Business

Jim Cramer Calls Biotech the Hottest Group in the Market

By Peace Longe TheStreet

Updated July 15, 2026 4:24 AM

For most of 2026, the market's story has mostly been on semiconductors and artificial intelligence. Jim Cramer just told investors to look somewhere else.

On his CNBC show, the "Mad Money" host called biotechnology the hottest group in the market right now.

Coming from someone who admits he had not made that call in years, the claim carries weight.

Biotech spent a long period sitting out the tech rally. Now, it is outrunning the broader market, and a wave of buyouts is pulling cash-rich drugmakers back in.

The question on investors' minds is simple: is this view worth acting on or not?

Why Jim Cramer says biotech is the hottest group in the market

Cramer's argument starts with the charts and ends with dealmaking.

He pointed to a group that has quietly moved to the front of the market while most investors kept watching AI, 24/7 Wall St reported.

Cramer's main point is that a friendlier regulatory backdrop is reopening the door to takeovers.

Under the former administration, Amgen's (AMGN) $27.8 billion Horizon Therapeutics (HZNP) deal cleared only after heavy antitrust scrutiny, 24/7 Wall St reported.

A change at the top of the FDA has, in Cramer's view, cleared that obstacle.

The result is a backlog of companies now ripe for acquisition. He told viewers his sources expect deals to flood the market, and that now is the time to bet on biotech.

More Biotech and Pharma Stocks:

That call matters because it names a specific catalyst.

Regulation decides whether big pharma companies can buy smaller drugmakers, and buyouts are where quick gains are made in the sector.

Biotech stocks have broken out in 2026 after years of lagging the broader market.

Bloomberg / Getty Images

The numbers behind biotech's 2026 breakout

The sector's performance backs up the call.

The iShares Nasdaq Biotechnology ETF (IBB), is up roughly 51% over the past year and has been trading near its 52-week high, Yahoo Finance reported.

Smaller companies have run even harder.

The equal-weighted SPDR S&P Biotech ETF (XBI), which leans on mid and small-cap drugmakers, has posted a total return of about 70% over the same stretch, Seeking Alpha noted.

That gap shows where the energy is coming from. When smaller biotech stocks outpace the giants, it means the whole sector is rallying, not just a handful of big names.

Biotech has also held up during rough patches for tech. While AI and chip stocks sold off mid-year, biotech kept climbing.

How the M&A wave is driving drug stocks higher

The clearest evidence sits in the deal log. Big drugmakers are spending aggressively to buy the growth they can't generate fast enough on their own.

Eli Lilly (LLY) has been the loudest buyer, closing four acquisitions in the first quarter of 2026 alone.

That spending is funded by an obesity franchise, with Mounjaro and Zepbound drivingfirst-quarter revenueup 55.5% to $19.8 billion. Lilly is also defending older products abroad.

Gilead Sciences (GILD) has run the same playbook, closing a $7.8 billion purchase of Arcellx for a cell therapy in multiple myeloma.

Vertex Pharmaceuticals (VRTX) shows the "tuck-in" model Cramer likes. Its $4.9 billion purchase of Alpine Immune Sciences added a new area to its lineup without a major overhaul, 24/7 Wall St noted.

A tuck-in is a smaller purchase that slots neatly into an existing business, adding a drug or pipeline without reshaping the whole company.

Vertex's cystic fibrosis expansion into new disease areas is a textbook example of a tuck-in.

The valuation gaps pulling buyers into biotech

Part of what makes the sector attractive is mispricing. Some companies are growing fast while their stocks lag, and that gap is what draws cash-rich buyers.

Cramer used Alnylam Pharmaceuticals (ALNY) as an example.

Its TTR drug franchise revenue surged 153% annually to $910 million on the strength of AMVUTTRA, yet ALNY has trailed, 24/7 Wall St reported.

When a company grows revenue like that while shares sit still, big drugmakers see a bargain. This is especially so when the prize is an advanced platform like RNAi that would take years to build in-house.

The same dynamic can cut the other way, as a recent AstraZeneca trial failure showed.

What Wall Street expects from biotech in the second half of 2026

Analysts are mostly positive, but they emphasize selectivity.

The setup is a "survival of the fittest" market where late-stage companies with real clinical data win and early-stage platforms without it can struggle, Mizuho said.

A few forces are expected to keep the pressure on big pharmaceutical companies to keep buying:

Key catalysts analysts are watching

The patent cliff: Large drugmakers are losing exclusivity on blockbuster products and need to replace that revenue, which pushes them to buy mid-stage pipelines.
Therapeutic gold rushes: Money keeps pouring into obesity pills, oncology, immunology, and Alzheimer's treatments.
A reopening IPO window: After a multi-year drought, new biotech listings are picking up again, BioSpace reported.
A steadier macro backdrop: Stable-to-declining interest rates and firmer FDA guidelines give the sector a more predictable footing.

How everyday investors can approach the biotech rally

A hot sector call is not a green light on every single stock.

The biotech sector moves on binary events like trial readouts and FDA decisions, which can move a small-cap stock by 40% in a single morning.

For most readers, the lower-risk route is diversified exposurethrough a fund like IBB or XBI rather than betting on one drug's outcome. That spreads single-stock risk across the group.

If you prefer individual names, the safer profile tends to be profitable large companies doing the acquiring, not speculative players hoping to be bought.

What could go wrong with the biotech trade

A regulatory reversal or a high-profile blocked deal could cool the M&A wave that is powering the rally.
Early-stage biotechs without clinical data may keep struggling to raise cash, and some will not survive.
After a run of about 51% in IBB and roughly 70% in XBI, a lot of good news is already priced in, so pullbacks are likely.

The practical move is to weigh positions to your own risk tolerance and treat biotech as a growth sleeve, not a core holding.

Even strong sectors give back gains when expectations climb this high.

The bottom line on Cramer's biotech call

Cramer's message is that leadership has changed, and the data supports him.

Biotech is outperforming, deals are accelerating, and the freeze that stalled buyouts has eased.

The opportunity is real, but so is the volatility.

The investors most likely to benefit are those who buy the trend through a fund or quality large-caps, stay selective, and keep expectations grounded.

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This story was originally published July 15, 2026 at 4:17 AM.