In this article, we’ll explore the 10 Large Cap Stocks Jim Cramer Can’t Stop Talking About.
In a recent episode of Mad Money, Jim Cramer highlights a critical gap in the American education system, which often overlooks financial literacy despite its importance. While students may graduate with extensive knowledge in subjects like chemistry, history, and languages, they rarely receive practical education on managing personal finances. Cramer emphasizes that financial planning, retirement readiness, and investing are seldom covered, leaving many people uninformed about crucial money management skills.
“There is a gaping hole in the American education system, although I hesitate even to call it a system. When you go to high school, they teach you chemistry, geometry, and physics. You have English classes, history classes, and foreign language classes. You can graduate from college speaking three languages with a deep understanding of quantum physics or ancient philosophy. But you know the one thing they almost never teach you in middle school or high school, let alone college? Financial literacy.
And I’m not talking about economics here—you could be an econ major and still learn nothing about financial planning or retirement readiness, let alone investing. Money is just not talked about. Frankly, it’s become the third rail of American education. You’re a thousand times more likely to read Marx’s “Das Kapital” than to read anything about planning a budget or picking stocks.”
Cramer’s mission is to bridge this gap through the CNBC Investing Club, where he and the Charitable Trust provide practical financial guidance. He stresses the significance of retirement planning, noting that while 401(k) plans and Individual Retirement Accounts (IRAs) are key tools for saving, many people lack comprehensive understanding of their benefits and limitations.
“That’s why I’m on a constant mission to teach you how to manage your money, which is what we do every day in the CNBC Investing Club, with the Charitable Trust providing a constant source of examples. When it comes to managing your money, nothing is more important than retirement. Sooner or later, you’re going to stop working—hopefully sooner rather than later, unless you really love your job. I’m betting most of you, even if you don’t own individual stocks, still have some money in a 401(k) plan.
Decades ago, corporate pensions started going the way of the dodo, and now the 401(k) is the main way that Americans save for retirement. They’re offered by your employer, and they’re among the greatest tax-deferred investment vehicles out there, along with the IRA. And I’m not talking about the Irish Republican Army—I’m not even talking about the Inflation Reduction Act, for that matter. I mean the Individual Retirement Account.”
Cramer points out that while contributing to a 401(k) is widely advised, it’s not always the best strategy for everyone. Despite its tax advantages and the ability to defer taxes on contributions, 401(k) plans can have drawbacks, such as hidden fees that diminish returns.
“Hear me out, darn it—you need to know this stuff. Your future self will thank you for getting your retirement funds in order. While you may think you know everything you need to know about these tax-favored accounts, the truth is there’s a lot the so-called experts don’t tell you or don’t want you to know. For example, conventional wisdom says that you absolutely must invest in your 401(k)—you’d have to be a fool not to contribute.
Many experts will even advise you to max out your 401(k) contributions every year if you can afford to. Right now, the maximum contribution is over 20 grand, with room for an additional 7 grand if you’re over 50. It tends to rise gradually over time, usually a little faster than inflation. In 2004, it was $13,000; by 2023, it was $22,500. Either way, that’s a serious chunk of change, even with these contributions coming from your pre-tax income.”
He argues that understanding both the benefits and the shortcomings of these retirement accounts is essential for making informed financial decisions. Cramer encourages individuals to educate themselves about these investment options to ensure their retirement savings are managed effectively.
“However, sometimes I think it can be the wrong approach. I’m not going to sing the praises of the noble 401(k) plan or tell you it’s the key to your financial salvation because 401(k) plans can be a real mixed bag. Sure, they have a couple of really great features, but they also have a lot of bad ones, and those problematic features will eat away at your returns—sometimes through fees that are almost totally hidden from you. I do not like that. So let me lay out the good, the bad, and the ugly of 401(k) plans. Then I’ll tell you whether it makes sense for you to contribute more money to your own 401(k)—maybe there’s a better way for you to invest for retirement.”
