We recently published an article titled Jim Cramer Discusses These 10 Stocks & An Outfit Better Than DeepSeek. In this article, we are going to take a look at where Advanced Micro Devices, Inc. (NASDAQ:AMD) stands against the other stocks.
In his recent appearance on CNBC’s Squawk on the Street, Jim Cramer spent nearly all of the show either discussing stocks or the changed environment for AI data center stocks after the DeepSeek selloff. During the selloff, Wall Street’s favorite AI GPU stock lost close to $600 billion in market capitalization. Since then, AI data center investors have been greeted with several optimistic earnings call announcements that counter the narrative of DeepSeek leading to lower AI data center capital expenditure and lower demand for its products.
Since the selloff though, the stock still hasn’t risen to its former glory. While it dropped by 17% during the day and has gained 12.5% since then, the shares are still down by 6.6%. The shares appear to have regained some of their value due to growing evidence showing that the demand for AI chips still exists.
The rise is also relevant when we consider Cramer’s remarks in the selloff’s immediate aftermath. Back then, the CNBC host had outlined that he was watching two key metrics to determine the fate of the AI stock According to Cramer, the first metric is energy spending. Investors have piled into nuclear energy stocks due to the industry’s demand for clean energy to power gigawatt data centers. Cramer believes that any drawdown in energy spending or a slowdown of plans such as those to revive the Three Mile Island nuclear reactors could signal a paradigm shift in AI data center investing.
The second metric is GPU orders. On this front, earnings calls from big tech firms have painted an optimistic picture as no firm has significantly reduced their expenditure. Yet, Cramer had cautioned back then “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.”
While capital expenditure spending by big tech for data centers is an estimate of future capital outlays, a similar metric is the revenue earned by chip manufacturers. On this front, the world’s largest contract chip manufacturer based in Taiwan announced in February that it had earned a cool $8.93 billion in January to mark an impressive 39% annual growth. This revenue is from chips that will ship later this year, and it presented investors with insight into semiconductor demand immediately after the DeepSeek selloff. Although, granted that these orders were likely made before the selloff, the shares of the AI GPU stock jumped by 2.7% on the news.
During his show, Cramer shared details of a website that he came across. He outlined “Now there’s an outfit that I’ve been dealing with called you dot com. . . .I really like you dot com. It’s one of those companies that is really ahead of DeepSeek, it’s way ahead,” he shared. Cramer’s initial takeaway was that You.com’s advantage could hurt the GPU company. But, when he dug deeper, he found that the GPU company was actually one of the website’s biggest investors.”
Commenting on this discovery, he outlined “Once again you just find this, the long knives came out, whether it be China or whether it be Biden or whether it be these big hyperscalers, that said listen we don’t want [to buy the GPU company’s stock], we wanna scale back in [the stock] and then something happened which just said, you know, I guess we can’t.”
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 February 5th.
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).
A close up of a complex looking PCB board with several intergrated semiconductor parts.
Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders In Q3 2024: 107
Advanced Micro Devices, Inc. (NASDAQ:AMD) is a chip designer that is the second largest player in the CPU and GPU markets. Its ability to target both markets has acted as an insulator for the firm against NVIDIA’s dominance in the AI industry. Advanced Micro Devices, Inc. (NASDAQ:AMD) has capitalized on Intel’s manufacturing woes, but the shares have lost 8.4% year-to-date as the firm struggles to displace NVIDIA’s high-performing GPUs. Cramer’s comments about Advanced Micro Devices, Inc. (NASDAQ:AMD) came after the firm’s fourth-quarter data center business and outlook disappointed investors:
“And then you know AMD didn’t help the case. Because AMD did not do well last night. . . yeah that Citi downgrade was substantive.”
“They have a transition going on.”
“You can’t [defend AMD] because it was indefensible. They basically talked about how things are going to be flat. That they don’t really have the right chips right now. They are doing very well versus Intel on the less expensive CPUs, but they kinda missed the cycle. Now they’ll catch up in the second half, but you don’t hear them in the mix. That’s the problem. Because they don’t have the right GPUs. That’s what’s going on.”
“[On CEO Lisa Su saying AMD delivered greater than $5 billion dollar data center revenue] Well true, but AI revenue is flat to down for the first half. And there’s going to be margin dilution. Which is why you’re seeing this. There’s an inventory build. There’s poor leverage to what they’re doing. This again cuts to you know who, I don’t need to say I anymore because I say it too much . . .NVIDIA.”
“[on next month being the anniversary of stock touching $227] Well I mean there was a time, look she was putting up, Lisa Su was putting up very big numbers. She is. Uh took about five billion dollar projections, she’s making that. But what most people say is, wait a second, this a halcyon time for what she makes, the GPUs, and she’s not delivering.”
“But look I think she’ll be back. They’re making a lot of money. But it’s fallen very much out of favor. And you got a downgrade today, and I just feel that people just say, you know what, NVIDIA won. NVIDIA won another round and the long knives are out for NVIDIA we’re waiting to hear what they’re going to do with China, we know that there are a lot of people who say that Amazon’s going to talk about more custom chips. Maybe that’s Broadcom. But Amazon, so far is not using AMD GPU. And that was what the customer they really needed and we don’t see it.”
Overall AMD ranks 8th on our list of the stocks Jim Cramer recently discussed. While we acknowledge the potential of AMD 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 AMD 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.
