Cramer says to not trade big winners ahead of earnings

CNBC’s Jim Cramer on Monday discouraged investors from making any moves in high-value stocks ahead of earnings reports, especially in Big Tech — which will be viewed with intense scrutiny.

“No one on Wall Street knows what any of the quarters will look like, except for the principals,” he said. “So don’t bother to follow the money that you see trading right now in anticipation. You know why? It’s a fool’s errand.”

For example, he described why it’s difficult to trade Alphabet based on earnings, saying that often some data in the Google parent’s quarter fails to impress Wall Street. He speculated that management could say something “defensive” about Gemini, the company’s artificial intelligence product, when it reports on Tuesday. It’s difficult for Alphabet to jump on earnings, he said, unless nearly everything in the quarter is ideal.

He also brought up Microsoft and Amazon, saying the former is “no longer the lock it used to be.” Some on Wall Street are mixed on Microsoft, namely its AI product, Co-Pilot, he said, adding that even a small miss for its web services division will upset investors. Cramer noted that Amazon suffered after its last report showed a retail sales miss, and he said there isn’t any indication that that figure has improved. Apple, he asserted, “could get real choppy,” as investors worry about sales of the latest iPhone and business in China.

And according to Cramer, many on Wall Street will carefully examine each tech giant’s spending on data centers and Nvidia products.

“I am indeed trying to discourage you from trading these stocks ahead of the quarters. It’s just a roulette game based on nothing,” he said. “Often the game feels rigged, you just don’t know which way it’s rigged because companies really and truly do not let this stuff drip out.”

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Disclaimer The CNBC Investing Club Charitable Trust holds shares of Alphabet, Microsoft, Amazon and Apple.