CNBC’s Jim Cramer warned investors on Tuesday against chasing the rally in data storage stocks. However, Cramer said all is not lost: Investors should instead consider owning the companies that will help alleviate the memory supply crunch.
“Given how much they’ve already run, if you don’t already own them, … I think you’re too late,” Cramer said, referring to Micron, Western Digital, Seagate and Sandisk, the four leading names in the global data stage and memory industry.
Shares of all four companies more than tripled last year because of surging AI-related demand and limited supply, giving the companies immense pricing power. They are also off to hot starts in 2026. With investors sitting on big gains, “even the smallest disruption could crush these stocks,” Cramer said.
Instead, Cramer pointed to semiconductor capital equipment makers like ASML, Applied Materials, KLA Corp and Lam Research as a “relatively safer way” to play the same theme. That’s because whenever there’s a chip shortage, companies start buying more manufacturing equipment in order to boost their production. Indeed, Micron is spending billions to build new chip factories.
“If you want to play the memory and data storage shortage without chasing stocks that have tripled or quadrupled in barely more than a year, I think the semiconductor capital equipment makers will be more durable winners here,” Cramer said, noting that it’s not just memory chipmakers who are racing to add manufacturing capacity. For example, Intel is also signaling that it’s increasing spending on semiconductor tools.
ASML jumped 54% last year, while Applied Materials added 58%. KLA jumped 93%, and Lam Research popped 137%.
Cramer said investors may consider making a move soon on ASML, Lam Research or KLA if shares dip on their quarterly earnings reports this week. Applied Materials doesn’t release results until next month.
While Cramer expects all of these companies to report solid numbers, he said the bar is very high given how much each has run. “I hope their stocks pull back because then you’ve got my blessing to buy them for the long haul,” he added.
