these stocks show why you trade on fundamentals, not fear
CNBC’s Jim Cramer said stock selloffs can be painful for investors, but they can also create opportunities for those who want to move beyond fear-based narratives and focus on fundamentals.
“Tail turns can be very bad,” Cramer said Tuesday on “Mad Money.” “If you own a stock that’s stuck, it’s very hard to hang on, but sometimes the market can be wrong and it’s worth getting through the turbulence.”
After a day of declines like Tuesday’s session, when all three major U.S. averages fell about 0.6%, Cramer pointed to several high-profile examples of stocks that have staged strong recoveries after being written off by Wall Street.
first one CrowdStrikeIts shares crashed in 2024 after a buggy software update disrupted millions of Microsoft systems worldwide. The stock lost more than a third of its value in a month as investors feared permanent damage to their reputation.
By the end of 2024, the stock was back above pre-outage levels and “never looked back,” Cramer said. That is, until late 2025, when investors start to fear new competition from AI companies. These fears have intensified further with Anthropic’s recent introduction of its new Mythos model; The AI startup highlighted its effectiveness in detecting vulnerabilities in software.
However, Cramer argued that those selling CrowdStrike in these headlines were misled. Rather than replacing cybersecurity companies, AI tools could actually drive more spending on security. That view gained traction Tuesday after KeyBanc upgraded the stock to a buy-equivalent rating, citing the benefits of AI to its business. The stock rose 3.8% as the broader market struggled.
“AI and Anthropic were not headwinds for cybersecurity,” Cramer said. “They were tailwinds.”
A similar pattern also occurred Microsoft. After setting an all-time high above $555 in late July, the stock fell to a low of $356 in late March, driven by doubts around AI offerings and broader software demand.
Despite the negative sentiment, Cramer said the company’s core strengths remain intact, including its Azure cloud platform and dominant enterprise software franchise. Citi’s recent bullish research note, citing strong demand, helped revive the stock, which closed at $424.16 per share on Tuesday.
“I’m glad we didn’t divest that,” he said, referring to Charitable Trust’s long-standing stake in the tech giant. “It could have been a big mistake.”
Cramer also emphasized KarataşIt has come under pressure due to concerns about private credit risk and potential adverse effects from poor software investments. As fears mounted, the stock fell from $130 to $100 in just a few weeks, but rebounded sharply after the worst-case scenarios did not materialize. It closed at $128.50 per share on Tuesday but rose as high as $133.25 during the session.
“There’s a lot of short selling, but not a lot of failure,” Cramer said, describing the stock’s rapid reversal of fortunes.
United Health Group offers another example. Cramer said the stock fell last year as the insurer grappled with a series of problems, including high medical costs and management missteps. But he said the return of former CEO Stephen Hemsley in May 2025 had helped regain investor confidence. Then on Tuesday, UnitedHealth reported that what Cramer claimed would be “the first of many positive surprises.”
All of these examples require “faith in management, faith in the model, faith in the balance sheet, faith in the turnaround,” Cramer said.
While not every struggling stock will recover, Cramer said investors who can distinguish between broken narratives and broken businesses will generally be rewarded over time.
“Within a few months… skeptics were saying, ‘What were we thinking?’ “he will ask,” he said. “Answer? You let your fears take over you.”
Disclosure: The portfolio used by CNBC Investing Club holds shares of Cramer’s Charitable Trust, CrowdStrike, and Microsoft.
