Jim Kramer says big tech companies need to “change the way they do business” to remain market leaders

CNBC’s Jim Cramer said on Wednesday that some of the world’s largest technology companies need to adapt to a changing market.

“It’s time to realize that FAANG names are getting too big. Can they change things? Sure, but they have to change the way you work,” he said, referring to his acronym for his father on Facebook. deadAnd the AmazonAnd the appleAnd the Netflix And Google Parents the alphabet.

Cramer previously said that financial stocks can outperform tech stocks New market leaders In the current high interest rate environment. Banks benefit from higher interest rates because they can earn more on loans.

Meanwhile, high-growth tech companies like FAANG names are hurting from higher interest rates because their shares are trading on the promise of higher returns in the future – a risk investors usually aren’t willing to take in a turbulent economic environment.

Kramer’s comment comes on the heels of several disappointing earnings results from major tech companies. the alphabet Missed third-quarter revenue and earnings expectations On Tuesday, while Microsoft released weak quarterly guidance that weighed on its shares.

meta pads Reported a big loss in third quarter earnings After closing on Wednesday, which sent its stock down more than 18% in after-hours trading.

Netflix has fared better than its tech peers, Reporting up and down wins in the third quarter On October 18th with a huge growth in the number of subscribers. The company also provided updates on its plans to eliminate password sharing and introduce a new ad-supported layer.

Kramer said the broadcast giant’s plans for the latest initiative exemplify the kind of innovation FAANG companies need to halt their downward trajectory.

“Forget about being leaders – big [Tech] Stocks now have a following in the post-Covid era as we learn their dividends have been more inflated by the pandemic than we used to know.”

Amazon is due to report its third-quarter earnings on Thursday.

Disclaimer: Cramer’s Charitable Trust owns shares in Alphabet, Apple, Amazon, Meta and Netflix.