CNBC’s Jim Cramer said the stock selloff could be painful for investors, but it could also create opportunities for those willing to look past fear-driven narratives and focus on fundamentals.
“Tailpins can be very bad,” Cramer said Tuesday on “Mad Money.” “If you own a single-held stock, it’s very difficult to hold on, but sometimes the market happens to be unfair and it’s worth getting rid of the chaos.”
After a low day like Tuesday’s session, when all three major US averages fell by about 0.6%, Cramer pointed to several high-profile examples of stocks making a strong recovery after being issued by Wall Street.
The first is CrowdStrikewhich caused its shares to fall in 2024 after a faulty software update disrupted millions of Microsoft systems around the world. The stock lost more than a third of its value during the month, as investors feared permanent damage to its reputation.
However, by the end of 2024, the stock was back above its pre-end levels and “I haven’t looked back,” Cramer said. That is, until the end of 2025 when investors start to fear new competition from artificial intelligence firms. Those fears only intensified when Anthropic recently released its new Mythos model, with the AI startup highlighting its effectiveness in detecting software vulnerabilities.
But Cramer argued that those selling CrowdStrike on those topics are misplaced. Instead of replacing cybersecurity firms, AI tools can make more money in security. That view gained momentum Tuesday after KeyBanc upgraded the stock to an equal-buy rating, citing the benefits of AI to its business. Shares rose 3.8% as the broader market struggled.
“AI and Anthropic were not cybersecurity hurricanes,” Cramer said. “They were storms.”
A similar pattern has played out as well Microsoft. After setting an all-time intraday high above $555 in late July, the stock fell to $356 in late March, weighed down by skepticism about its AI offerings and broader demand for the software.
Despite the negative outlook, Cramer said the company’s core strengths — including its Azure cloud platform and enterprise software franchise — remain strong. A recent research note from Citi pointing to strong demand helped revive the stock, which closed Tuesday at $424.16 a share.
“I’m glad we didn’t lose it,” he said, referring to the Charitable Trust’s long-term stake in the tech giant. “It would be a big mistake.”
Cramer was also highlighted Blackstonewhich came under pressure amid concerns about private debt exposure and potential fallout from weak software investment. In just a few weeks, the stock dropped from around $130 to around $100 as panic grew, but has rebounded sharply since those worst-case scenarios failed to materialize. It ended Tuesday at $128.50 a share, though it traded as high as $133.25 during the session.
“There are a lot of short sellers, but not a lot of failures,” Cramer said, describing the stock’s rapid reversal of fortunes.
UnitedHealth Group provides another example. The stock rallied last year as the insurer grappled with a number of problems including high medical costs and administrative errors, Cramer said. However, he said the return of former chief executive Stephen Hemsley in May 2025 helped restore investor confidence. Then, on Tuesday, UnitedHealth reported what Cramer argued would be “the first of many surprises.”
All of these models require “faith in the management, faith in the model, faith in the balance sheet, faith in the returns,” Cramer said.
While not all struggling stocks will recover, Cramer said investors who can distinguish between broken narratives and broken businesses are often rewarded in the long run.
“In a few months … skeptics will say, ‘What were we thinking?'” he said. “The answer? You let your fear get the better of you.”
Disclosure: Cramer’s Charitable Trust, a portfolio managed by the CNBC Investing Club, owns shares of CrowdStrike and Microsoft.
