Wall Street is retreating from this year’s hottest AI stocks as investors seek refuge in more traditional names like Coca-Cola and Walmart. Jim Cramer told CNBC that this rotation resembles the dot-com unwind back in 2000.

Memory chip stocks, once soaring on AI-driven demand, are now experiencing sharp reversals. Shares of companies like SK Hynix, Micron, Western Digital, and SanDisk surged earlier in 2026 due to shortages caused by AI data center needs, but gains have since flattened and declined. The fallout has hit Asian markets particularly hard, with South Korea’s KOSPI dropping over 10% in a week, dragging SK Hynix and Samsung Electronics lower alongside US peers.

Alphabet’s Spending Increase Fuels Selloff

Alphabet’s stock dropped nearly 7% after it raised its capital spending guidance for 2026 from $180 190 billion to $195 205 billion. This hike pushed quarterly free cash flow into negative territory, a rare event for the tech giant. Despite these headwinds, Cramer doesn’t see this as a full breakdown but rather a broad market rotation. He described the move as institutions taking profits from AI infrastructure stocks and rotating into companies with growth outside the data center space.

The rotation was visible in the market’s performance: consumer staples like Coca-Cola and Walmart rallied while the Nasdaq lagged behind. Hedge fund manager Steve Eisman also warned that the market’s current behavior reflects a concentrated bet on AI. Yet, Cramer remains bullish on Nvidia and Intel, arguing that ongoing demand supports their valuations beyond temporary supply issues. He stressed that comparing today’s situation to the dot-com bust was meant to highlight similarities, not to predict an imminent crash.

Investors now await key events that could test the AI trade’s resilience. Seagate recently reported strong earnings, beating estimates, while the Federal Reserve’s upcoming rate decision adds uncertainty. These developments will likely influence whether money flows continue toward steady, traditional stocks or returns to AI-focused names.

This article is for informational purposes only and does not constitute financial advice.