Our Methodology
This article reviews various episodes of Jim Cramer’s Mad Money, where he frequently discussed several stocks. We’ve highlighted ten large-cap companies that were prominently featured in his recommendations, including details on their market capitalizations. Additionally, the article examines how hedge funds view these stocks and ranks them based on the extent of hedge fund ownership, from the least to the most owned.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Large Cap Stocks Jim Cramer Can’t Stop Talking About
10. Starbucks Corporation (NASDAQ:SBUX)
Number of Hedge Fund Investors: 70
Market Capitalization: 105.5B
In an episode of Mad Money, Jim Cramer highlighted a dramatic turnaround for Starbucks Corporation (NASDAQ:SBUX), attributing it to the appointment of Brian Niccol as CEO. According to Cramer, Starbucks Corporation (NASDAQ:SBUX) had struggled until Niccol, a skilled food executive known for his successful tenure at Panera Bread, took the helm. Cramer points out that Starbucks Corporation (NASDAQ:SBUX) faced challenges with outdated store models that couldn’t accommodate mobile ordering, similar to issues Niccol addressed at Panera. He suggests that Niccol’s innovative approach, which revolutionized Panera’s store experience, could be exactly what Starbucks Corporation (NASDAQ:SBUX) needs.
“Here’s a stock that had been in freefall, and all it took was bringing in one person, a talented food executive, a CEO, and then it soars. The new guy, Brian Niccol, is a genius at what he does. He turned around AAA, but it’s not like his predecessor, Laxman Narasimhan, was a knucklehead. Laxman was beloved at PepsiCo and beloved where he was the CEO. When he took over Starbucks, all I heard was he worked in snacks and beverages and packaged goods—he really understood the process. He was supposed to be the logical, considered choice.
I think Howard had more pull by the lack of contrition than by the current’s execution, which he didn’t like. But if you’re blaming Schultz for firing Narasimhan, maybe you should thank him because he just created $20 billion in value when we learned that the new CEO was from AAA. I would like to take credit for that. We all take credit for the brick if we are looking for what can be saved. You need a big change of this topic. Starbucks is going to become the model. “
Despite a slight drop in revenue and net earnings in Q3 FY2024, Starbucks Corporation (NASDAQ:SBUX) remains committed to long-term growth through its aggressive expansion efforts. Starbucks Corporation (NASDAQ:SBUX) added 526 new stores during the quarter, bringing its total to nearly 39,500 locations worldwide. This expansion highlights Starbucks Corporation (NASDAQ:SBUX)’s strategy to increase its market share, particularly in international markets. Although comparable store sales declined, especially in China, Starbucks Corporation (NASDAQ:SBUX) mitigated these issues by boosting average ticket sizes in North America.
Strong customer engagement, driven by loyalty programs and digital innovations, positions Starbucks Corporation (NASDAQ:SBUX) well for future growth. Additionally, Starbucks Corporation (NASDAQ:SBUX)’s focus on new products and store formats supports its positive growth outlook. Despite short-term challenges, Starbucks Corporation (NASDAQ:SBUX)’s global expansion and efforts to enhance customer experience indicate it is poised to recover and continue delivering value to shareholders.
Mar Vista Strategic Growth Strategy stated the following regarding Starbucks Corporation (NASDAQ:SBUX) in its Q2 2024 investor letter:
“Our decision to divest from Starbucks Corporation (NASDAQ:SBUX) followed their latest earnings report, which highlighted concerning business trends. The primary issue was sluggish demand, with comparable store sales dropping in their important U.S. and Chinese markets. American consumers, grappling with inflation, are reducing non-essential expenses, including regular coffee shop visits. Meanwhile, China’s economic rebound, vital for Starbucks’ growth, has been underwhelming. These challenges led Starbucks to downgrade its annual financial projections, raising doubts about leadership’s capacity to address immediate headwinds. Faced with lowered financial expectations, persistent demand challenges, and a deteriorating economic landscape, we opted to liquidate our investment.”
9. Costco Wholesale Corporation (NASDAQ:COST)
Number of Hedge Fund Investors: 71
Market Capitalization: 389.5B
Jim Cramer praises Costco Wholesale Corporation (NASDAQ:COST) for its unique position in the retail market, describing it as the second-largest pure-play retailer in the country and a massive buying group for its members. According to Cramer, Costco Wholesale Corporation (NASDAQ:COST)’s membership model allows it to offer exceptional prices, often lower than what even the store pays for items like wine and gold bullion. While Costco Wholesale Corporation (NASDAQ:COST) may not carry every product, it consistently provides lower prices on the items it does stock compared to other retailers.
