In this piece, we will look at the stocks Jim Cramer discussed during the DeepSeek AI Sell-Off.
On the day that Wall Street’s favorite AI GPU stock bled 17% in the wake of investors panicking about Chinese AI startup DeepSeek’s low development costs for AI, Jim Cramer had a lot to say about the topic. Cramer has been one of the biggest fans of the GPU company, and right off the bat, he started out by sharing that the key thing to consider now is whether the GPU orders for the firm will materialize.
He also commented on ‘traveler stocks’ or those that have benefited from the broad AI sentiment. Cramer shared “What I find most interesting is that, the fellow travelers to these are the nuclear stocks that have been up a lot. . . .Are the memes. Are the crypto.” He commented that the fact that these stocks were all simultaneously losing value was not great for the market. According to Cramer, “So looks [like] they are all you know one stock and that is not good. That’s not good because that says you have hype and froth in here that has to come out no matter what.”
The CNBC host also shared his experience using DeepSeek’s R-1 model. In his previous remarks, Cramer revealed that he was a fan of ChatGPT and had used OpenAI’s product to research stocks ahead of his appearances on CNBC. However, he wasn’t impressed by R-1. Cramer outlined that he “tried to do a couple of, I tried to get it to give me Netflix’s performance from 2010. And it says I can’t do that. Well I mean, honestly? I can do that.”
Another aspect of R-1 that left him unimpressed was censorship. “This is a Chinese product,” Cramer said. “So when I put into my very helpful DeepSeek, what famous picture has a man with grocery bags in front of a tank? And it initially says, the famous picture you are referring to, Tank Man, unknown rebel, June 5, 1989,” he added. While this is all good, soon after the initial response, R-1 “takes that back and says sorry, can’t help you with that. And then secondarily it says sorry that’s beyond my current scope,” according to him.
When co-host Carl Quintanilla asked him whether it was worth buying any of the AI stocks, Cramer was rather direct. He shared “I don’t have the knowledge to be able to make that decision. It’s better to own that.” Cramer also noted that before Monday’s appearance, there was a debate about whether “can we just make a determination, or is the determination that we don’t want to let anybody down so we can’t make that?” Given the absolute bloodbath in the premarket that day, he felt “like, whatever you do, maybe twisted between now and the opening.” As a result, Cramer shared “But sometimes you have to admit, like if you were at the hedge fund you’d just say, you know I’m not sure what to do, it’s not a cop-out. I’m not sure what to do.”
However, with respect to the doubt surrounding AI, he added “When in doubt do you go against Zuckerberg? Do you go against Ellison? And I come back and say, I don’t know. Sometimes it’s better to say I don’t know.”
Like social media CEO Mark Zuckerberg’s AI, DeepSeek is also open source. When asked about whether being open source threatens the ecosystem, Cramer replied “Yeah I know that, again, I don’t want to front row Mark Zuckerberg on what he’s saying, but I would say that we do have tremendous chip allocation problems here. And I know that David, we, if you have open source, would you think, that you do not need as many chips. Right. Not necessarily.”
The sell-off in tech stocks did make him feel that “it’s not such a bad idea to look away from one moment and go back and say the healthcare rotation was so powerful last week.”
Our Methodology
To make our list of the stocks that Jim Cramer talked about, we listed down the stocks he mentioned during CNBC’s Squawk on the Street aired on January 27th.
For these stocks, we also mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds invest in? 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).
