CNBC’s Jim Cramer keyed in on the optionality of six of the companies that have become known as the “Magnificent Seven” during his Wednesday show.
“The Magnificent Seven have the most optionality of any publicly traded companies in modern history,” Cramer said. “To sell any of them is to forget that they have this kind of incredible power.
Tesla, Amazon, Meta, Apple, Microsoft, Alphabet and Nvidia make up the Magnificent Seven stocks that earned their name for their strong business fundamentals and high performance during the recent tough market.
One way that Cramer said you can see this sort of market power is with Google. Google shares jumped as much as $5 at one point Wednesday off of news that it could be using artificial intelligence to replace its large ad sales force.
The workforce shift, according to Cramer, makes sense because of how much cheaper and efficient AI would be, and Wall Street seemed to agree. That got Cramer thinking of all the ways that Google could reshape its company and create stock value.
Alphabet-owned Google is not the only Magnificent Seven company capable of that. Tesla, Amazon, Meta, Apple and Microsoft all have lots of optionality with all its business units. Nvidia does not have the same optionality, Cramer said, since it is mainly a graphics card company.
“The other six are so vast with so many divisions and so many moving parts that if they decided to split up or trim a losing division or sell something extraneous, they could propel their stocks up $42 billion, $50, $60 billion in the blink of an eye,” Cramer said.
These six members can afford to have business units that people don’t like, Cramer said, and it is up to them whether they spin them off or invest further. Their strength is that they have the flexibility to do either.
