In this piece, we will look at the stocks Jim Cramer discussed during the DeepSeek AI selloff.
In the episode of CNBC’s Squawk on the Street aired on the day of the DeepSeek stock market selloff, Jim Cramer mentioned the risks that utility companies had talked to him about when it came to investing in power generation. Energy stocks were among the hardest hit during the selloff due to earlier investor optimism about the high power demand from AI. Cramer shared “Well look . . .a bunch of utilities behind the scenes have been telling me, we would like to spend. But what happens if something comes out Carl, that doesn’t burn as hot. Then they would have spent a fortune and they don’t want to go rate payer versus data center. They didn’t want to make that trade-off. And today I think that the AIPs of the world, the American Electric Powers, they may actually catch a nice bid.”
One concern that co-host David Faber raised during the program was DeepSeek having access to large amounts of data, including the entire Gmail account used to sign up for the service. In response, Cramer shared that he had been trying to cancel his service during the break. “But they have everything,” he added. He mentioned the amount of time that he’d spent on TikTok and DeepSeek and wondered if he would be able to remove his DeepSeek account if he said “that I love Mao? Would that help me? I think Mao was a great man and should’ve gotten the Nobel Peace Prize. What would help me at this point? That Tiananmen Square was a great celebration? What do I do? Tell me what to do?”
The primary reason stocks shed billions of dollars on Monday was that investors wondered if companies would have to spend billions of dollars to set up AI platforms. However, Cramer argued that the argument that some firms might see an ROI improvement from lower costs was very important. He listed the beneficiaries of AI and stated “We have so many beneficiaries, now we have a healthcare rotation going on, we have the beneficiaries that have really been hamstrung. We have the notion like the Justice Department said under the previous President, there’s been too much concentration.”
Commenting on the environment as the market fell Cramer shared “Look I do think it’s a moment, Carl, where all of us were talking, like it was when we first discovered ChatGPT, and we were playing Haiku.” Yet, he remained skeptical about the accuracy of the data surrounding DeepSeek and R-1. According to Cramer “The difference here I think is that, if we really think that they are playing by American rules and they’re telling us everything, then maybe that’s why we keep seeing such a great number, a growth number from the Chinese economy.”
On whether the American GPU restrictions against China had failed after DeepSeek, Cramer maintained that “the point of the ban was military.” He also believes that President Trump might ban DeepSeek and added “Why can’t we just shut it down?” Returning to DeepSeek accessing huge amount of data, Cramer said “I’ve been really upset about this. I was playing on it all weekend. And I didn’t realize they were playing me. I mean it is on your PC. They’re like, what are they burrowing through it right now? Are they gonna get like personal things that I’ve said to my wife? Which would be devastating. I mean in a positive way.”
Finally, in his last morning remarks, Cramer shared that he thought that the selloff could have been much worse. According to him:
“Yes, I have to tell you that I thought these things, when I first saw this [NVDA share price graph] I’m not saying that I was in a panic but I said look, this could be, a lot of people are going to say this is the end of Mag 7. And of NASDAQ. But people are discerning winners and losers. We have to hear from Jensen, we haven’t yet, Jensen Huang. But frankly, I thought it would be worse.”
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. Walgreens Boots Alliance, Inc. (NASDAQ:WBA)
Number of Hedge Fund Holders In Q3 2024: 33
Walgreens Boots Alliance, Inc. (NASDAQ:WBA) is an American pharmacy retailer whose shares remained lackluster throughout 2024. Last year, the stock dropped by 63% as the firm’s revenue dropped due to slower consumer spending and difficulties with reimbursements. The struggles have injected hope of a business sale into the stock price, which has driven the shares by 18.6% year-to-date. However, Walgreens Boots Alliance, Inc. (NASDAQ:WBA)’s shares dropped on Tuesday amidst worries that a private equity buyout might be difficult. Cramer’s remarks for the firm also covered its sale:
“Oh you know I think there are some good things happening there.
“No, I’ve been saying Wentworth is a guy who’s gonna get us out of this. I’m not in, I’m not in it. Tim Wentworth is a genius. We’ve seen him pull rabbits out of hats before.”
11. Constellation Brands, Inc. (NYSE:STZ)
Number of Hedge Fund Holders In Q3 2024: 36
Constellation Brands, Inc. (NYSE:STZ) is an alcoholic beverage company known primarily for its beer products such as Corona Extra. Like other alcohol stocks, the firm struggled in 2024 as high inflation led to lower consumer spending. However, in his previous shows, Cramer has stressed that he believes that the dropping beer sales are part of a broader consumer shift, particularly among younger users. He added that Constellation Brands, Inc. (NYSE:STZ)’s management disagrees with him and that he has faith in CEO Bill Newlands. Here are his latest remarks for the firm:
“Oh my god, oh my god, Constellation Brands is up. It must be, is it a solar eclipse?
“[On a recent insider buy] Will Giles, the guy who came in from Elliot Partners. And that was good, but I just want to note, that periodically you get something which says in the event of nuclear war by Constellation, so I’m going to have to check things out.”