“Costco is like no other. It’s the second-biggest pure-play retailer in the country, and it functions basically as a gigantic buying group for its members who order pretty much everything. The membership gets you amazing prices, including some that are likely below what the store itself pays, like the bottles of wine I mentioned the other day and the gold bullion everyone is so crazy about.
Costco is a one-of-a-kind retailer where you might not find everything, but what you do find is likely cheaper than anywhere else. This store has done the most to roll back prices in this nation, often through its premium house brand, Kirkland Signature. Costco isn’t afraid to go after any nationally branded product if it won’t lower prices, and under the Kirkland label, they get prices down because the Kirkland brand is better than most of the branded stuff.”
Costco Wholesale Corporation (NASDAQ:COST)’s Q3 2024 earnings report highlights its strong financial performance, with earnings per share (EPS) of $3.78, surpassing the expected $3.70, and revenues reaching $58.52 billion, up 9.1% from the previous year. This reflects Costco Wholesale Corporation (NASDAQ:COST)’s ability to excel even in a challenging retail environment. Costco Wholesale Corporation (NASDAQ:COST)’s effective membership model, which boasts high retention rates and solid comparable sales growth, reinforces its resilience.
Additionally, Costco Wholesale Corporation (NASDAQ:COST)’s investments in expanding its store network and enhancing its e-commerce platform are driving steady revenue growth. Investor confidence is high, as evidenced by Costco Wholesale Corporation (NASDAQ:COST)’s strong stock performance, and there is positive anticipation for its Q4 2024 earnings report. With continued expectations for increased EPS and revenue, alongside Costco Wholesale Corporation (NASDAQ:COST)’s strong brand loyalty and effective cost management, the company stands out as a reliable investment with substantial growth potential.
8. Tesla Inc. (NASDAQ:TSLA)
Number of Hedge Fund Investors: 85
Market Capitalization: 672.7B
Jim Cramer highlights that investors should consider buying Tesla Inc. (NASDAQ:TSLA) shares ahead of the company’s robitaxi event on October 10. Despite Tesla Inc. (NASDAQ:TSLA)’s stock being down roughly 13% year-to-date, analysts at Piper Sandler have maintained a buy-equivalent rating and a $300 price target for the stock. Cramer suggests that the upcoming event could renew investor interest and potentially drive the stock higher.
“Investors should own shares of Tesla into the electric vehicle maker’s robitaxi event set for Oct. 10, according to analysts at Piper Sandler. The unveiling event was originally slated for Aug. 8, but CEO Elon Musk has said he requested design changes that resulted in the delay. Piper Sandler maintained its buy-equivalent rating and $300 price target on the stock. Shares of Tesla are down about 13% year to date.”
Tesla Inc. (NASDAQ:TSLA)’s Q2 2024 earnings reveal a strong performance and a bright future. Tesla Inc. (NASDAQ:TSLA) reported revenue of $30.4 billion, marking a 14% increase from last year, and net income of $2.9 billion, surpassing analysts’ expectations. This solid financial performance stems from high electric vehicle (EV) sales and improved operational efficiency, which has boosted its gross margin to 23.1%.
The positive outlook for Tesla Inc. (NASDAQ:TSLA) is backed by its continuous innovation and leadership in the EV sector. Recent expansions, including the new Gigafactory in Mexico, are set to increase production capacity and reduce costs. Advances in battery technology and energy storage are expected to further fuel growth. Upcoming product launches, such as the Cybertruck and a new generation of vehicles, are likely to drive higher demand and expand Tesla Inc. (NASDAQ:TSLA)’s market share.
Additionally, Tesla Inc. (NASDAQ:TSLA)’s advancements in autonomous driving technology enhance its investment appeal. Tesla Inc. (NASDAQ:TSLA)’s Full Self-Driving (FSD) software is advancing, increasing the attractiveness of its vehicles and reinforcing Tesla’s competitive advantage in this area. Analysts from Goldman Sachs and Morgan Stanley are optimistic about Tesla Inc. (NASDAQ:TSLA)’s future.
7. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Investors: 95
Market Capitalization: 620.31B
Jim Cramer highlights Walmart Inc. (NYSE:WMT)’s impressive performance, noting that the retailer’s strategy of providing great value to shoppers has paid off. Cramer points out that Walmart Inc. (NYSE:WMT) reported a strong quarter with a 4.2% increase in same-store sales, surpassing the 3.4% growth expected by Wall Street.
“Walmart proved that when you offer shoppers great value they’ll keep showing up. that’s how Walmart managed to report a glorious quarter they delivered 4.2% same store sales growth while Street was only looking for 3.4% with the vast bulk of that coming from transaction growth, not higher prices which is not what you want. You don’t want this number to be made by inflation.”
Walmart Inc. (NYSE:WMT)’s Q2 2024 earnings report shows strong performance, with earnings per share (EPS) of $1.84, exceeding the expected $1.69, and revenue up by 5.7% to $161.6 billion. This growth, driven by successful operations both in the U.S. and internationally, highlights Walmart Inc. (NYSE:WMT)’s ability to perform well across various segments. A major factor is Walmart Inc. (NYSE:WMT)’s effective omnichannel strategy, which led to a 24% increase in global e-commerce sales. The integration of online and in-store shopping has pushed e-commerce to make up 15% of total sales, while Walmart Inc. (NYSE:WMT)’s leadership in groceries continues to be a significant revenue driver.
Walmart Inc. (NYSE:WMT) has also raised its fiscal 2024 guidance, now expecting revenue growth of 4% to 4.5% and EPS of $6.36 to $6.46. This updated outlook shows Walmart Inc. (NYSE:WMT)’s confidence in maintaining strong performance throughout the year. Analysts are positive, with many recommending Walmart Inc. (NYSE:WMT) as a strong buy and anticipating a stock rebound after a minor post-earnings dip.
6. Advanced Micro Devices Inc. (NASDAQ:AMD)
Number of Hedge Fund Investors: 108
Market Capitalization: 221.6B
Jim Cramer emphasizes that Advanced Micro Devices Inc. (NASDAQ:AMD) is not just competing with NVIDIA Corporation (NASDAQ:NVDA) but is actually dominating the market. According to Cramer, Advanced Micro Devices Inc. (NASDAQ:AMD) is capturing significant market share, however the performance of NVIDIA Corporation (NASDAQ:NVDA)’s high-end chips is not significantly impacted by AMD’s offerings. This highlights Advanced Micro Devices Inc. (NASDAQ:AMD)’s strong position and influence in the semiconductor industry.
“AMD isn’t nipping at their heels. AMD is dominating. It’s actually taking gobs of market share.”
Advanced Micro Devices Inc. (NASDAQ:AMD)’s latest earnings report shows a robust performance, with a 9% increase in revenue year-over-year, reaching $5.84 billion, driven by a rebound in chip demand. Advanced Micro Devices Inc. (NASDAQ:AMD)’s adjusted earnings per share climbed to $0.69, bolstered by improved efficiency and a higher gross margin of 53%, up from 50% last year. Advanced Micro Devices Inc. (NASDAQ:AMD)’s strength in high-performance computing is evident, as its EPYC CPUs and Instinct GPUs have powered the world’s fastest supercomputer for three years in a row. The introduction of the Ryzen 9000 Series processors, built on the new “Zen 5” architecture, further boosts Advanced Micro Devices Inc. (NASDAQ:AMD)’s competitive edge in gaming, productivity, and content creation.
Looking forward, Advanced Micro Devices Inc. (NASDAQ:AMD) anticipates a strong Q3 2024, with projected revenue of about $6.7 billion, representing a 16% increase from the previous year. Advanced Micro Devices Inc. (NASDAQ:AMD) is expanding its presence in AI and data centers, with new customer wins and product launches set to capitalize on growing demand for advanced computing.