12. SoFi Technologies, Inc. (NASDAQ:SOFI)
Number of Hedge Fund Holders In Q3 2024: 31
SoFi Technologies, Inc. (NASDAQ:SOFI) is a financial services and technology company that provides loans, accounts, and an investment platform. Its stock fell by 10% on Monday amidst the AI sell-off stemming from investor panic surrounding China’s DeepSeek AI startup. However, Cramer believes that SoFi Technologies, Inc. (NASDAQ:SOFI) is delivering consistent performance, which is also clear through the fact that its shares had gained 26.8% year-to-date ahead of the sell-off. Here is what Cramer said:
“Right now SoFi is Anthony Noto, he’s made a major turn. The stock used to be much lower. The shorts were all over it. He just delivered consistent, consistent, and he’s flipped the model to be a little more financial service and a little less banking. He does report this morning. Now people are going to say wait a second it must have been a miss. No, the actual quarter was good, it must be the forecast. Only one line item, the EBITDA, was light. People were looking for nine hundred and five million, and they came in at eight hundred and forty five. My problem here David is why would I sell it over a forecast and not the fact that it’s doing quite well. And the answer is, DeepSeek. It’s just caught up because. . . .it’s kind of the secondary of like well wait a second, how we overstayed our welcome in a red hot stock. And I think David, the red hot stocks today are trading as a unit. And SoFi’s been caught up in that. Now do I want to buy SoFi? It just had such a big move. That’s the problem. We’ve had stocks that had such big moves. Why don’t we just come in today and say, you know what, I’m going to buy it down ten without any particular answer. And so what people are going to say, is I want to see what happens during the day. Now I feel that way myself, about a lot of these.”
11. Shake Shack Inc. (NYSE:SHAK)
Number of Hedge Fund Holders In Q3 2024: 35
Shake Shack Inc. (NYSE:SHAK) is a fast food chain whose shares managed to gain more than 80% in 2024 despite the fact that the food industry suffered from inflation reducing consumer spending. The firm’s success came from its targeting of upscale outlets and reducing operating costs through initiatives such as reducing checkout times at kiosks. On Monday, Shake Shack Inc. (NYSE:SHAK) became the unfortunate firm that rang the opening bell while markets were sinking after the DeepSeek fallout. Here is what Cramer said as the firm rang the bell:
“[how market viewed ex-Mag 7 on the day of the sell off] I mean, it is interesting, by the way, that Rob Lynch moved over to Shake Shack, and he’s done a great job. But I will say that not the right day to ring the opening bell, in the sense of its line of focus. But a good sense that he’s brought the company to a growth pattern that’s far in excess of we thought it was going to have.”
10. Abbott Laboratories (NYSE:ABT)
Number of Hedge Fund Holders In Q3 2024: 63
Abbott Laboratories (NYSE:ABT) is a global healthcare giant whose medical device business is driving its narrative. The firm’s glucose monitors have helped it navigate a tumultuous 2024 where it struggled from a slowdown in China and an infant formula lawsuit. Abbott Laboratories (NYSE:ABT) glucose monitors have left Cramer impressed as he believes that the market is underappreciating the firm’s potential to make an impact in the diabetes market. In his latest remarks, Cramer wondered how much hot money was in Abbott Laboratories (NYSE:ABT) stock at a time when tech was crashing:
“Well look at Abbott Labs then. Oh my god. Are you serious? Was there that much hot money in that?”
9. Arista Networks, Inc. (NYSE:ANET)
Number of Hedge Fund Holders In Q3 2024: 70
Arista Networks, Inc. (NYSE:ANET) is a computer hardware and software company that primarily sells networking products. Since networking products such as Ethernet adapters are heavily used in AI data centers, it has performed well on the stock market. Arista Networks, Inc. (NYSE:ANET)’s shares closed in 2024 after gaining 92%, but the impact of DeepSeek’s AI sell-off was equally brutal. The stock lost a whopping 22% amidst investor panic about lower demand for data centers due to lower AI training costs. As the stock fell, here’s what Cramer said about Arista Networks, Inc. (NYSE:ANET):
“And then, Arista, people forget, Arista is integral to [the] inside. They were white boxing a lot of technology inside a data center, there are some people who think, no, that it’s no doubt that is a better stock than NVIDIA. I always question that and it seems a little fanciful frankly. But I know people who hold that view.”
8. Bristol-Myers Squibb Company (NYSE:BMY)
Number of Hedge Fund Holders In Q3 2024: 70
Bristol-Myers Squibb Company (NYSE:BMY) is a healthcare stock that has seen a lot of attention from Cramer lately. He is impressed about the firm’s schizophrenia medicine which he believes is the first of its kind in decades. This time around, amidst the DeepSeek sell-off, Cramer commented on how other sectors, such as healthcare, could offer investors refuge. He tied Bristol-Myers Squibb Company (NYSE:BMY) to a note that he had sent club members over the weekend:
“Look there is no doubt, I sent a note to people this morning, we can, from the club. Look, this is the seminal thing, you know this is going to sound like the old days, but what do you when you have these situations? You buy Bristol-Myerrrrsss! And that’s what people are going to do.”
