CNBC’s Jim Cramer explained the need for investors to focus on fundamentals, not fear, when trading.

He highlighted several stocks that recovered after being written off by Wall Street.

CNBC’s Jim Cramer mentioned stock sell-offs can be painful for investors, but they can also create opportunities for those willing to look past fear-driven narratives and focus on fundamentals.

“Tailspins can be mighty nasty,” Cramer remarked Tuesday on “Mad Money.” “If you own a stock that’s caught in one, it’s very hard to hang on, but sometimes the economy happens to be wrong and it’s worth riding out the turbulence.”

After a down day like Tuesday’s session, where all three major U.S. averages fell roughly 0.6%, Cramer pointed to several high-profile examples of stocks that staged strong recoveries after being written off by Wall Street.

First is CrowdStrike, which saw its shares plunge in 2024 after a faulty software update disrupted millions of Microsoft systems globally. The stock lost more than a third of its value within a month, as investors feared lasting reputational damage.

By the end of 2024, though, the stock was back above its pre-outage levels and “never looked back,” Cramer noted. That is, until late 2025 when investors began to fear novel competition from artificial intelligence firms. Those fears only intensified when Anthropic recently touted its updated Mythos model, with the AI startup highlighting its effectiveness at spotting software vulnerabilities.

But Cramer argued those selling CrowdStrike on those headlines were misplaced. Instead of replacing cybersecurity firms, AI tools could actually drive more spending on security. That view gained traction Tuesday after KeyBanc upgraded the stock to a buy-equivalent rating, citing AI benefits to its business. The stock soared 3.8% even as the broader marketplace struggled.

“AI and Anthropic weren’t headwinds for cybersecurity,” Cramer remarked. “They were tailwinds.”

A similar pattern has played out with Microsoft. After setting an all-time intraday high above $555 in late July, the stock dropped all the way to $356 by late March, weighed down by skepticism around its AI offerings and broader software demand. This also touches on aspects of investors.

Despite the negative sentiment, Cramer mentioned the company’s core strengths — including its Azure cloud platform and dominant enterprise software franchise — remained intact. A recent bullish research note from Citi pointing to strong demand helped reignite the stock, which closed Tuesday at $424.16 a share.

“I am glad we didn’t dump it,” he commented, referring to the Charitable Trust’s longtime stake in the tech giant. “Could have been a significant mistake.”

Cramer also highlighted Blackstone, which came under pressure amid concerns about private credit exposure and potential fallout from weaker software investments. Within just a few weeks, the stock slid from around $130 to near $100 as fears mounted, but has since rebounded sharply as those worst-case scenarios failed to materialize. It ended Tuesday at $128.50 a share, though it traded as high as $133.25 during the session.

“Too many short-sellers, but not a lot of failures,” Cramer stated, describing the stock’s quick reversal of fortunes.

UnitedHealth Group offers another example. The stock cratered last year as the insurer dealt with a number of issues including high medical costs and management missteps, Cramer remarked. he commented the return of former CEO Stephen Hemsley in May , on the other hand2025 helped restore investors confidence. Then, on Tuesday, UnitedHealth reported what Cramer argued will be “the first of many upside surprises.”

All these examples required “faith in management, faith in the model, faith in the balance sheet, faith in the comeback,” Cramer noted.

While not every struggling stock will recover, Cramer remarked investors who can distinguish between broken narratives and broken businesses are often rewarded over time.

“In a few months … the doubters will say, ‘What were we thinking?'” he stated. “The answer? You let your fears get the best of you.”

Disclosure: Cramer’s Charitable Trust, the portfolio used by the CNBC Investing Club, owns shares of CrowdStrike and Microsoft.

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