On Tuesday, Jim Cramer, host of Mad Money, defended the growing wave of artificial intelligence investment, drawing a distinct line between this boom and previous capital expenditure surges. He argued that the AI movement stands apart from other booms driven by the private sector, largely because of the immense wealth backing it from Big Tech leaders. Cramer quipped:
“Bubble, bubble, bubble and you know how it just seeps into your consciousness? And that’s why I want to retire that word, instead talk about whether it’s a capital expenditure boom, one that might go bust. But it’s a boom. It’s not a bust.”
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Cramer highlighted that the economy has experienced many significant capital expenditure booms over time, noting that Deutsche Bank had recently published an impressive piece of research focused on these phenomena, examining both booms and busts.
The report from Deutsche Bank takes a look back at several major bubbles throughout history, including the explosive real estate market of the 20th century, as well as the dot-com and telecom booms, each of which culminated in significant losses. Yet, Cramer pointed out that not every capital expenditure boom ends in disaster. He cited various instances of successful themes that, despite their high risks, ultimately proved worthwhile. “These were fantastic themes, and no one ever called them bubbles,” he observed, adding that these movements, while capital-intensive, were largely initiated by government rather than the private sector. He added:
“This might be the boom that doesn’t go bust, because the players are so well capitalized. It simply doesn’t have to end that way…. But the bottom line: If you’re any of the hyper-competitive tech execs involved in the space race, you know what’s going on. You hate to lose and you won’t let it happen. After all, how do you think they got where they are in the first place?”
Our Methodology
For this article, we compiled a list of 6 stocks that were discussed by Jim Cramer during the episode of Mad Money aired on March 25. We listed the stocks in the order that Cramer mentioned them. We also provided hedge fund sentiment for each stock as of the fourth quarter of 2024, which was taken from Insider Monkey’s database of over 1,000 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Jim Cramer Discussed These 6 Stocks Recently
6. Delcath Systems, Inc. (NASDAQ:DCTH)
Number of Hedge Fund Holders: 27
Delcath Systems, Inc. (NASDAQ:DCTH) was mentioned during the episode, and here’s what Cramer said:
“Well, it’s a specialty pharma company. It is supposed to have its earnings breakout this year. And that’s why I’m going to bless it because remember I’m not recommending stocks that are losing money but are supposed to have an earnings breakout. But I would say, people who are looking at it… you’re not early to the story anymore. I’m glad that you… have been able to be, take, take advantage of the fact that this stock’s been such a win.”
Delcath Systems (NASDAQ:DCTH) develops targeted treatments for liver cancers, with its main product, HEPZATO KIT, delivering high-dose chemotherapy directly to the liver while reducing systemic side effects.
On March 4, the company reported its financial results for the full year 2024, highlighting total revenue of $37.2 million. Delcath Systems (NASDAQ:DCTH) posted a gross margin of 86% for the year. However, the company also reported an adjusted EBITDA loss of $2.5 million for the full year.
5. Catalyst Pharmaceuticals, Inc. (NASDAQ:CPRX)
Number of Hedge Fund Holders: 35
When a caller asked what Cramer thought of Catalyst Pharmaceuticals, Inc. (NASDAQ:CPRX), he said:
“No, I think it’s very good and it’s had a very good year. It’s up more than almost every other drug, any company I follow. Yeah, we did like it. Now remember this [is] still [a] small cap stock and there’s some insider selling, but I do think it’s just a very good situation. We went over that a while ago and it beat the earnings estimates…. They were supposed to earn 55 cents and earned 70 cents. That’s my kind of stock. I think you’re in good shape.”
Catalyst Pharmaceuticals (NASDAQ:CPRX) develops and markets treatments for rare diseases, offering medications for conditions such as Lambert-Eaton myasthenic syndrome, focal onset seizures, pediatric LEMS, and Duchenne muscular dystrophy.
4. GSK plc (NYSE:GSK)
Number of Hedge Fund Holders: 38
A caller asked if Cramer deviated from his previous bullishness on GSK plc (NYSE:GSK), in light of the threatened tariffs on the pharma companies. In response, Cramer said:
“Not at all, not at all. I like GSK very much. I think it’s a very good company. I think Dame Walmsley’s doing a terrific job. I think the stock, the fact that it’s at a very low PE and it yields 4%, that’s my kind of stock. I think you put it away, buy it, and put it away.”
