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How to Play AI Theme With ETFs Amid Overvaluation Concerns?
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Key Takeaways
Cramer favors established tech leaders to play the AI boom.
ETFs offer diversified exposure to Cramer's AI stock picks.
Cybersecurity and semiconductor ETFs broaden the AI opportunity.
CNBC’s Jim Cramer believes investors looking to ride the artificial intelligence (AI) boom should focus on established technology companies that have multiple ways to benefit from the technology.
Cramer acknowledged concerns about stretched AI valuations and comparisons with the dotcom bubble. Still, rather than stepping away from a trade that continues to drive much of the market’s gains, Cramer prefers blue-chip companies with strong businesses and management teams that can find new ways to monetize AI.
However, Cramer is not ignoring the risks. He acknowledged that investor enthusiasm around AI can become excessive, particularly when valuations stretch too far. For that reason, he emphasized the importance of diversification rather than putting too much money into a single AI theme.
Let’s find out what themes and stocks he suggests. Investors can play the related ETFs on those suggestions.
Meta, Microsoft Stand Out
Cramer pointed to Meta (META - Free Report) and Microsoft (MSFT - Free Report) as two of his preferred AI plays, quoted on CNBC. Meta had a difficult start to 2026, but Cramer said he continued to trust Meta to find ways to turn the company’s heavy AI spending into new revenue opportunities.
Cramer took a similar approach with Microsoft when the stock fell to a 52-week low of $350 in June. Microsoft shares have since climbed about 4105% over the past six months as investors have become more confident about the company’s Copilot strategy. Stronger-than-expected Azure performance and guidance in late July also helped fuel the stock’s rally.
Microsoft-heavy ETF Global X PureCap MSCI Information Technology ETF (GXPT - Free Report) and Meta-heavy ETF Fidelity MSCI Communication Services Index ETF (FCOM - Free Report) are thus under the watch.
In cybersecurity, Cramer favors CrowdStrike (CRWD) and Palo Alto Networks (PANW) as companies that could benefit from continued demand for AI-driven security solutions. Both are overvalued, with CRWD’s forward P/E ratio rising to the extent of 221.73X.
Amplify Cybersecurity ETF (HACK - Free Report) contains both stocks, but with a moderate exposure, which limits potential overvaluation-led selloffs in these two high-flying stocks. On the contrary, Corgi AI Cybersecurity ETFXA and iShares Expanded Tech-Software Sector ETF (IGV - Free Report) are heavy on CRWD and PANW.
Chips in Focus
Cramer also sees opportunities beyond the biggest tech companies. Semiconductor stocks are positioned for strong growth in 2027, helped by sustained AI infrastructure spending, a tight memory market and expanding demand in data centers and advanced packaging.
Per Deutsche Bank, hyperscaler investment of around $750 billion in 2026 will grow to more than $950 billion in 2027. The earnings outlook for semiconductor companies is favorable.
Since the start of the year, analysts have raised their 2026 earnings growth expectations for S&P 500 semiconductor companies by more than 40 percentage points, per the bank’s July report. Consensus expects profits for the sector to roughly double this year, followed by growth of around 58% in 2027 and 22% in 2028.
In semiconductors, Cramer highlighted Advanced Micro Devices (AMD - Free Report) and Intel (INTC - Free Report) , while pointing to Marvell Technology (MRVL - Free Report) for its exposure to chips and fiber.
AOT Growth and Innovation ETF (AOTG - Free Report) , iShares Semiconductor ETF (SOXX - Free Report) and State Street SPDR NYSE Technology ETF (XNTK - Free Report) offer respective exposures in these three stocks.
AI Growth Less-Hurt in a High-Rate Environment?
Cramer’s bullish view on AI becomes even more important in a higher-interest-rate environment, where finding companies capable of delivering strong growth can be difficult.
He believes AI-related companies are among the relatively few businesses that still have significant room to grow despite tighter financial conditions.
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How to Play AI Theme With ETFs Amid Overvaluation Concerns?