7. Marvell Technology, Inc. (NASDAQ:MRVL)
Number of Hedge Fund Holders In Q3 2024: 70
Marvell Technology, Inc. (NASDAQ:MRVL) is a semiconductor firm that sells chips such as network controllers and signal processors. The firm has been one of the biggest beneficiaries of the AI wave as investors have piled in over its ability to join Broadcom to provide chips that are also capable of running AI workloads. Yet, as the wind was blown out from AI stocks on Monday, Marvell Technology, Inc. (NASDAQ:MRVL)’s shares dropped by a whopping 19%. For his part, Cramer commented on a note from Melius Research that upgraded the stock to Buy and set a $188 share price target:
“But Marvell’s had a, in the Mellius piece today it talks about just huge numbers. All these could be pushed back.”
6. QUALCOMM Incorporated (NASDAQ:QCOM)
Number of Hedge Fund Holders In Q3 2024: 74
QUALCOMM Incorporated (NASDAQ:QCOM) is one of the largest semiconductor designers in the world. The firm’s shares struggled in 2024 and closed the year with just 8.7% in gains primarily due to sluggishness in the global smartphone market. More than two-thirds of its revenue comes from the smartphone industry, and the woes were exacerbated due to the slowdown in China. However, QUALCOMM Incorporated (NASDAQ:QCOM)’s smartphone exposure also meant that the stock was unfazed as investors rotated out of enterprise-facing AI stock names. The share performance didn’t skip Cramer’s attention either:
“What are the second day’s rally? It’s very cheap, Apple not going down, Qualcomm not going down makes no sense whatsoever but there are adherents of Qualcomm.”
5. GE Vernova Inc. (NYSE:GEV)
Number of Hedge Fund Holders In Q3 2024: 89
GE Vernova Inc. (NYSE:GEV) is a General Electric spin-off. As data center stocks surged in 2024, its shares also benefited to make it a ‘traveler’ stock according to Cramer. GE Vernova Inc. (NYSE:GEV)’s shares soared by 144% from the day they started trading to the close of the year. This was because of the firm’s exposure to nuclear power. Ahead of Monday, GE Vernova Inc. (NYSE:GEV) has been Cramer’s top nuclear stock pick on the back of strong management execution and despite the fact that he believes that the benefits from nuclear won’t be visible before the end of the decade. Yet, as data center stocks fell, GE Vernova Inc. (NYSE:GEV)’s shares also slid by 21.5%. As the stock fell, here’s what Cramer said:
“Like GE Vernova, which I’ve really liked for a long time. But do I wanna step in right here in GE Vernova and say, this is it. I don’t feel capable to be able to say this is it. SoFi, Ge Vernova, none of this.”
“Look I was on the phone with people from GE Vernova last week, and there’s no doubt about it, there’s no power demand then there ever has been. And that those orders are, those are the long life orders, it’s not like you can come in tomorrow and say I would like very much to have a natural gas plant. I mean this takes a long time.”
4. Vertiv Holdings Co (NYSE:VRT)
Number of Hedge Fund Holders In Q3 2024: 91
Vertiv Holdings Co (NYSE:VRT) is a diversified data center company that provides busbars, racks, analytical services, and project management. The firm has been one of the key stocks in the AI era due to its liquid cooling products which have grown in importance due to the high heat generated by AI products. Vertiv Holdings Co (NYSE:VRT) grew sales by 54% in Q2 2024 and closed the year with the stock having gained 140%. Yet, it was also one of the worst-hit AI stocks in the DeepSeek sell-off as the shares tanked by a whopping 30%. Cramer wasn’t surprised with the performance:
“Vertiv, which, the most obviously data center oriented play. I mean that stock’s going to come down.”