5. Eli Lilly and Company (NYSE:LLY)
Number of Hedge Fund Investors: 100
Market Capitalization: 861.2B
Jim Cramer recently discussed his approach to evaluating stocks, noting that he currently favors Eli Lilly and Company (NYSE:LLY) over Bristol Myers Squibb Company (NYSE:BMY) due to Eli Lilly’s strong growth prospects, which make its high price-to-earnings ratio less concerning.
“When I look at companies, I might favor Eli Lilly over Bristol, considering the growth rate makes me less concerned about the price-to-earnings ratio. But then Jeff brings me back to earth, reminding me that sometimes a sky-high price-to-earnings ratio can create problems. In the end, we must trust and do what’s right. You can’t become complacent with any stock, even one like Eli Lilly, which I think has the biggest pharmaceutical potential.
I’ve mentioned it twice now, but it’s just on my mind. We could easily become the Eli Lilly fund if it becomes dominant, or the Apple fund if it becomes dominant. What we try to do at all times is avoid swinging from one stock to another, which is why we sometimes recommend trimming.”
In Q2 2024, Eli Lilly and Company (NYSE:LLY) reported strong earnings of $3.92 per share, significantly higher than the $2.64 expected, and revenue of $11.3 billion, exceeding the forecast of $9.83 billion. This impressive performance was driven by successful new drug launches and solid sales across key product lines. Looking ahead, Eli Lilly and Company (NYSE:LLY) is poised for substantial growth, supported by a promising drug pipeline, especially in diabetes and obesity treatments, which are anticipated to boost revenue in the future.
Eli Lilly and Company (NYSE:LLY) has updated its FY 2024 guidance to project earnings per share between $16.10 and $16.60 and revenue between $45.4 billion and $46.6 billion, indicating strong confidence in its continued market expansion. Eli Lilly and Company (NYSE:LLY)’s stock has surged by 64% this year, reflecting strong investor confidence. Eli Lilly and Company (NYSE:LLY)’s strategic acquisitions and partnerships, particularly in oncology and immunology, have strengthened its market position.
Baron Health Care Fund stated the following regarding Eli Lilly and Company (NYSE:LLY) in its Q2 2024 investor letter:
“Shares of global pharmaceutical company Eli Lilly and Company (NYSE:LLY) increased on continued investor enthusiasm around GLP-1 drugs for diabetes and obesity. We remain shareholders. Lilly’s Mounjaro/Zepbound not only offers superb blood sugar control for diabetics but can drive 20%-plus weight loss and likely improve cardiovascular outcomes in both diabetic and non-diabetic obese patients. Lilly is developing next generation drugs, including retatrutide, which drives approximately 25% weight loss, and orforglipron, a daily pill that produces approximately 15% weight loss.
In the U.S. alone, there are 32 million Type 2 diabetics and an additional 105 million obese patients who we estimate would qualify for GLP-1 drugs. Although supply and access are limited near term, we think GLP-1 drugs will become standard of care for both diabetes and obesity and will become a $150 billion-plus category. We see Lilly setting a high efficacy bar and capturing significant long-term market share. We think the adoption of GLP-1s will drive Lilly to triple total revenue by 2030.”
4. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Investors: 165
Market Capitalization: 1.94T
Jim Cramer notes that Alphabet Inc. (NASDAQ:GOOG)’s recent concerns about not making acquisitions are driven by the fear of Meta Platforms, Inc. (NASDAQ:META) potentially surpassing them. According to Cramer, Alphabet Inc. (NASDAQ:GOOG)’s hesitation is rooted in a specific worry: that Meta Platforms, Inc. (NASDAQ:META) could catch up and overtake Google in the competitive landscape.
“Google isn’t buying because they’re worried that the other guys might do something. They’re specifically worried that Meta is going to catch and pass them and they should be.”
Alphabet Inc. (NASDAQ:GOOG)’s latest earnings report reveals a strong financial performance, with revenue reaching $84.7 billion, a 14% increase from the previous year. This growth was fueled by exceptional results in its key areas, such as Search and Cloud. Alphabet Inc. (NASDAQ:GOOG)’s operating income surged to $27.4 billion, while net income climbed to $23.6 billion, showcasing significant improvement. The Search business was particularly successful, contributing $73.9 billion in revenue, and YouTube advertising grew by 13% to $8.66 billion.
