We recently compiled a list of the Jim Cramer on Tesla and Other Stocks. In this article, we are going to take a look at where GE Vernova Inc. (NYSE:GEV) stands against the other stocks Jim Cramer is talking about.
Jim Cramer, host of Mad Money, emphasized the ongoing significance of fossil fuels in supporting technological advancements, even as investments in renewable energy continue to increase. He stated:
“This is not just a grudge match between the old and the new, a battle of electric vehicles versus internal combustion. The truth is, fossil fuels are essential for a lot more than vehicles, like it or not.”
READ ALSO Jim Cramer is Talking About These 12 Stocks and Jim Cramer’s Latest Stock Picks
Cramer highlighted the growing energy demands of major tech companies, noting that the data centers they are constructing consume vast amounts of electricity. While these tech giants are making substantial investments in nuclear energy, he pointed out that this power source is unlikely to significantly impact data centers for at least another decade due to the complexities of building nuclear facilities and community resistance to having them nearby.
“If we need more energy, we’re going to get it from what comes out of the ground … fossil fuels that will power the data center, specifically natural gas… You may be reluctant to invest in it, you might think who cares, but you need to know how vital all of this fossil fuel technology is to the growth of the Magnificent Seven.”
Cramer also reflected on the shift in the U.S. energy landscape, recalling how the nation was once heavily reliant on OPEC for oil imports just two decades ago. Today, he pointed out, the U.S. produces over 13 million barrels per day, making it the largest oil producer globally and a net exporter. He mentioned the Permian Basin’s unexpected resilience, continually producing despite earlier predictions of depletion.
Cramer noted that the decline of OPEC has transformed the geopolitical landscape. He referenced the 1973 oil crisis, triggered by OPEC’s retaliation against U.S. support for Israel, which led to stagflation and economic turmoil. In contrast, he pointed out that despite Israel’s current conflict, the U.S. economy is not experiencing stagflation or recession, resulting instead in a bull market. He attributed this stability to the industry, saying:
“… This industry that spent billions upon billions of dollars to try to be as low carbon as possible is the reason why oil prices have actually come down during this period. They’ve gotten so much production that OPEC is now powerless.”
Turning his attention to the broader oil industry, Cramer explored the role of oil service companies that facilitate production, including offshore drillers. He recalled becoming optimistic about oil service stocks earlier in the year, anticipating higher energy prices but admitted that this expectation did not materialize due to economic concerns dampening oil and gas markets. Despite current investor reluctance toward oil service stocks, Cramer suggested that sentiment could shift over time, especially because of the Federal Reserve’s recent rate cutting.
“Now that the FED is our friend and more rate cuts are on the table, that’s good news for the industry. I am not worried about the election either. If Trump wins, maybe we’re back to that “drill baby drill” thing. If Harris wins, we get exactly what we’ve had the last four years. Not ideal for the industry but it’s still led to record oil and gas production here in the United States.”
Our Methodology
For this article, we compiled a list of 14 stocks that were discussed by Jim Cramer during his episodes of Mad Money on October 23 and 24. We listed the stocks in ascending order of their hedge fund sentiment as of the second quarter, which was taken from Insider Monkey’s database of more than 900 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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
An aerial view of a power plant, symbolizing the company’s investments in energy infrastructure sector.
GE Vernova Inc. (NYSE:GEV)
Number of Hedge Fund Holders: 92
Cramer shed light on GE Vernova Inc.’s (NYSE:GEV) recent earnings report and emphasized the importance and need for fossil-based fuel.
“When you study GE Vernova’s fantastic quarter and it was, and you read between the lines, the numbers that shine were certainly not nuclear, definitely not wind. No, the strength came from electrification and the power of natural gas. You may be reluctant to invest in it. You might think who cares but you need to know how vital all this fossil fuel technology is to the growth of Magnificent 7. Because of these data centers, because NVIDIA’s chips burn so darn hot, and they use an insane amount of electricity, we simply need more fuel fossil-based fuel.”
GE Vernova (NYSE:GEV) operates in the energy sector, focusing on a range of solutions related to electricity generation, transfer, orchestration, conversion, and storage. On October 23, it shared its third-quarter results, highlighting significant growth in orders and revenues. During this period, the company secured orders totaling $9.4 billion, marking a 17% increase on an organic basis.
This growth was primarily fueled by a 28% rise in services, with all segments showing strength, complemented by equipment growth in Power and Electrification. Revenue for the quarter reached $8.9 billion, an 8% increase. The financial performance showed expanding margins in the Power, Electrification, and Onshore Wind segments, although these gains were somewhat offset by contract losses in Offshore Wind. Its cash flow saw a substantial improvement, increasing by approximately $0.9 billion.
Focusing on GE Vernova’s (NYSE:GEV) Electrification segment, orders amounted to $2.5 billion, also up 17% organically, driven by heightened demand for grid equipment and services. Revenue for this segment reached $1.9 billion, a 22% growth fueled by contributions from Grid Solutions and Power Conversion. The Power segment’s orders reached $5.2 billion, a 34% organic increase, while revenues totaled $4.2 billion, marking an 8% rise, driven by increased demand for Gas Power services and equipment.
Overall GEV ranks 2nd on our list of stocks Jim Cramer is talking about. While we acknowledge the potential of GEV 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 timeframe. If you are looking for an AI stock that is more promising than GEV 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.
