We recently published an article titled Jim Cramer’s Bold Predictions About These 15 AI Stocks. In this article, we are going to take a look at where Alibaba Group Holding Limited (NYSE:BABA) stands against the other AI stocks Jim Cramer talked about.
As trading in 2024 heads towards a close, major stock market indexes have had a good run despite mixed performance across sectors. The flagship S&P index is up 26% year-to-date while the broader NASDAQ index has gained 33.56%. On top of this, the index of the NASDAQ’s top 100 stocks is up 29.8%, which solidifies the conclusion that technology stocks have driven the stock market’s 2024 returns. For further evidence, consider the Dow’s performance. The stock index which tracks industries across the US economy is up 14% YTD, making it the weakest-performing index among all mentioned.
However, even within technology, not all stocks have performed equally well. As an example, consider the performance of two stocks. Both of these are semiconductor companies. The first, which ranked 3rd on our list of Jim Cramer’s bearish tech calls is the largest American manufacturer of memory chips. The second, which ranked 1st on the same list is Wall Street’s AI darling. The two stocks have gained 7.64% and 184.60% year-to-date, so even though both of them are technology companies, their share price returns have differed primarily because of the firms’ varying exposures to artificial intelligence.
Yet even though AI has held up the stock market in 2024, other factors continue to influence stock performance as well. Continuing with our example of the GPU designer’s shares, the stock dropped by 1.1% on the day the Federal Reserve cut interest rates but guided two cuts for 2024 instead of the earlier four. The shares fell despite the fact that the firm enjoys the widest moat possible in the AI industry. On the same day, the flagship S&P and the broader NASDAQ indexes shed 2.9% and 3.6%, respectively. Following the year-end sell-off on Friday, neither index has fully recovered to levels before the Fed’s announcement.
Cramer, for his part, had predicted that the markets might not find it easy to reverse all losses following the Fed’s announcement. Talking on CNBC’s Squawk on the Street on the day after the Fed’s decision, the host shared that “rampant Bitcoin speculation, after speculation in nuclear power, after speculation in quantum computing” was baked into markets ahead of the announcement. Commenting on quantum computing in particular, Cramer mentioned one quantum computing stock and wondered whether the industry was all hype and no substance. “How is that [the firm] going to quantum? When we don’t even know what quantum is?” wondered Cramer. “It’s a nonfungible tokens, right? Cause you know what a fungible token was?” he added.
As AI continues to shape the winners and losers in the stock market, Cramer also shared tips for trading in 2025 in a recent Mad Money episode. He believes that one key fact that everyone needs to keep in mind when trading is to not get disillusioned by strong gains. According to Cramer, while bulls and bears both “make money” on the stock market, it’s the pigs that “get slaughtered.” He elaborated further and shared that in his experience he’s “seen moments where stocks went up and up and up so much that people were intoxicated with their gains.” Yet, it’s “precisely at that point of intoxication that you need to remind yourself that you don’t want to act like a pig,” believes the television show host.
Cramer’s second tip for successful investing is to have the fortitude to hold stocks even when the market is tough. He believes that not only is holding through the thick and thin ‘the hardest part of investing,” but adds that “taking short-term pains so you can have long-term gains” lies at the heart of the market’s performance “for a century.”
Finally, one key factor that several people ignore while trading stocks is to hunt for the right entry price. Cramer cautions against buying in bulk. “Do not, under any circumstances, buy your whole position at once,” he stresses and adds that “you should never sell all at once,” either. Instead, Cramer recommends staging “your buys, work your orders, try to get the best price over time.”
Our Methodology
To compile our list of Jim Cramer’s bold predictions about AI stocks, we scanned the stocks he mentioned in Mad Money and Squawk on the Street as far back as in August. Then, we picked out stocks with AI computing, hardware, and energy generation exposure, and ranked them by the number of hedge funds that had bought the shares in Q3 2024.
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).
An e-commerce platform displaying a wide range of products to customers online.
Alibaba Group Holding Limited (NYSE:BABA)
Number of Hedge Fund Holders In Q3 2024: 115
Date of Cramer’s Comments: 8-19-24
Performance Since Then: 1.37%
Alibaba Group Holding Limited (NYSE:BABA) is a Chinese technology conglomerate that is also one of the largest eCommerce players in the country. Estimates show that the firm commands at least 40% of merchandise shipments in China. Alibaba Group Holding Limited (NYSE:BABA) also enjoys a key place in China’s cloud computing and AI industries through its Alibaba Cloud and Alimama businesses and tools. However, the shares are up by just 13.8% year-to-date and have lost 14.3% since the November election due to the incoming Trump administration’s perceived hard stance against China. Recently, Alibaba Group Holding Limited (NYSE:BABA) has sought to consolidate its eCommerce businesses to compete with upstarts like PDD and introduced open-source AI models to establish an industry foothold. Here’s what Cramer said:
“Susquehanna lowered its price target on Alibaba to $130 a share from $135, but maintained its positive rating on the Chinese e-commerce and cloud giant’s stock. Despite a sluggish Chinese economy, analysts touted Alibaba’s progress on AI initiatives and noted its most recent earnings report showed better-than-expect profits.”
Overall BABA ranks 7th on our list of the AI stocks Jim Cramer recently talked about. While we acknowledge the potential of BABA 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 BABA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article is originally published at Insider Monkey.