Additionally, the Cloud segment performed remarkably well, with revenue increasing by 28.8% to $10.35 billion and achieving over $1 billion in quarterly operating profit for the first time. Alphabet Inc. (NASDAQ:GOOG)’s commitment to investing in artificial intelligence (AI) enhances its growth prospects. Alphabet Inc. (NASDAQ:GOOG)’s focus on advancing AI within its Search and Cloud services is expected to yield substantial returns as AI becomes more widely adopted across various sectors. While there are some challenges in its Network ads segment, Alphabet Inc. (NASDAQ:GOOG)’s strong performance in Search, Cloud, and AI positions it well for ongoing growth and profitability.
Baron Fifth Avenue Growth Fund stated the following regarding Alphabet Inc. (NASDAQ:GOOG) in its Q2 2024 investor letter:
“We also added to Alphabet Inc. (NASDAQ:GOOG). The company reported solid financial results with first quarter revenue growth of 15% year-over-year, driven by 14% growth in search, 21% growth in YouTube, and 28% growth in cloud (which accelerated from 26% growth in the fourth quarter). The company has also increased its cost discipline efforts, which drove operating margins to 31.6% (compared to 25% in the first quarter of 2023). With regards to GenAI, while we are cognizant of the potential risks to the dominance of search, we believe that on the range of outcomes, Alphabet remains well positioned through its massive user distribution (9 products with over 1 billion users each), long-standing AI research labs (DeepMind and Google Brain), top AI talent, a solid cloud computing division in Google Cloud, and deep pockets for investing in AI.
During the quarter, Alphabet also held its annual I/O conference, where it provided an update on its efforts in AI including: Gemini is now used by 1.5 million developers; model quality is expanding rapidly (e.g., context window is now 2 million tokens of length); the new genomics model, Alphafold 3 can predict structures of molecules and potentially accelerate drug discovery; new TPU6 AI chips has shown a 4.7 times improvement in compute performance compared to the prior generation; and Gemini for workspace is showing early data on a 30% increase in user productivity. Alphabet also has real value in assets such as Waymo, which are not factored into valuation today (and are potentially included at a negative valuation as they currently generate losses, hurting EPS). We continue to believe that the current valuation of Alphabet presents an attractive risk/reward for long-term owners of the business and have therefore increased our position.”
3. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Investors: 179
Market Capitalization: 2.64T
Jim Cramer explains that there was concern about NVIDIA Corporation (NASDAQ:NVDA) being set back due to rumors of delays with its new high-end chips. However, despite these worries, NVIDIA Corporation (NASDAQ:NVDA)’s stock recently rose by 4% following a very positive report from UBS. Cramer points out that, while there’s no new significant development, NVIDIA Corporation (NASDAQ:NVDA)’s current high-end chips are sufficient to address any short-term gaps.
“The rumor that NVIDIA’s new high-end chips were running late led us to believe the company was set back because of the delay, and that concern lingers. However, NVIDIA just jumped 4% on a very positive UBS report. There’s nothing new here at all, and even if there were, the company’s current iterations of high-end chips can fill the gap. I expect the stock to get hit again tomorrow. Many know little about the company. They say they love it, but it was a huge buy a week ago, ten points lower.”
NVIDIA Corporation (NASDAQ:NVDA)’s Q2 2024 earnings report shows strong performance, with revenue reaching $30 billion, exceeding the expected $28.72 billion. This success is driven by high demand for NVIDIA Corporation (NASDAQ:NVDA)’s AI chips, which are essential for data centers and advanced computing. Although the stock has been somewhat volatile due to market conditions and profit-taking, NVIDIA Corporation (NASDAQ:NVDA)’s long-term growth outlook remains strong. NVIDIA Corporation (NASDAQ:NVDA) is well-positioned to benefit from the growing AI sector, as its technology plays a key role in AI development across various industries. Analysts view NVIDIA Corporation (NASDAQ:NVDA) as a leader in AI, with potential for significant stock gains as AI demand continues to grow.
