Cramer urges wider buying levels as AI stock swings intensify

AI-linked stocks have been moving sharply enough that CNBC’s Jim Cramer says investors should rethink how they add exposure during pullbacks. For everyday investors, his point is about risk control: a stock can look cheaper after one drop and still have room to fall if volatility stays elevated.

On Monday’s Morning Meeting, Cramer said he was not prepared to put new money into technology stocks yet, according to CNBC. He repeated a theme from his Sunday column and said investors who still want to buy declines in chipmakers and data-center-related stocks should use what he called “wide scales.”

By that, Cramer means setting buy levels in advance and leaving larger-than-usual gaps between each purchase, CNBC reported. The goal is to avoid buying an entire position at once, or buying again after only a small move lower, when daily swings in artificial intelligence stocks have become more extreme.

Cramer described the approach as building a position in a pyramid style as prices fall. In practice, that can mean buying more shares at each lower price level, so the investor’s average cost per share, known as cost basis, falls if the plan is completed.

How the buying plans differ

CNBC outlined several ways an investor could build an 80-share position in Intel, whose ticker is INTC, using preset purchase points.

• Simple dollar cost averaging: CNBC described this as four equal purchases of 20 shares each at lower predetermined prices. Dollar cost averaging means spreading purchases over time or price levels instead of investing the full amount at once.

• Weighted pyramid: Under CNBC’s example, an investor could buy 5 shares first, then 15, then 25, then 35 as the price moves down. The final position still totals 80 shares, but more of it is bought at lower levels.

• Doubling-style pyramid: CNBC said another version starts with 10 shares, adds 10 more, then adds 20, and finally adds 40, ending with 80 shares total.

Cramer’s broader point, according to CNBC, was that investors should decide on a plan before the stock moves. He said discipline matters because buying into a decline can become harder when the decline is actually happening.

CNBC said the Investing Club previously might have considered adding to its Intel position after a 5% decline. Given the recent change in trading conditions for hyperscalers and AI stocks, Cramer said the club would now need a pullback closer to 10%. Hyperscalers are large cloud and data-center operators whose spending can influence demand for chips and AI infrastructure.

Cramer also said the case for buying lower prices depends on the company’s fundamentals staying intact, CNBC reported. In his framework, that includes unchanged earnings estimates and an investment thesis that has not broken.

If a stock rebounds before all planned purchases are made, CNBC said the approach would stop adding and leave the investor with a smaller position. Cramer also discussed widening the gaps between purchases, such as waiting for a 5% decline before the first buy, 8% before the second and 10% before the third.

CNBC noted that Investing Club subscribers receive trade alerts before Cramer makes trades for his charitable trust. The outlet said Cramer waits 45 minutes after sending an alert before buying or selling for the trust, and waits 72 hours after an alert if he has discussed the stock on CNBC TV.

This story draws on original reporting from CNBC.