Was Jim Cramer Right About Recursion Pharmaceuticals? A Tale of AI, Biotech, and Market Realities

The stock market is a theater of contradictions: optimism clashes with skepticism, innovation battles execution, and timing often determines triumph or failure. Few companies embody this dynamic more than Recursion Pharmaceuticals (NASDAQ: RXRX), a biotech firm that Jim Cramer, the outspoken host of CNBC’s Mad Money, has called both a “cutting-edge name with long-term potential” and a “disastrous” underperformer. Over the past two years, RXRX’s stock has been a litmus test for investors weighing the promise of AI-driven drug discovery against the harsh realities of clinical trials, market sentiment, and macroeconomic headwinds. So, was Cramer right? Let’s dissect the evidence.

Cramer’s Evolution: From Optimism to Skepticism

Cramer first championed RXRX in April 2024, highlighting its use of artificial intelligence to accelerate drug discovery—a process traditionally plagued by high costs and long timelines. He framed the stock as a pioneer in a sector ripe for disruption. Yet by April 2025, RXRX had dropped 26.91% since his endorsement, a stark underperformance that Cramer labeled a “clear miss.”

But Cramer’s stance evolved further. In May 2024, after Recursion’s management appeared on Mad Money, the stock began a steep decline. By early 2025, Cramer openly criticized the stock’s trajectory, calling it “disastrous” and urging investors to “hold off” until he could meet with management “face to face.” This hesitation came despite two critical milestones: a Phase 1 trial success for REC-617 in solid tumors (December 2024) and positive 12-month data from a Phase 2 trial for REC-994 in cerebral cavernous malformations (CCM) (February 2025).

The Company’s Case: Innovation vs. Execution

Recursion’s story is one of ambition. The firm’s AI platform, which screens vast libraries of biological data to identify drug candidates, has been praised as revolutionary. In late 2024, the acquisition of Exscientia, a leader in AI-driven drug design, bolstered its capabilities. Yet these advancements have yet to translate into sustained investor confidence.

The disconnect lies in timing. While Phase 1 and Phase 2 results are encouraging, they remain early-stage. The stock’s 8.2% single-day drop in early 2025—amid broader fears of a recession triggered by Trump administration tariffs—highlighted how external pressures can overshadow scientific progress. Meanwhile, Cramer noted that Recursion’s valuation lagged peers, with other AI stocks trading at less than 5 times earnings, offering shorter-term appeal.

Market Context: Biotech’s Double Bind

Recursion’s struggles are not isolated. The biotech sector, represented by the Nasdaq Biotechnology Index (^BIIX), has faced headwinds since 2023, buffeted by regulatory uncertainty, high R&D costs, and skepticism toward AI’s real-world impact.

Cramer’s broader commentary on the sector—linking RXRX’s decline to geopolitical tensions and Federal Reserve policy—adds context. In 2024, President Trump’s push for tariffs and a contentious relationship with the Fed created an environment where investors prioritized stability over high-risk bets like early-stage biotechs.

The Verdict: Right in the Long Run?

Cramer’s calls were neither entirely right nor entirely wrong—they were partially right. The company’s AI platform and clinical progress underscore its long-term potential. The REC-994 data, for instance, could open a new treatment avenue for CCM, a rare disease with limited options.

Yet in the near term, Cramer’s skepticism was justified. RXRX’s 26.91% decline from April 2024 to April 2025 reflects investor impatience with execution risks and macroeconomic noise. Even the acquisition of Exscientia, while strategically sound, faced skepticism due to integration challenges and the time required to see returns.

Conclusion: A Tale of Two Horizons

Jim Cramer’s stance on Recursion Pharmaceuticals mirrors a broader truth about innovation-driven stocks: long-term vision must coexist with short-term pragmatism. While Recursion’s AI platform and clinical advancements position it as a leader in its field, its stock performance since 2023 underscores the brutal reality that execution, valuation, and market timing matter as much as science.

The data speaks clearly: RXRX’s underperformance against Cramer’s initial call and the broader market suggests that investors are still waiting for the company to deliver tangible results beyond clinical trials. Yet for those willing to look further ahead, the firm’s progress—paired with strategic moves like the Exscientia acquisition—hints at a future where AI could redefine drug discovery.

In the end, Cramer was right to recognize Recursion’s potential but wrong to underestimate the patience required to realize it. For now, RXRX remains a story of two horizons—one where innovation is a promise, and the other where markets demand proof.