Additionally, NVIDIA Corporation (NASDAQ:NVDA)’s dominance in GPU technology and its expansion into AI software and hardware further support its growth prospects. NVIDIA Corporation (NASDAQ:NVDA)’s focus on innovation and market expansion strengthens its long-term outlook. While broader economic factors may influence short-term stock performance, NVIDIA Corporation (NASDAQ:NVDA)’s leadership in a fast-growing industry provides a solid foundation for sustained growth.
2. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Investors: 184
Market Capitalization: 3.38T
Jim Cramer explains that while some experts argue that Apple Inc. (NASDAQ:AAPL)’s stock appears expensive, this perspective overlooks the company’s strong cash flow, which supports its value. Cramer highlights a recent insightful piece by Ben Rice from Melius, which argues that despite the market’s current overbought conditions, investors should hold onto their Apple Inc. (NASDAQ:AAPL) stock.
“Another firm mentioned that Apple’s stock is expensive, which it is—unless you consider the cash flow instead of just the earnings. The piece by the irrepressible Ben Rice from Melius made so much sense that you know you need to hold on tight and not feel compelled to sell your Apple stock when the market gets overbought, as it is now. The tech titans, the hyperscalers, the colossal portion of the market—yes, the mega stocks—they just come back every time you sell. But short-term signals say to sell. To me, that means it’s time to bunker down and accept the unavoidable small losses. These stocks are just too good to let go. Bottom line: Hold on to them.”
In Q3 2024, Apple Inc. (NASDAQ:AAPL) reported record revenues of $85.78 billion, marking a 5% increase from the previous year. This growth was driven primarily by a 14% rise in services revenue, which reached an all-time high of $24.21 billion. Key services like iCloud, Apple Music, and the App Store have become significant contributors to Apple Inc. (NASDAQ:AAPL)’s financial success, demonstrating its ability to perform well even amid economic challenges. Apple Inc. (NASDAQ:AAPL)’s net income also grew nearly 8% year-over-year to $21.45 billion, with earnings per share rising to $1.40, exceeding analysts’ expectations.
Apple Inc. (NASDAQ:AAPL)’s investment in artificial intelligence, especially with the launch of the new Apple Intelligence platform, is set to bolster future growth by enhancing user experiences across its ecosystem. Although iPhone sales experienced a slight decline and sales in Greater China fell by over 6%, Apple Inc. (NASDAQ:AAPL)’s focus on expanding its services and AI capabilities provides a solid growth outlook.
1. Amazon.com Inc. (NASDAQ:AMZN)
Number of Hedge Fund Investors: 308
Market Capitalization: 1.85T
Jim Cramer shared his views on Amazon.com Inc. (NASDAQ:AMZN), explaining that he recently purchased more shares of the company because he felt the market was too critical of its last quarterly performance. Cramer believes Amazon.com Inc. (NASDAQ:AMZN) is a solid investment and expects it to continue performing well in the future.
“We recently bought more Amazon shares because I believe the market was too harsh on their last quarter. Amazon is a buy, and I think it will continue to perform well.”
Amazon.com Inc. (NASDAQ:AMZN)’s Q2 2024 earnings report reveals a strong recovery, with revenue reaching $134 billion, up 11% from the previous year, and net income soaring to $6.7 billion, up from $6.75 billion from the same quarter last year. This turnaround is largely driven by a 19% increase in revenue from Amazon Web Services (AWS), underscoring Amazon.com Inc. (NASDAQ:AMZN)’s dominant position in the cloud and AI markets. Amazon.com Inc. (NASDAQ:AMZN)’s investment in generative AI and warehouse automation supports its long-term growth prospects, especially in high-margin areas.
Although the retail segment faces some challenges due to cautious consumer spending, Amazon.com Inc. (NASDAQ:AMZN)’s strategic improvements in its delivery network and shopping experience are expected to enhance margins and increase market share. Analysts remain optimistic about Amazon.com Inc. (NASDAQ:AMZN)’s future, with expectations for continued growth in AWS and positive outlooks from major financial institutions like JPMorgan and Wedbush.
While we acknowledge the potential of Amazon.com Inc. (NASDAQ:AMZN), our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than the ones on our list but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
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