GSK plc (NYSE:GSK) is engaged in research, development, and production of vaccines, as well as specialized and general medicines aimed at preventing and treating various diseases. In early March, Cramer was similarly bullish on the company as he said:
“Well, look, GSK is a very inexpensive stock with a 4% yield, with a lot of things going for it. I’m gonna say yes to that.”
3. Trane Technologies plc (NYSE:TT)
Number of Hedge Fund Holders: 65
A caller asked Cramer’s thoughts on Trane Technologies plc (NYSE:TT) and Cramer replied:
“TT is absolutely terrific. We’ve had them on the show. They really know what they’re doing. I like ‘em. I [will] give you a twofer. You mentioned Florida West Palm, that is right where Carrier is, Dave Gitlin. Both stocks are excellent.”
Trane Technologies (NYSE:TT) designs, manufactures, and services a wide range of HVAC and refrigeration solutions, including air conditioning systems, heating units, energy recovery products, and refrigeration equipment for various sectors, while also offering energy efficiency programs, digital controls, and maintenance services.
Aristotle Atlantic Partners, LLC stated the following regarding Trane Technologies plc (NYSE:TT) in its Q4 2024 investor letter:
“Trane Technologies plc (NYSE:TT) detracted from performance in the fourth quarter of 2024. The company reported better than expected revenue and earnings growth at the end of October. The stock declined in December despite two investor conferences early in the month where the company reiterated expectations that current strong trends in commercial HVAC will continue into 2025, the service business is continuing to experience low double-digit growth, and the residential business is expected to improve from a lull in 2024. Higher interest rates have been a drag on industrial stock performance generally in December. Strength in the US dollar in 2025 will impact large cap companies like Trane, which have international exposure.”
2. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 223
NVIDIA Corporation (NASDAQ:NVDA) was mentioned as Cramer highlighted that while the private sector has historically relied on excessive debt and stock issuance for growth, today’s leading companies are financially strong and resemble well-funded nation states, with nearly unlimited resources, reducing their dependence on debt. He added:
“Lots of times I feel that it’s winner take all, losers take none but what if we’re looking at these generative AI platforms and agents in a way that’s too static, or maybe I am? What if there are so many uses once you build the thing that it’s stupid not to do so, which brings me to Jensen Huang, the CEO of NVIDIA, the biggest winner from the generative AI infrastructure build-out because only NVIDIA’s chips are strong enough, smart enough, and fast enough to develop things that we haven’t thought of yet, or things that sound like total science fiction.
NVIDIA chips will be vital to make these designs come to life and we don’t even know what those designs are yet… Believe me, owning NVIDIA’s become a heavy burden for me. It seems to be at the epicenter of the so-called bubble, which is now why it sells at just 26 times earnings. And by the way, that’s a true sign that people don’t believe anymore. NVIDIA’s current valuation basically says that Joe Tsai’s right, the bubble is about to pop.”
NVIDIA (NASDAQ:NVDA), known for its advancements in graphics, computing, and networking technologies, is seeing significant growth due to its GPUs and the CUDA software platform, both of which are important for AI infrastructure.
1. Alibaba Group Holding Limited (NYSE:BABA)
Number of Hedge Fund Holders: 107
Alibaba Group Holding Limited (NYSE:BABA) was mentioned during the episode, and here’s what Mad Money’s host had to say:
“I worry because of things like what happened last night when Joe Tsai, the chairman of Alibaba and an executive I have tremendous respect for, talked about the ‘astounding levels of spending on technology-related goods’. He went on to say, ‘I start to see the beginning of some sort of bubble.’ This man has great vision. I was sick to my stomach when I read these comments. I knew they’d be picked up all over the place because Joe’s a well-known character, recognized for a savvy nature.
I figured he could throw cold water on the entire data center gang and that’s exactly what he did. The stocks were down long before the get-go as this group trades all early morning. You could just feel it, you could hear it. I was thinking… You know, it’s frightening.”
Alibaba (NYSE:BABA) provides a wide range of technology and marketing services, offering digital retail platforms, logistics, on-demand delivery, and cloud computing, while also offering various media, entertainment, and AI solutions to businesses and consumers globally.
While we acknowledge the potential of Alibaba Group Holding Limited (NYSE:BABA) 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 BABA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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