Jim Cramer says ask yourself this question when looking for AI winners to buy

Investors should stop fixating on how much a stock has already run and instead focus on how much upside may still remain, CNBC’s Jim Cramer said Wednesday.

“You can’t worry about where a stock’s been, just focus on where it’s going,” the “Mad Money” host said. “That’s becoming my watchword for this explosive market.”

His comments come as many of the market’s biggest winners — particularly artificial intelligence and data center stocks — continue to rally even after already posting massive gains this year. Cramer said one of the biggest mistakes investors make is assuming a stock has become “too expensive” simply because it has already moved sharply higher.

“The lesson here is that if you think a stock’s headed higher, don’t use where the stock has come from as an excuse not to buy,” Cramer said.

As an example, Cramer pointed to Corning, which is a holding in the Charitable Trust, the portfolio used by the CNBC Investing Club. After visiting the company’s Kentucky facility in September, he said Corning CEO Wendell Weeks laid out a compelling case for why fiber optics could increasingly replace copper in data centers because of advantages in speed, cybersecurity, and durability.

The problem? Corning shares had already climbed from roughly $52 in July to $77.

“My first reaction? I had missed it,” Cramer said. “Then I said, no, this CEO’s conviction is so fundamental, his knowledge of what could happen was crystal clear. I had to buy it.”

The Investing Club initiated its position a few weeks later, on Oct. 21. The stock has since more than doubled, recently aided by Nvidia’s investment tied to optical connectivity technology.

Cramer said he faced a similar decision with Arm Holdings, another Club stock. Shares had already soared after the company on March 24 officially unveiled its first in-house designed CPU, moving beyond licensing chip technology. He said he believed this move would better position Arm for the rise of AI agents in data centers.

“I couldn’t resist the temptation,” he said. “I decided enough, just forget where it came from and do some buying.”

By the time the Club took a stake on April 20, the stock was at roughly $173 a share, up from $135 before the CPU event. Arm has since climbed above $300.

That’s why Cramer thinks investors should focus less on how much a stock has already gained and more on whether the business story still has room to play out.

“You can’t pass up on a good stock just because it’s moved up beyond where you thought it could go,” he said.