

Cramer urged investors to focus on where chips are used rather than judging the entire industry through a single index. The devices themselves, he said, provide a clearer view of the technology demand supporting the sector.

Micron was one example. Cramer highlighted the memory-chip maker’s 26 long-term customer agreements, which cover about 35% of its revenue through 2030. Negotiations for agreements covering 2031 are already underway.

The take-or-pay contracts require customers to meet their financial commitments, giving Micron greater visibility into future revenue. Cramer said the absence of such agreements would have raised concerns about the company’s outlook.

He also cited Intel and AMD, whose central processing units serve as basic components in a wide range of machines. That demand extends beyond memory chips and reflects the broader need for processing capacity across consumer and industrial devices.

Cramer said the group could face further losses after its sharp advance, but argued that the rally was not driven entirely by borrowed-money trading. He said underlying demand accounted for a significant part of the gains.

Cramer’s Charitable Trust owns shares of Apple, Intel and Micron.