3. Salesforce, Inc. (NYSE:CRM)
Number of Hedge Fund Holders In Q3 2024: 116
Salesforce, Inc. (NYSE:CRM) is a customer relationship management software provider. Cramer has discussed the firm’s CEO Marc Benioff and its Agentforce AI products several times this year. He is impressed by Agentforce and believes that Benioff has the right perspective for the AI market. Cramer also believes that Salesforce, Inc. (NYSE:CRM) is targeting the healthcare industry. The firm’s non-data center spending exposure meant that its shares actually closed 3.96% higher on the day of the DeepSeek sell-off. Here’s what Cramer said about Salesforce, Inc. (NYSE:CRM) during the day:
“I mean Marc Benioff just going out multiple times. . . .going back and forth with Marc this weekend, and what Marc is saying to me, don’t you see the value is in the data? The value is not in the hardware. So if you sell down Salesforce, that’s like a second day rally.
“I do think that Benioff is winning right now in the tug of war of mind.”
2. Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Holders In Q3 2024: 128
Broadcom Inc. (NASDAQ:AVGO) is a technology company that is present in the semiconductor and software industries. It was one of the best-performing stocks in 2024 due to its exposure to AI chips. Broadcom Inc. (NASDAQ:AVGO) is one of the few firms in the world capable of designing custom chips. This led the stock to soar by a whopping 62% in December after management revealed that strong demand for AI chips could allow the firm to earn $70 billion in AI revenue in 2027. Yet, the bigger they are, the harder they fall, and Broadcom Inc. (NASDAQ:AVGO)’s stock bled 17.4% during the DeepSeek sell-off. Here is what Cramer said:
“Then there’s fellow travelers, there’s Broadcom, Marvell, that’s all data center. Broadcom of course we know has far more than data center but today no one cares. Extraordinary move up [over the last quarter] because there’ve been so many reasons to buy the stock.”
1. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders In Q3 2024: 193
AI chip darling NVIDIA Corporation (NASDAQ:NVDA) was at the center of the DeepSeek sell-off as it lost more than $600 billion in market value. The drop occurred because investors were worried that billions of dollars in spending by big tech to buy NVIDIA Corporation (NASDAQ:NVDA)’s GPUs might not materialize if the low development costs from DeepSeek’s R-1 model were accurate. Cramer has been one of the biggest proponents of the stock, and he started his morning show by explaining that what really mattered for NVIDIA Corporation (NASDAQ:NVDA) was whether its orders would be cut:
“Let’s talk about something else. So against the idea that you’re spending too much on NVIDIA, is the censorship [On DeepSeek R-1] that I don’t really think any of the American companies can trust.
“Right look I think you can certainly make any claim you want. I think what matters to me in the end is numbers. Do you pause your NVIDIA orders? Do you say you know what I’ve spent a lot on NVIDIA, now I can hold back. Is this some sort of prisoner’s dilemma where if you hold back then maybe Ellison goes and buys. I think that NVIDIA’s really the target here because it’s cost so much money and it just doesn’t seem to be able to command that kind of money if this is good.
“Look, we don’t know how many chips they really used.
“[On if Jevon’s paradox is going to be proven correct] Exactly, I was wondering that myself when I was looking at GE Vernova, Constellation Energy Group. Look, Carl, I think that in the end again it always comes back to, can NVIDIA make its numbers? And I think it’s harder. You know I like NVIDIA but I think it’s harder. We haven’t heard from them, but it is quiet period. Who are the winners?
“Remember, Blackwell, which is the current iteration, Blackwell’s about video. It’s just about video. And video is incredibly important. Because video is the ability to make it so that the robots work. Robots do not work on the current one. And I think robots are the next frontier. So I don’t think necessarily that uh . . . .Elon Musk, who may be focused on many different things, that Elon Musk says I don’t wanna buy NVIDIA’s chips.”
NVDA is a stock Jim Cramer talked about as DeepSeek wreaked havoc on the stock market. While we acknowledge the potential of NVDA as an investment, our conviction lies in the belief that some 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 NVDA 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. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and investors. Please subscribe to our daily free newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
