How to weather the current AI stock storm that we were all dreading

We are at a moment that we who own tech have all dreaded. That moment when there may not be as much money out there as we thought we needed to continue the build-out of the fourth industrial revolution that we believe in so passionately. The data center, as central to this revolution as the rails were to the industrial revolution, has to be able to continue to grow. It can't if there isn't enough money. Right now, with the data center stocks cascading and money moving like mad to the drugs and food stocks, there is panic, and that panic includes some of our positions. This is why I am so glad we are having our October Monthly Meeting now, right in the wake of artificial intelligence kingpin Anthropic's earnings announcement, one that fell short of expectations, even as I would point out that a $100 billion annualized run-rate is hardly disappointing. We might even see profitability from this amazing company. So hope should not be lost. The boom we wanted to last forever may be pausing or ending. We think it's the former, because the artificial intelligence revolution is the biggest force i have seen in my 45 years of investing. There will be bumps, fits, starts, but that's par for the course. We never thought, or said, it would all be done in fair weather. It's foul weather out there right now, with our semiconductor and data center component stocks trading down in panic fashion. But we have faith that the sun will come out again. Many money managers have been waiting for the build-out to run its course, or actually thought it was phony, and they think with these somewhat weaker Anthropic numbers and the debt problems of thinly capitalized companies like CoreWeave , the future is collapsing. One person, by the way, Jensen Huang, CEO of Nvidia , came out Thursday and said that CoreWeave is fine, doesn't need help — and, in fact, the company's cost of capital is actually decreasing because Nvidia chips more than hold their value. That statement actually turned the entire tech market around — at least for Thursday. Still, the possibility of a political nightmare, a wave of states voting no to new data centers in the midterm election, makes it all even uglier. Maybe the midterms further quash the data center build-out. And then, the next day after the election, will President Donald Trump make good on his decision to restart the war against Iran — and perhaps expand it to the Houthis. It's all on the table. At the same time, a new Federal Reserve chairman, Kevin Warsh , has come in, and he's not messing around. Warsh will bring inflation down to the central bank's 2% target after years and years above that level. But he will do so by the blunt instrument of raising interest rates. To get the inflation rate down to 2%, Warsh might have to take short-term rates to 5.5% or even 6%. The current range for short-term policy rates is 3.75% to 4% following the Fed hiking last month for the first time in three years. The market sees at least one more rate increase by year-end. The longer end, which the Fed does not control, could go to 5.5% to 7% or 8%. We are not set up for that. Given the flight to quality rising from the data center woes, we don't need to at this point because our diversification strategy is playing out fabulously. Still, we aren't so confident that rates will be this low a month from now — not with the hot consumer price index on Wednesday and hot producer price index and retail sales numbers on Thursday and not with $100-per-barrel oil that won't seem to go away. So, what does it mean for us, and for you? Rather suddenly, if you own technology stocks, you are fighting what we used to call the tape, the ticker tape on which quotes used to appear. This tape wants to go lower. If we are buying stocks now, especially tech stocks, we are also fighting the Fed, which is now raising rates, never a good situation for stock owners. Those of you old enough to remember market legend Marty Zweig, a regular on "Wall Street Week with Louis Rukeyser," know that he was by far the most practical and historical figure in the business. He had simple rules, but ones that have to be obeyed or you will lose a lot of money. I remember them like it is 1981 all over again. His two most important: Don't fight the Fed and don't fight the tape. Club members, even with 12% of our funds in cash, much higher than usual, and even with big sales like that of Corning that we talked about at length when we met last month, we find ourselves fighting both the Fed and the tape with many of our positions. That makes me uncomfortable. You won't find us putting on a lot of new stock without taking some off, as we have been doing consistently for some time now. Before the meeting , we took profits in a rallying stock we still really like, Cardinal Health , and bought additional shares of Bank of New York , which had great earnings Thursday. As I said on Wednesday night's "Mad Money," it will not be an easy moment for us. We know that there are some positives out there that could make it so we will be fully embracing the tape, not fighting it. If the president solves the war with Iran — which I don't think will happen anytime soon — we will wish we could borrow money and be 120% long all sorts of stocks. That's how explosive the bull will be. If oil plummets to $40, where I think it will go when the war ends because the world is wildly overproducing, you will no longer be fighting the Fed. The Fed will be on your side, and we will be done with rate hikes. So we are being kept up at night because we own too much tech if the war doesn't end and data center funding dwindles, especially if the midterm election produces multiple data center bans. And, we are being kept up at night because we might not own enough tech because there are no important data center bans and the war ends sooner than the cognoscenti expect. Most of all, we want to be in nothing but the highest quality stocks with the best balance sheets so we can ride this one through. We have made a point of avoiding the speculative stocks, and we have high-graded this portfolio as much as we could. That will, ultimately, get us through even this treacherous moment. (Jim Cramer's Charitable Trust is long NVDA, CAH, BNY. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. 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