CNBC's Jim Cramer warned Wednesday that Wall Street may be getting ahead of itself following the midterm elections.
Stocks rallied after Democrats scored a decisive victory in the midterms, but the gains masked a divide within technology . Hyperscalers surged as investors anticipated that greater opposition to data center development could slow the AI buildout and ease spending pressures. Meanwhile, semiconductor stocks and data center developers came under pressure. Cramer cautioned that investors may be drawing premature conclusions about the election's economic implications.
"The midterm results controlled today's trading, but by Friday we will be talking the Labor Department's nonfarm payrolls report, and we could see a repeal of so much of this move that I hesitate to guess where we go next," the " Mad Money " host said.
"But I do like the word guess," he added. "Because that sums up what I saw throughout today's session and it's not the stuff I want to base investment decisions on, even as it's terrific for a one-day trade for the ages."
Apple shares hit an all-time high Wednesday as investors bet that a slowdown in data center construction could ease memory chip prices, which have been pressuring the company's margins . Microsoft and Amazon also rallied on expectations that a slower AI buildout could reduce data center costs and rein in their massive capital spending.
Conversely, investors sold shares of companies whose growth depends on continued AI infrastructure investment, including chipmakers Nvidia and AMD and data center developers CoreWeave , Nebius and Iren .
But Cramer questioned whether a single election could fundamentally alter the forces driving the market. "I want you to understand that, as important as a midterm election can be, and this one is important, the elections did not upend the business cycle," Cramer said.
Cramer noted that he's aligned with JPMorgan strategist Michael Cembalest, who publishes the closely followed Eye on the Market commentary.
In his latest piece Wednesday, Cembalest wrote, "The business cycle drives markets, and the important components are things that midterms do not affect: 10 yr interest rates, commodity prices, Fed policy, corporate profits, budget deficits, defense spending, the pace of AI investment over the next 12 months, the ferocious borrowing needs of AI companies and the impact on credit spreads, etc."
Cramer said it's important that investors understand that short-term market moves may not always align with the actual fundamentals. "Never confuse what happens in the stock market with what happens in reality," he said.
Cramer's Charitable Trust , the portfolio run by CNBC's Investing Club, owns shares of AAPL, AMZN, MSFT, and NVDA.
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