AI Selloff Echoes 1987 Crash Pattern, Cramer Says Stock Declines Don't Reflect Weakening Fundamentals

CNBC "Mad Money" host Jim Cramer said Monday's AI stock selloff mirrors the 1987 crash, arguing that falling share prices do not necessarily signal deteriorating corporate fundamentals. The 39th anniversary of "Black Monday" fell on Monday, when the Dow Jones Industrial Average plunged 22.6% on October 19, 1987, as portfolio insurance strategies triggered cascading automatic sell orders. Last week, the S&P 500 fell nearly 2%, its largest weekly decline since late June, while the Nasdaq Composite tumbled 4.5%, ending a four-week rally. Semiconductor and data center stocks were hit hardest, declining in unison despite no apparent deterioration in fundamentals. Cramer suggested Friday's selling may have been exacerbated by a hedge fund liquidation, similar to the summer blowup of highly leveraged fund Situational Awareness. No additional fund liquidation has been confirmed. On Monday, the S&P 500 and Nasdaq both closed higher, recovering part of Friday's losses, while the Dow closed slightly lower.