We recently published a list of Jim Cramer Recently Looked Into These 8 Stocks. In this article, we are going to take a look at where Adobe Inc. (NASDAQ:ADBE) stands against other stocks that Jim Cramer recently analyzed.
Jim Cramer, the host of Mad Money, took to the airwaves last Friday to discuss the recent stir caused by DeepSeek in the tech world. Cramer highlighted that we’re in the midst of what he described as the most chaotic two weeks of earnings season.
He noted that last week alone, nearly 20% of S&P 500 companies reported their results, with another quarter of the index set to follow this week. On top of that, Cramer pointed to the selloff in AI stocks sparked by DeepSeek’s revelations, ongoing political turmoil in Washington, and a number of high-profile earnings reports, all of which have made it nearly impossible to keep track of everything happening at once.
READ ALSO: Jim Cramer Looked Closely At These 10 Stocks and Jim Cramer’s Thoughts on These 7 Stocks
“We learned that maybe just maybe we don’t need to buy as many of those chips as we thought a Chinese outfit called DeepSeek has purportedly figured out a way to get much more out of NVIDIA’s cheaper, lower-end chips, which makes you wonder why should anybody buy the most expensive ones?”
Cramer noted that, according to DeepSeek, it managed to train an AI model for a mere $6 million, a fraction of the hundreds of millions typically required for such endeavors. DeepSeek’s claim was that their cheaper approach might even result in performance that’s as good, if not better, than what’s possible with the highest-end hardware available.
For Cramer, this announcement was unsettling. He reflected on how, for a brief moment, the tech world accepted DeepSeek’s bold claim as fact. The consensus seemed to be that DeepSeek, a company backed by a Chinese hedge fund, had effectively disrupted the semiconductor giant’s ability to command high prices for its products. However, Cramer began to question the full accuracy of this narrative. What if DeepSeek wasn’t being entirely transparent about the true cost of its hardware? What if the $6 million figure they reported was far lower than the actual expenses? He explained:
“And that’s what an article and a known authority called SemiAnalysis said today. This publication, which has covered DeepSeek for longer than most people knew it existed, speculates that the $6 million cost is highly misleading. They say DeepSeek’s real hardware spending, all in, could be more than $1.6 billion. Hmm, I wonder if the PRC’s subsidizing them.”
Our Methodology
For this article, we compiled a list of 8 stocks that were discussed by Jim Cramer during the episode of Mad Money aired on January 31. We listed the stocks in ascending order of their hedge fund sentiment as of the third quarter, which was taken from Insider Monkey’s database of 900 hedge funds.
Why are we interested in 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).
A team of engineers and scientists collaborating at a workstation surrounded by their applications and solutions.
Adobe Inc. (NASDAQ:ADBE)
Number of Hedge Fund Holders: 123
When a caller asked about Adobe Inc. (NASDAQ:ADBE), Cramer replied:
“I’m worried too. You know, Shantanu Narayen is so good. The product is like a Lamborghini versus the guys that it’s up against. I don’t think I wanna sell the stock down here. It generates too much cash. I know that it seems like a tough stock to own. I can’t sell at 21 times earnings.”
Adobe Inc. (NASDAQ:ADBE) is a prominent software firm known for its wide range of products, particularly in digital media creation and document management. The stock has seen a decline of more than 30% over the past year.
Parnassus Investments stated the following regarding Adobe Inc. (NASDAQ:ADBE) in its Q3 2024 investor letter:
“Also in the Information Technology sector, we exited a position in Adobe Inc. (NASDAQ:ADBE) and initiated a new one in Synopsys. Adobe is contending with market cyclicality, rising competition and lofty AI monetization expectations that are unlikely to be met in the near term. We sold Adobe for Synopsys, which faces fewer competitive threats and has room to grow as companies adopt Synopsys software for custom semiconductor design.”
Overall, ADBE ranks 1st on our list of stocks that Jim Cramer recently analyzed. While we acknowledge the potential of ADBE as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ADBE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. This article is originally published at Insider Monkey.
