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Cramer Signals Rotation from Healthcare to Software Stocks

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  Published in Stocks and Investing on Wednesday, February 18th 2026 at 13:18 GMT by CNBC
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New York, NY - February 18th, 2026 - CNBC's Jim Cramer today offered a snapshot of his current investment strategy, signaling a potential rotation out of healthcare and into select software stocks. During his regular "Lightning Round" segment on "Squawk on the Street," Cramer advised investors to cautiously approach the healthcare sector while expressing interest in a software company exhibiting technical strength despite recent downturns.

While Cramer remained tight-lipped on the specific names involved - maintaining his standard practice of not divulging stock tickers directly on air - his commentary provided valuable clues for discerning investors. He described the software stock as "behaving better than the market," a crucial indicator in the current volatile environment. This suggests the company is demonstrating resilience, potentially benefiting from underlying demand or effective internal strategies despite broader economic headwinds. Cramer highlighted the stock's "technical strength," indicating positive chart patterns and momentum indicators that suggest further upside potential. He also pointed out the stock had been "beaten up," and therefore was "undervalued", a classic Cramer buy signal - finding opportunity in temporarily depressed prices.

This move toward software comes as the sector continues to demonstrate long-term growth potential, driven by digital transformation across industries. Analysts have consistently predicted continued investment in cloud computing, artificial intelligence, and cybersecurity, creating a fertile ground for well-positioned software companies. However, the recent tech sell-off, fuelled by rising interest rates and concerns about inflation, has created pockets of value within the sector. Cramer appears to be identifying a company that has weathered the storm relatively well, possessing the fundamentals to capitalize on future growth.

Conversely, Cramer's call to "bail" on a healthcare name raises concerns about the near-term prospects for that particular company. He explicitly stated the stock has been "disappointing" and expects continued underperformance. This negative assessment could stem from a variety of factors. Potential issues could include clinical trial failures, regulatory hurdles, increasing competition, or disappointing earnings reports. The healthcare sector, while generally considered defensive, isn't immune to market pressures. Increased scrutiny of drug pricing, evolving healthcare policies, and the rising cost of research and development pose significant challenges for companies operating in this space.

Experts suggest that Cramer's "Lightning Round" appearances often reflect broader market trends. The recent performance of healthcare stocks has been somewhat subdued compared to the overall market, with certain sub-sectors facing specific pressures. Pharmaceutical companies, for example, are grappling with patent expirations and the emergence of biosimilars, eroding profitability. Medical device manufacturers are contending with supply chain disruptions and increased material costs. The specific healthcare company Cramer referenced may be facing a confluence of these challenges.

It's important to note that Cramer's advice should not be taken as a definitive "buy" or "sell" signal. Investors should conduct their own thorough research and consider their individual risk tolerance and investment goals. However, Cramer's insights provide a valuable starting point for analysis, highlighting potential opportunities and risks within the market.

Technical analysis, as Cramer emphasized, involves evaluating past market data, primarily price and volume, to identify patterns and predict future price movements. While not foolproof, technical analysis can help investors identify potential entry and exit points. The fact that Cramer focused on technical strength suggests he believes this software stock has demonstrated resilience and is poised for a potential rebound.

Beyond technical factors, company-specific fundamentals play a crucial role in Cramer's decision-making process. This includes assessing revenue growth, profitability, debt levels, and management quality. A strong balance sheet and a clear growth strategy are essential for long-term success. The undervalued nature of the stock, combined with these potential fundamentals, could be a key driver of Cramer's interest.

The broader implications of Cramer's comments point to a potential shift in investor sentiment. A move away from defensive healthcare stocks toward growth-oriented software companies could signal renewed optimism about the economic outlook. However, investors should remain cautious, as the market remains susceptible to unexpected shocks. Continued monitoring of macroeconomic indicators, such as inflation and interest rates, will be crucial for navigating the current environment.