10. Take-Two Interactive Software, Inc. (NASDAQ:TTWO)
Number of Hedge Fund Holders In Q3 2024: 46
Take-Two Interactive Software, Inc. (NASDAQ:TTWO) is a video game company behind one of the most popular titles in the world, Grand Theft Auto. Its shares are up by 11.6% over the past year primarily on the back of a strong Q2 report in November that sent the stock soaring by 7.5%. The stock rose as Take-Two Interactive Software, Inc. (NASDAQ:TTWO)’s Q2 bookings of $1.47 billion beat analyst estimates of $1.43 billion. This was in contrast to rival EA’s results which disappointed investors when it came to a newly released sports title. Here’s what Cramer said about Take-Two Interactive Software, Inc. (NASDAQ:TTWO):
“I do want to point out that there’s a great UBS note about Take-Two. It’s in a different world from EA. It’s just on a better plane. It’s got Grand Theft Auto, uh coming out, and I would say that Strauss Zelnick is doing a remarkable job. This is their year. And if you believe in video games, then you don’t want to buy EA, you buy these guys. It’s for real.”
9. Beacon Roofing Supply, Inc. (NASDAQ:BECN)
Number of Hedge Fund Holders In Q3 2024: 47
Beacon Roofing Supply, Inc. (NASDAQ:BECN) is a Virginia-based company that provides roofing products for industrial and residential use cases. Due to its exposure to the rate-sensitive real estate industry, it’s unsurprising that the shares posted a modest 15% gain in 2024. Yet, Beacon Roofing Supply, Inc. (NASDAQ:BECN) didn’t close the year in the red as the firm benefitted from destocking among its customers. However, 2025 has been a great year for the stock. Beacon Roofing Supply, Inc. (NASDAQ:BECN)’s shares have gained 19.2% year-to-date on an acquisition offer by QXO. Here’s what Cramer said about the firm:
“I’ve been waiting for you to bring up Beacon Roofing. Sly guy.
“Do you mind the fact that Beacon. . . . they’re demanding a higher price. They’re demanding a higher price and can I just say that they’ve done a remarkable job. And before people just say you know what, I’ll take it and run, the EBITDA, the EBITDA numbers, are so low versus the cohort. I think we have to hear from Julian Francis. I will feel much better when I hear from Julian Francis, the CEO.”
“We hear from him, I think it’s going to change the game. Game changer, Mr. Roofer.”
8. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders In Q3 2024: 69
The Coca-Cola Company (NYSE:KO) is the largest carbonated beverage provider in the world. It is a classic defensive stock that investors tend to flock to during a recession or periods of market turmoil. The Coca-Cola Company (NYSE:KO)’s hypothesis is driven by its volumes shipped, market penetration in the developing world, supply chain efficiencies, and cost control. The shares are up by just 4.6% over the past year as the firm has struggled with declining volumes in China and the Middle East. Cramer commented on the defensive nature of The Coca-Cola Company (NYSE:KO)’s shares:
“But then, the money’s going to go to Coca-Cola. We’re back in that world, which is that, okay, so we need to be a little more defensive.”
7. The Walt Disney Company (NYSE:DIS)
Number of Hedge Fund Holders In Q3 2024: 76
The Walt Disney Company (NYSE:DIS) is a global media and entertainment giant with a presence in the theme park, film, and television industries. It’s a regular feature of Cramer’s morning show, and the host is nothing but full of praise for the firm. Cramer believes that The Walt Disney Company (NYSE:DIS)’s management, led by Bob Iger, is executing a turnaround strategy well as evident through declining losses at its cable business and a profitable streaming business. Yet, The Walt Disney Company (NYSE:DIS)’s share rose during the DeepSeek selloff and closed the day 1.60% higher. Cramer was exasperated:
“Is Disney somehow a winner? I mean you see these things that are just up and you want to say, are you kidding?”
6. Merck & Co., Inc. (NYSE:MRK)
Number of Hedge Fund Holders In Q3 2024: 86
Merck & Co., Inc. (NYSE:MRK) is a pharmaceutical company that has made waves with some of the most popular medicines in the world lately. The firm’s flagship drug is KEYTRUDA, which helps cancer patients. Its HPV vaccine called GARDASIL is another popular treatment and has led to weak share price performance due to problems in China. Merck & Co., Inc. (NYSE:MRK)’s Chinese distributor has limited its GARDASIL inventory procurement due to regulatory troubles and slow demand. Here’s what Cramer said about the firm:
“[On MRK and PFE being up during the DeepSeek selloff] Uh based on what there? What happened?
“Did you see the tuberculosis outbreak in Kansas? Worst outbreak in tuberculosis. Do you really think that happens to be a coincidence? I think that was something that we beat. Tuberculosis. But I guess if you don’t take a shot against it, we didn’t, then all healthcare’s up. I think that Rob Davis at Merck, that’s been a one-way stock. Down. Even though he’s done some terrific things. He’s got a great heart drug. But it doesn’t seem to matter at all.”
