We recently published a list of Jim Cramer Stocks: 10 Latest Calls. Since Arm Holdings PLC – ADR (NASDAQ:ARM) ranks 7th on the list, it deserves a deeper look.
Jim Cramer in a new program on CNBC talked about the latest pullback on Tuesday, when the market snapped its 8-day winning streak. Cramer said that the hopes of rate cuts were buoying the markets all along. According to Cramer, when a company posted a good quarter, its stock roared. If a company reported a bad quarter, investors assumed it was the “last bad quarter” because the Fed was about to start cutting rates.
“In other words, companies could do no wrong. But not today. Today we had a bit of a reckoning and dose of reality being thrown in our faces.”
Cramer talked about two home improvement companies that recently reported their quarters. According to Cramer, these results show that the consumer is still extremely cautious, and high mortgage rates and inflation is keeping spending on big-ticket items depressed.
“Wall Street is maybe expecting not good news from the Fed on Friday and therefore a slowdown, a bad slowdown,” Cramer said.
Jim Cramer said the market is “rational” again and the optimism needed to be “tempered” before the next rally.
For this article we watched several latest programs of Jim Cramer aired on CNBC and picked 10 stocks he’s recommending investors to buy or sell. 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).
Arm Holdings PLC – ADR (NASDAQ:ARM)
Number of Hedge Fund Investors: 38
Jim Cramer talked about ARM in a program on CNBC a few days ago and praised the company’s leadership.
“By the way Arm I think is a pretty good company. Rene Haas (ARM CEO) is doing a pretty good job there.”
Arm Holdings PLC – ADR (NASDAQ:ARM) shares fell after the company posted fiscal first-quarter results and gave guidance that failed to impress Wall Street. Analysts believe extremely high expectations are affecting the stock as the market continues to expect rapid growth at once. Arm Holdings PLC – ADR (NASDAQ:ARM) revised its guidance for the full year which still points to about 27% year-over-year revenue growth.
Revenue growth at ARM is expected at around 22% over the next few years.
Why is Arm Holdings PLC – ADR (NASDAQ:ARM) a promising stock? The company makes advanced microprocessors that are key to most electronic devices, known for their power efficiency and high performance. These processors are used in everything from smartphones and laptops to automotive systems and cloud data centers. The company generated revenue by licensing its designs to manufacturers and earning royalties from products that use its technology. . Demand for its technology is rising, particularly in AI, smartphones, and cloud computing. New product launches and partnerships with companies like Google and AWS further bolster its market position. Arm Holdings PLC – ADR (NASDAQ:ARM) anticipates continued growth in licensing and royalty revenues, fueled by the adoption of its v9 architecture.
Despite this, the stock’s forward P/E of 80 is too high a price to pay right now when competition is increasing and investors’ patience on AI monetization is running thin.
Overall, Arm Holdings PLC – ADR (NASDAQ:ARM) ranks 7th on Insider Monkey’s list titled Jim Cramer Stocks: 10 Latest Calls. While we acknowledge the potential of Arm Holdings PLC – ADR (NASDAQ:ARM), 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 ARM 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.