Key Takeaways
CNBC’s Jim Cramer believes investors looking to ride the artificial intelligence (AI) boom should focus on established technology companies that have multiple ways to benefit from the technology.
Cramer acknowledged concerns about stretched AI valuations and comparisons with the dotcom bubble. Still, rather than stepping away from a trade that continues to drive much of the market’s gains, Cramer prefers blue-chip companies with strong businesses and management teams that can find new ways to monetize AI.
However, Cramer is not ignoring the risks. He acknowledged that investor enthusiasm around AI can become excessive, particularly when valuations stretch too far. For that reason, he emphasized the importance of diversification rather than putting too much money into a single AI theme.
Let’s find out what themes and stocks he suggests. Investors can play the related ETFs on those suggestions.
Meta, Microsoft Stand Out
Cramer pointed to Meta (META - Free Report) and Microsoft (MSFT - Free Report) as two of his preferred AI plays, quoted on CNBC. Meta had a difficult start to 2026, but Cramer said he continued to trust Meta to find ways to turn the company’s heavy AI spending into new revenue opportunities.
The company is expected to explore this through Muse, its AI initiative. Meta shares have surged about 17.6% over the past month (as of Oct. 7, 2026) (read: Should You Tap Meta ETFs on Muse's Success or Wait on the Sidelines?).
Cramer took a similar approach with Microsoft when the stock fell to a 52-week low of $350 in June. Microsoft shares have since climbed about 4105% over the past six months as investors have become more confident about the company’s Copilot strategy. Stronger-than-expected Azure performance and guidance in late July also helped fuel the stock’s rally.
Microsoft-heavy ETF Global X PureCap MSCI Information Technology ETF (GXPT - Free Report) and Meta-heavy ETF Fidelity MSCI Communication Services Index ETF (FCOM - Free Report) are thus under the watch.
How to Play High-Flying Cybersecurity Stocks?
AI safety concerns and rising cyber threats are creating new tailwinds for the cybersecurity sector (read: Strengthen Your Portfolio With These Cybersecurity ETFs).
In cybersecurity, Cramer favors CrowdStrike (CRWD) and Palo Alto Networks (PANW) as companies that could benefit from continued demand for AI-driven security solutions. Both are overvalued, with CRWD’s forward P/E ratio rising to the extent of 221.73X.
Amplify Cybersecurity ETF (HACK - Free Report) contains both stocks, but with a moderate exposure, which limits potential overvaluation-led selloffs in these two high-flying stocks. On the contrary, Corgi AI Cybersecurity ETF XA and iShares Expanded Tech-Software Sector ETF (IGV - Free Report) are heavy on CRWD and PANW.
Chips in Focus
Cramer also sees opportunities beyond the biggest tech companies. Semiconductor stocks are positioned for strong growth in 2027, helped by sustained AI infrastructure spending, a tight memory market and expanding demand in data centers and advanced packaging.
Per Deutsche Bank, hyperscaler investment of around $750 billion in 2026 will grow to more than $950 billion in 2027. The earnings outlook for semiconductor companies is favorable.
Since the start of the year, analysts have raised their 2026 earnings growth expectations for S&P 500 semiconductor companies by more than 40 percentage points, per the bank’s July report. Consensus expects profits for the sector to roughly double this year, followed by growth of around 58% in 2027 and 22% in 2028.
In semiconductors, Cramer highlighted Advanced Micro Devices (AMD - Free Report) and Intel (INTC - Free Report) , while pointing to Marvell Technology (MRVL - Free Report) for its exposure to chips and fiber.
AOT Growth and Innovation ETF (AOTG - Free Report) , iShares Semiconductor ETF (SOXX - Free Report) and State Street SPDR NYSE Technology ETF (XNTK - Free Report) offer respective exposures in these three stocks.
AI Growth Less-Hurt in a High-Rate Environment?
Cramer’s bullish view on AI becomes even more important in a higher-interest-rate environment, where finding companies capable of delivering strong growth can be difficult.
He believes AI-related companies are among the relatively few businesses that still have significant room to grow despite tighter financial conditions.