In this piece, we will look at the stocks Jim Cramer recently discussed.
In his latest appearance on CNBC’s Squawk on the Street, Jim Cramer commented on whether the low AI development costs demonstrated by China’s DeepSeek AI models would upend investor expectations of AI spending. Ever since the AI wave kicked off in November 2022, businesses have committed and spent hundreds of billions of dollars to procure AI GPUs and develop data centers to host them. The high spending requirements also led President Trump to announce a massive $500 billion Stargate project earlier this month.
However, data center stocks crashed on Monday and wiped out a trillion dollars of value as investors worried whether low AI development costs would mean that this spending would not materialize. Cramer is divided about the overall sentiment when it comes to AI spending after the DeepSeek selloff.
He commented that the lower costs are “the theme of the moment because some people saw it coming.” Cramer added “and yet they still ordered. That would be the Zuckerberg case, maybe the Musk piece.” On the other hand, he outlined that others “just say oh my, what am I in, I’m gonna go buy a double short NVIDIA.” Finally, the CNBC host also shared a third category of people “who think that it’s [Wall Street’s favorite AI GPU stock] a hand cream.”
While investors fretted about lower AI costs translating into weaker demand for items such as GPUs, another narrative questioned whether lower costs meant that AI development would open up to more firms and entities than the higher costs had previously permitted. Cramer admitted that this was possible, but added that it also meant that perhaps “the monopoly rent that people feel that” the premier GPU company “was charging is gone.” He added that he was in wait-and-watch mode when it came to AI spending.
Cramer noted several events that could signal to him that perhaps the narrative shift surrounding AI spending was permanent. One of his tests “test would be, uh, is, Three Mile Island not going to be reopened? That would be one I need to hear.” The second driver that might convince the CNBC TV show host of a paradigm shift for AI spending would be reports of “any [GPU] order pullback. And I have not heard that yet.” Cramer added “But that’s not, necessarily, what people are going to announce, ‘listen, I’ve decided. . . If this thing only needs one-tenth of the power, one-tenth of the compute, well I’m going to cut my orders by nine-tenths.’ I’ve not heard that yet, but this thing is. . . a steamroll.”
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 29th and mentioned in his Morning Take from his Investing Club morning meeting.
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).
10. Starbucks Corporation (NASDAQ:SBUX)
Number of Hedge Fund Holders In Q3 2024: 76
Starbucks Corporation (NASDAQ:SBUX) is one of the largest coffee chains in the world. The firm faced quite a bit of turmoil in 2024 as it struggled to maintain growth and blamed poor profitability on a weak consumer spending environment. Starbucks Corporation (NASDAQ:SBUX)’s shares were down by 21% from the start of the year to the first week of August. However, after the firm announced that it had hired former Chipotle CEO Brian Niccol to lead a turnaround, the shares jumped by 24.5%. Niccol’s turnaround efforts at Chipotle piqued investor attention, and Starbucks Corporation (NASDAQ:SBUX)’s stock jumped by 8% in February after a strong fourth quarter indicated that his approach was yielding results. Here is what Cramer:
“Sometimes it’s pure joy to do this job. Starbucks results. Beat on the bottom and on the top line despite some same-store sales declining for the fourth consecutive quarter. But a little better than what we thought.”
9. GE Vernova Inc. (NYSE:GEV)
Number of Hedge Fund Holders In Q3 2024: 89
GE Vernova Inc. (NYSE:GEV) is one of Jim Cramer’s favorite stocks. Its shares surged by 144% in 2024 as Wall Street piled into it with hopes of positive tailwinds from high power demand due to AI data centers. However, the fall was equally brutal as GE Vernova Inc. (NYSE:GEV) dipped by 21.5% during the DeepSeek selloff. Cramer is now wondering whether the long-term power projects for data centers will materialize. Here is what he said:
“Now there’s also the, frankly we saw, we had GE Vernova yesterday, the idea that maybe this whole concept of more power is ridiculous, I had Rusty Braziel on, he’s my guy, RBN Energy, who is saying, are you kidding me? I mean you really think that all these plants are going to be built?”
