We recently compiled a list of the 10 Stocks Jim Cramer Believes Will Soar. In this article, we are going to take a look at where Apple Inc. (NASDAQ:AAPL) stands against the other stocks Jim Cramer believes will soar.
On a recent episode of Mad Money, Jim Cramer reflects on Wall Street’s favorite GPU maker’s remarkable journey and current status in the stock market. After the sharp decline three weeks ago, caused by the sudden sell-off linked to the yen carry trade, the market is rebounding.
“We’ve had a remarkable run from the lows three weeks ago as we realized that the forced selling caused by the implosion of the yen carry trade is merely temporary.”
Cramer notes that the Federal Reserve’s upcoming rate cuts should support this recovery. However, Wall Street has become more selective, and investors are less forgiving of mediocre results now that the market has rallied significantly.
“Now the Fed is our friend again with rate cuts on the way, starting at next month’s Federal Open Market Committee meeting. At the same time, though, after such a spectacular rally, Wall Street’s gotten a little more discerning. Investors are no longer willing to give companies a pass for less-than-stellar results once we reach more elevated levels. That’s what happens—the exuberance goes away. Now we’re in a tricky moment that feels like a race against time.”
Cramer emphasizes that the current economic climate is uncertain. The economy is slowing, and while the Fed’s rate cuts are expected to help, their impact is unpredictable. The effectiveness of these measures and the extent of the economic downturn remain unclear.
“While the economy is slowing and we know the Fed rate-cut cavalry is riding to the rescue, we just don’t know how effective it will be and how bad things will get before Fed Chief Powell manages to turn the tide—and he will. We need to figure out how quickly the economy will deteriorate and how quickly the rate cuts will work their magic. Both of these are judgment calls, and we don’t necessarily have enough data to decide either way. We never do at this point in what we call the economic cycle.”
Jim Cramer: In my 43 Years on Wall Street, I’ve Never Seen Anything Like This
According to Cramer, Nvidia has captured extraordinary attention from investors. He describes it as a groundbreaking company, now valued at $3.2 trillion, a dramatic increase from $580 billion just 18 months ago. Cramer highlights its dominance in the semiconductor industry and its influence on technology, particularly in artificial intelligence.
“I searched for comparisons and came up grasping at something ethereal to describe this incredible $3.2 trillion company, which was worth just $580 billion 18 months ago. It has captivated not just investors but people far removed from the stock market. It’s almost miraculous how many have had life-changing experiences because of this single stock.”
Despite its impressive achievements, Cramer notes that the stock’s performance will be scrutinized closely. He points out that the company’s quarterly results need to surpass high expectations, including significant revenue beats and strong future guidance.
“But tomorrow, the stock will descend into mere mortality, and I feel compelled to explain why. Why does it hold such a high status, and why can it never fully live up to the hype of its $3.2 trillion market cap based solely on one quarterly report? The quarter is about it beating earnings estimates, topping revenue numbers, and crushing forecasts. The stock has run so high that it needs a $2 billion revenue beat and guidance that’s $2 billion higher than expected, along with a bullish conference call discussing a strong roadmap. And let’s not forget a gigantic buyback because the company has too much cash sitting idle.”
Cramer concludes that the company’s technology is so advanced that it’s difficult to fully grasp its future potential. Despite this, he believes the company’s achievements should be celebrated, and the stock might still hold significant upside surprises.
“The bottom line: I don’t want to be poetic, but it excels in ways that are unmatched. We should celebrate its achievements and bring on those upside surprises.”
Our Methodology
In this article, we examine a recent episode of Jim Cramer’s Mad Money, where he highlighted ten stocks with strong potential for growth. We also analyze hedge fund perspectives on these stocks and rank them according to hedge fund ownership, from the least to the most.
At Insider Monkey we are obsessed with 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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A wide view of an Apple store, showing the range of products the company offers.
Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Investors: 184
Jim Cramer addresses recent changes in Apple Inc. (NASDAQ:AAPL)’s leadership, specifically the retirement of CFO Luca Maestri, a highly regarded executive known for his exceptional financial stewardship. Despite initial market reactions that saw Apple Inc. (NASDAQ:AAPL)’s stock dip slightly and prompted some to view the change with concern, Cramer remains confident in the company’s future. Maestri’s tenure saw Apple Inc. (NASDAQ:AAPL)’s revenue and earnings grow significantly, with Apple Inc. (NASDAQ:AAPL)’s market cap soaring from $547 billion to nearly $3.5 trillion.
“Apple’s C-suite is being shaken up, but I’ll tell you why it’s not shaking my confidence in the company going forward. Own it, don’t trade it. Apple’s stock briefly got rocked this morning after we learned that CFO Luca Maestri, one of the best in the business, is retiring. Luca is a hero. He’s been the steward of Apple’s cash and has done his best to add value for all shareholders, much better than almost every other CFO out there. So what happens to the stock upon the news of his retirement? It goes down a buck and a half in pre-market trading, and we get a host of notes saying that Luca’s decision is either a mild negative for the stock or a real negative—a reason to be worried and a cause of disappointment and concern.
It’s been 10 years for Luca, a little longer than the average CFO term, during which Apple’s revenues have compounded at an 8% annual clip, while its earnings compounded at a 15% clip. Apple’s market capitalization expanded more than six times, from $547 billion to nearly $3.5 trillion today. Luca has been incredible at planning the success of the service revenue stream, which is now close to $100 billion. He’s helped grow the company in key emerging markets like India, Turkey, Thailand, Malaysia, Brazil, and the UAE, which together are becoming a real force. I’d argue he’s been a genius when it comes to buying back stock, always purchasing it when it’s right, not just repurchasing shares by rote, as most CFOs do…
In the midst of an endless parade of commentators who want you to trade, many of whom make money if you trade, there is Apple—the one and only stock that’s run the way you want a company to run, which is why I always say own it, don’t trade it. I can’t think of a thing Apple does wrong when it comes to running the business day-to-day, and I know that Luca played a big role in that. The highest compliment I can pay is that I bet Kevin Park will do exactly the same.”
Apple Inc. (NASDAQ:AAPL) offers a strong investment opportunity due to its leadership in technology innovation, growing ecosystem, and solid financial health. Apple Inc. (NASDAQ:AAPL)’s recent product launches, including the iPhone 15 series, iPad Pro, and new MacBook models, showcase its commitment to cutting-edge technology and have been positively received by consumers, strengthening its market position. Apple Inc. (NASDAQ:AAPL)’s ecosystem, which integrates its hardware, software, and services, is expanding rapidly. Investments in its Services segment—such as Apple Music, iCloud, and Apple TV+—along with recent advancements in AI, are boosting recurring revenue and improving customer engagement.
Additionally, Apple Inc. (NASDAQ:AAPL)’s strategic investments in emerging technologies like augmented reality (AR), artificial intelligence (AI), and health technology, including the new Apple Watch Series 9, position it well for future growth and continued market leadership. Overall, Apple Inc. (NASDAQ:AAPL)’s innovation, expanding ecosystem, strong financial standing, and forward-looking investments make it an appealing investment choice.
Overall AAPL ranks 1st on our list of the stocks Jim Cramer believes will soar. While we acknowledge the potential of AAPL as an investment, our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a promising AI stock 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.