5. Apple Inc (NASDAQ:AAPL)
Number of Hedge Fund Holders In Q3 2024: 86
Apple Inc (NASDAQ:AAPL) is once again the most valuable company in the world after Monday’s DeepSeek rout. The selloff saw NVIDIA bleed almost $600 billion in market value while Apple Inc (NASDAQ:AAPL) escaped unscathed as its shares closed 3.18% higher. At the heart of the firm’s fortune is its lack of exposure to the multi-billion enterprise AI capital expenditures that have driven the market and exposure to consumer AI via the iPhone and other products. Cramer also commented on Apple Inc (NASDAQ:AAPL)’s share performance:
“[on Apple trading defensively] Yes it does although it’s got very high you know, plus thirty multiple. .
“[On Apple shares underperforming recently] Well what do you think of that? Everyone was shorting it ahead of the quarter.
“[On Apple being a potential beneficiary from perceptions of DeepSeek’s reduced AI costs] Because they were a free rider to begin with. . . .no you mean like, maybe you have to start paying Apple to take your AI. . . . we’ve seen it happen, the Justice Department didn’t like their last deal.”
4. Eli Lilly and Company (NYSE:LLY)
Number of Hedge Fund Holders In Q3 2024: 106
Eli Lilly and Company (NYSE:LLY) is one of the biggest pharmaceutical companies in the world. Over the past five years, its shares have gained a whopping 476% as they have been driven by the firm’s weight loss drugs. Eli Lilly and Company (NYSE:LLY) has also been a regular feature of Cramer’s morning show this year. The host has remained optimistic about the company despite weak product launches and shaky fourth-quarter results. He believes Eli Lilly and Company (NYSE:LLY)’s weight loss drugs are superior to rival Novo Nordisk’s products. Here are his latest remarks:
“I urge people to remember that Lilly has some, there was a note on Friday about Lilly and GLP. They’re much more further ahead than Novo. I think Novo was a bit of a short squeeze.
“I would that in the terms of persistence, that if David Ricks were here, he’s such a great spokesperson for the industry. I think he would say, uh, it’s longer, the persistence is twelve to fifteen months. And that is what, I had to ask him directly, I said listen I keep hearing that people, because Michael Semblance had a piece, about how people leave it. He said listen that’s not right. The piece isn’t right. And I mean I do not want to dispute, you don’t want to dispute David Ricks. He’s, uh, money good, so to speak.”
3. UnitedHealth Group Incorporated (NYSE:UNH)
Number of Hedge Fund Holders In Q3 2024: 112
UnitedHealth Group Incorporated (NYSE:UNH) is one of the largest medical insurers in America. Its shares are down by 4.28% over the past six months due to recent events in the insurance industry that have turned public sentiment against the firm. These have also led President Trump to promise that he will target the healthcare middleman in order to reduce healthcare costs for Americans. UnitedHealth Group Incorporated (NYSE:UNH) also struggled in December after its full-year midpoint profit guidance of $29.50 and $30.00 fell below analyst estimates of $29.92. Cramer, however, believes the firm is untouchable:
“Look at UnitedHealth. Now there’s an example. UnitedHealth, they win no matter what. Uh and I don’t wanna pick one because we know there was a tragedy there. But there are certain stocks that just come back to over and over and over again, Carl. And I just think that these are the ones that was, ohhh, that can’t be hurt. That can’t be hurt. And that’s the UnitedHealth story since 1984 frankly.”
2. Alphabet Inc. (NASDAQ:GOOGL)
Number of Hedge Fund Holders In Q3 2024: 202
Alphabet Inc. (NASDAQ:GOOGL) is the mega-cap technology giant that faced a lot of troubles in 2024. Its shares had gained 12.9% by early December due to the Justice Department’s action against the firm surrounding antitrust concerns. Alphabet Inc. (NASDAQ:GOOGL)’s saving grace turned out to be its Willow quantum computing chip. Willow’s announcement sent the shares soaring by 11% in December. During Monday’s DeepSeek stock selloff, Alphabet Inc. (NASDAQ:GOOGL)’s stock shed a modest 4.20% when compared to others such as NVIDIA. Cramer wondered why that was:
“I think that Alphabet is one to look at. Not down as much and that would be one that I would be concerned, they’ve spent a lot of money.”
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders In Q3 2024: 286
Amazon.com, Inc. (NASDAQ:AMZN) is one of the biggest eCommerce companies in the world. It also plays an important role in the cloud computing industry. Amazon.com, Inc. (NASDAQ:AMZN) is one of the leading players in the AI industry courtesy of its partnership with Anthropic which has provided it with access to the Claude AI model. The shares are up by 8.14% year-to-date, and they closed Monday flat by gaining 0.24%. Amazon.com, Inc. (NASDAQ:AMZN)’s narrative depends to a large extent on online sales. This was evident in August 2024 when the shares dipped by 12% after sales growth slowed down sequentially. As he did with Disney, Cramer wondered what role Amazon.com, Inc. (NASDAQ:AMZN) would play in an era of low AI costs:
“By the way, I question, what is Amazon’s role? Did Amazon, are they a winner or loser? They spend a lot with Anthropic, but so [do] others.”
AMZN is a stock Jim Cramer talked about as DeepSeek wreaked havoc on the stock market. While we acknowledge the potential of AMZN 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 AMZN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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