8. Danaher Corporation (NYSE:DHR)
Number of Hedge Fund Holders In Q3 2024: 98
Danaher Corporation (NYSE:DHR) is a life sciences firm that provides raw materials to biotechnology and other associated industries. 2024 was not a great month for biotech or other research-intensive stocks as high rates squeezed funding. As a result, Danaher Corporation (NYSE:DHR)’s shares closed the year flat after an 11% drop in October that stemmed from weak guidance. In his previous comments, Cramer has pinned some of the firm’s weakness on a slow Chinese economy. His latest remarks for Danaher Corporation (NYSE:DHR) came during his Morning Take from his Investing Club morning meeting:
“We’re just gonna skip for a second to a company I mentioned at the monthly meeting that I was extremely disappointed in. And that is Danaher. I don’t like to bury any losers, that’s the type of thing that people say is cherry-picking. While I said that I was deeply disappointed in the company, it was far worse than that. I’ll tell you why it’s far worse and then get over some of the good things. Because I’m not calling the company delusional. I am just saying they are ill-advised. Rene Blair, the CEO, starts his conference call, saying they believe ‘we’ve finished the year strong, with better than anticipated core revenue. That’s the end. Okay, that’s the end. They have no credibility whatsoever. I wanna point that out that I’m going from disappointed on the meeting, to frankly that I have no hope for these guys. And this is the opposite, say of Starbucks, where we knew at seventy seven, seventy eight that we should stick with it. And I don’t appreciate their glib nature and their lack of urgency and their complacency. Which is not Danaher. I don’t know who’s running that company right now but it’s not Danaher.”
7. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders In Q3 2024: 107
Advanced Micro Devices, Inc. (NASDAQ:AMD) is a CPU and GPU designer that has struggled over the past six months. The firm’s shares have lost 14% over this time period primarily due to the fact that not only has it not kept up with NVIDIA in the AI GPU market but also because analysts have also soured on the PC CPU market for this year. Yet, its lack of AI exposure meant that Advanced Micro Devices, Inc. (NASDAQ:AMD)’s stock lost a mere 6.4% during the DeepSeek selloff while other stocks bled double-digit percentages. Cramer discussed an interesting aspect of the firm related to the selloff and potentially lower AI development costs:
“I was surprised that Advanced Micro actually went own because people feel that hey listen, if this stuff is really easy, let’s put it on AMD. I would love to see Lisa Su talk about it. We’re in quiet period for everybody. You can’t get the stuff that you’d like.”
6. Salesforce, Inc. (NYSE:CRM)
Number of Hedge Fund Holders In Q3 2024: 116
Salesforce, Inc. (NYSE:CRM) is an enterprise software firm that caters to businesses’ customer relation management needs. The firm’s narrative in today’s AI era is driven primarily through its Agentforce AI products. Agentforce uses AI to provide users with 24/7 support, and it has allowed Salesforce, Inc. (NYSE:CRM)’s shares to gain a respectable 33% over the past six months. Cramer’s recent comments for the firm have surrounded its CEO Marc Benioff and his opinions about the partnership between OpenAI and Microsoft. This time around, he remarked on the fluidity and the rapidly changing AI environment:
“The fluidity of a situation. Last night I had Marc Benioff, talking about the split up with, David we’re talking about a split with OpenAI . . .last night.”
“[On Altman and Nadella together] Benioff’s was slagging that. And saying the combination and saying that it’s done.”
5. Apple Inc (NASDAQ:AAPL)
Number of Hedge Fund Holders In Q3 2024: 158
Apple Inc (NASDAQ:AAPL) is the most valuable company in the world. Cramer’s remarks for the firm this year revolved around the firm’s earnings report. The CNBC TV show host has stressed on multiple occasions that the firm was widely expected to miss its earnings estimates. Apple Inc (NASDAQ:AAPL)’s latest earnings report, released on January 30th, saw the firm post $124.30 billion in sales and $2.40 in earnings per share to beat analyst estimates of $124.12 billion and $2.35, respectively. The firm’s upbeat iPhone guidance also sent its shares soaring in the aftermarket. Here’s what Cramer said about Apple Inc (NASDAQ:AAPL) ahead of the earnings:
“Well first of all this is supposed to be a downside surprise. Who’s left to be surprised? I need to know who’s left to be surprised in this downside surprise. Second the forecast is supposed to be really terrible, okay. Third, China is supposed to be awful. The only guy who’s really doing well it’s selling higher end phones is this guy T-Mobile. So, Mike Sievert. So I come back and say, if everyone knows that something’s horrible, can it still be horrible?”
4. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders In Q3 2024: 193
Cramer started his show once again by commenting on AI GPU giant NVIDIA Corporation (NASDAQ:NVDA). The firm’s shares have lost 12.6% this week after paring back some of their losses during the DeepSeek selloff. The tepid sentiment surrounding NVIDIA Corporation (NASDAQ:NVDA) is driven by investors’ re-calibration of AI spending as they fear that lower costs demonstrated by China’s DeepSeek might lead to significantly lower demand for the firm’s GPUs. Here’s what Cramer said about NVIDIA Corporation (NASDAQ:NVDA):
On whether DeepSeek uncovers NVIDIA’s liabilities “Look I think that there’s a perception that more is less. More chips, more people who know how to use them, more out of China means less for NVIDIA. NVIDIA’s been quiet. But they may have advised people who look at CES, uh, post-interview. Not good enough. I think people have decided that we had a rebound. But the reality is that the order will decline. By the way therefore the power will decline. Because people are figuring out how to use more with less. And David, that’s the big negative thesis.
“. . . NVIDIA has to come out and either say democratization is terrific, but we’re really on a plane doing different things. Or NVIDIA can say, you know what, we gotta work harder because the other guys have something we don’t. If he says the latter, then the multiple will shrink. If he says the former, then the multiple could grow and we could regain . . . “
3. Meta Platforms, Inc (NASDAQ:META)
Number of Hedge Fund Holders In Q3 2024: 235
Meta Platforms, Inc (NASDAQ:META) is the most valuable social media company in the world courtesy of its Facebook and Instagram platforms. The firm recently reported its fourth-quarter earnings. The results saw Meta Platforms, Inc (NASDAQ:META) post $48.4 billion in revenue and $8.02 in EPS to comfortably beat analyst estimates of $46.9 billion and $6.75. The firm also reiterated that it still aims to spend as much as $65 billion in capital expenditure for AI and other development expenses in 2025. Ahead of Meta Platforms, Inc (NASDAQ:META), Cramer was confident in the firm’s ability to deliver. He doubted those who were worried that the stock had gathered unwarranted momentum ahead of the report:
“[On if Meta was going into the quarter too hot] Uh, too hot? Taekwondo, no. Taekwondo, no.”
2. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders In Q3 2024: 279
Microsoft Corporation (NASDAQ:MSFT) is the most valuable software company in the world and the second most valuable firm overall following the DeepSeek selloff. Yet, the firm’s shares have lost 11% since their peak in July last year primarily on the back of investor worries about its AI initiatives not delivering profit fast enough to warrant the billions of dollars already spent in capital expenditure. Microsoft Corporation (NASDAQ:MSFT)’s latest earnings led to the stock crashing by 6% as it forecast a midpoint of 31.5% growth for its Azure cloud business that fell below analyst estimates of 33%. Ahead of the earnings, Cramer was worried about Microsoft Corporation (NASDAQ:MSFT)’s valuation multiples:
“Look I watched Brad Gerstner yesterday. There’s a sense that the multiple has become very low. So it’s actually one of the lowest at Microsoft.”
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders In Q3 2024: 286
Amazon.com, Inc. (NASDAQ:AMZN) is the world’s most valuable eCommerce company in the world that also plays a key role in the cloud computing industry. The DeepSeek selloff that has reshaped the narrative surrounding AI spending has also created interesting implications for the firm. Amazon.com, Inc. (NASDAQ:AMZN)’s stock didn’t fall during the selloff. The firm can potentially benefit from lower training costs by spending less on AI development. It can also experience reduced spending on NVIDIA’s GPUs and rely on in-house chips instead. Here’s what Cramer said about Amazon.com, Inc. (NASDAQ:AMZN):
“I think that there will be, and I think that’s why you’re seeing some compression [NVDA margin compression]. But until someone actually has a better chip. An actual better chip. And there we have to see Amazon. Now Amazon’s going to report. Amazon is the one that is really rivaled.”
AMZN is a stock Jim Cramer recently talked about. 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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