Jim Cramer says these 3 stock market themes could work if the oil shock eases

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• XOM
• CVX
• ORCL

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CNBC’s Jim Cramer is warning against trying to ignore the Iran war because rising oil prices could eventually overwhelm even the best stock ideas.

“The war cannot be ring-fenced, no matter what we do. I don’t want to sugarcoat it. We can’t avoid this issue,” Cramer said on “Mad Money” on Wednesday evening. “People are trying to dismiss the impact of the war, or they’re trying to see through it, see past it until it’s over.”

That may be why the market was not down more on Wednesday. The S&P 500 closed slightly lower in a session marked by a 5% jump in U.S. oil prices. That’s a far cry from Monday’s spike up to $119 and change per barrel. But current West Texas intermediate crude levels above $88 per barrel are still up more than 50% year to date.

Investors appear to be counting on the release of global strategic petroleum reserves to cushion the stock market until the conflict ends. President Donald Trump said Wednesday evening he would tap the U.S. Strategic Petroleum Reserve to help ease energy prices. Earlier in the day, the International Energy Agency agreed to release 400 million barrels of oil to address global supply disruption.

Those moves, while positive, are just Band-Aids.

“Without some reason to believe that the war’s ending, there’s nothing that can stop oil from eventually soaring to $120 and beyond,” Cramer said. “That will bust any ring fence. All bullish bets would be off.”

A spike back to those levels or worse could trigger widespread selling across stocks, he added, saying “The selling in the S&P futures would be so outrageous that even the stocks of Exxon and Chevron would get crushed too, simply because they’re part of the index.”

Still, Cramer outlined several themes investors could consider if oil stabilizes and tensions ease around the Strait of Hormuz, a critical waterway where much of the world’s oil supply passes through.

• The first theme is AI-driven data center infrastructure. Cramer pointed to strong results from Oracle as validation of the trend. “We just got the best verification of the theme’s strength when Oracle, the data center champ, reported a fantastic set of numbers that indicated its buildout is going better than anyone thought,” he said.

• The second is the ongoing shortage of memory used in AI and computing systems. Cramer said commentary from Hewlett Packard Enterprise suggests the tight supply could last longer than investors expect.

• The third theme Cramer called out is discount retailers that benefit when consumers trade down during inflationary periods. “What does count is that financially challenged families are moving down to Burlington, Ross Stores, and TJX with its HomeGoods, Marshalls, and T.J. Maxx divisions,” he said.

While geopolitical uncertainty is still in the cards, Cramer concluded those themes are “the only ones I know that can be bought after a run in oil that devastates the stock market.”

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I don’t see an off ramp for the war in Iran, says Jim Cramer

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