We recently published a list of Jim Cramer’s Latest Lightning Round: Top 10 Stocks. Since Applied Materials, Inc. (NASDAQ:AMAT) ranks 4th on the list, it deserves a deeper look.
Jim Cramer in a latest program on CNBC said that the market has already priced in the expected positive comments from the Fed Chair Jerome Powell at the Jackson Hole event in Wyoming. Cramer said some bulls might be hoping for an indication of “multiple rate cuts,” but that’s “not gonna happen.”
Cramer talked about the latest 8-day winning streak of the market which he called a “resurrection.” He said that almost “anything” during these days went up. Even the companies with “bad” results went up because investors thought they would improve once the Fed began to cut interest rates, Cramer said.
“But that was then, this is now. Since the winning streak ended we are starting to get into what I call the buyer’s remorse phase of this move. Stocks have had a nice run based on nothing more than hope are now rolling over hard.”
Jim Cramer also pointed to the possible events in the coming months that could keep the markets depressed:
“Maybe the Fed is already too late and the economy will get real ugly or maybe traders are beginning to fear the possibility of a democratic sweep in November which could lead to higher corporate tax rate, bad for earnings. And a potential witchhunt for price gouging in the aisles of the supermarket and the drug stores.”
For this article we picked 10 stocks Jim Cramer talked about during his latest programs on CNBC. With each company we have mentioned the number of hedge fund investors. 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).
Applied Materials, Inc. (NASDAQ:AMAT)
Number of Hedge Fund Investors: 77
Jim Cramer said in a latest program that Applied Materials is a Buy despite China-related headwinds.
“I think the company is doing well I think the government is not crazy about their posture because they do so much business in China. I think that’s a shame – to criticize a company or to be skeptical of a company that has done a great job,” Cramer said.
Applied Materials, Inc. (NASDAQ:AMAT) recently posted decent quarterly results which showed the contribution of China in the revenue mix fell.
In Q3, Applied Materials, Inc. (NASDAQ:AMAT) core semiconductor systems segment posted $4.924 billion in revenue, a $248 million increase year-over-year. The company guided Q4 EPS at $2.18, slightly ahead of analyst estimates by three cents, with revenue expected to land around $6.93 billion. While sales growth has been sluggish this year, there’s optimism for a pickup in 2025 and 2026.
Applied Materials, Inc.’s (NASDAQ:AMAT) moat is strong and wide. The company makes equipment used to make semiconductor chips. It has a diverse equipment portfolio that addresses the high-growth ICAPS industry (IoT, Communications, Automotive, Power, and Sensors). Last year Applied Materials, Inc. (NASDAQ:AMAT) made a breakthrough announcement by launching Centura Sculpta, a machine that dramatically reduces the number of steps required in chips production. Applied Materials, Inc. (NASDAQ:AMAT) said chipmakers can save a whopping $250 million per 100K wafer starts per month of production capacity in costs.
Currently, Applied Materials, Inc. (NASDAQ:AMAT) is trading at around 23 times earnings, which is 5 points higher than its three-year average. While the current growth rates of the company might not justify this valuation, the possible increase in growth in 2025 and 2026 makes the stock a hold for the long term.
After the results, Wells Fargo analyst Joe Quatrochi reiterated his Overweight rating but reduced its price target to $260 from $280.
Overall, Applied Materials, Inc. (NASDAQ:AMAT) ranks 4th on Insider Monkey’s list titled Jim Cramer’s Latest Lightning Round: Top 10 Stocks. While we acknowledge the potential of Applied Materials, Inc. (NASDAQ:AMAT), our conviction lies in the belief that 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 AMAT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
