We recently compiled a list of the Jim Cramer’s Game Plan: Top 14 Stocks to Watch. In this article, we are going to take a look at where Microsoft Corporation (NASDAQ:MSFT) stands against the other stocks.
Jim Cramer, the host of Mad Money, recently shared his thoughts on the upcoming earnings season, emphasizing that investors should tread carefully and avoid making any big moves.
“When people think about an exciting time for stocks, they think of the next two weeks, that’s when some of the most important consequential companies on Earth report, practically at the same time. Throw in the actions of the new president and all I can say is, we’re not gonna have any idea what the heck we’re doing until we have time, probably at night to sift through all the data points and study all the conference calls.”
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Cramer stressed that the current week, in particular, is too difficult for snap judgments. He warned that the Federal Reserve’s decision on Wednesday will only add to the uncertainty. At one point, it seemed like the market could expect a rate cut, which would push stocks higher, but then Amex reported that its customers were spending at a rapid pace. He said:
“But when American Express says today that its millions of customers are spending like mad, the Fed can’t possibly give us a rate cut, can it?”
He added that if the Fed does lower rates on Wednesday, it would likely be because Chairman Jerome Powell has caved to President Trump’s demand for immediate cuts. In this complex situation, Cramer advised investors to just sit tight and not act, pointing out that it would be a “no-win situation” for Powell.
As if the pressure of earnings reports and the Fed’s decision were not enough, Cramer also noted that this week would feature the release of the Fed’s favored inflation measure, the Personal Consumption Expenditures (PCE) price index. However, Cramer does not expect good news, given the high level of consumer spending.
“The exhausting bottom line: Look it’s a sheer hell week. Our heads will be spinning, swivel-like, lazy Susan even, as each day you can expect a flood of earnings and a sound bite from President Trump that upsets whatever order there might be. Like I always say, don’t try to make decisions during this part of earnings season, just listen. It’s too hard and I don’t want you to lose money just because this is one of eight super exciting weeks of the year.”
Our Methodology
For this article, we compiled a list of 14 stocks that were discussed by Jim Cramer during the episode of Mad Money on January 24. We listed the stocks in the order that Cramer mentioned them. We also provided hedge fund sentiment for each stock as of the third quarter of 2024, which was taken from Insider Monkey’s database of 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).
A development team working together to create the next version of Windows.
Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 279
Talking about the prominent technology company, Microsoft Corporation (NASDAQ:MSFT), Cramer said:
“How about two wild cards? First is Microsoft. Now, this has become a battleground stock because its aggressive data center build-out, so far failed AI PC, got a call ‘em as I see ‘em, a possible fallout with OpenAI, and the possibility that Copilot is nothing but Clippy 2, yes, that little paperclip that almost ruined Microsoft Office in the late nineties. I keep trying to figure out how CFO Amy Hood can be positive on her part of the conference call, which is really frankly the only part of the conference call that matters because she handles the guidance.
And the guidance is the guidance. We pared this one back for the Charitable Trust and if it weren’t for the fact that Microsoft has an installed base to meet demand, I have to tell you, we would’ve sold our entire position.”
For fiscal Q2 2025, Microsoft (NASDAQ:MSFT) expects Azure cloud services to grow by 31% to 32%, slower than the previous quarter’s 34%. The Intelligent Cloud segment is projected to see an 18% to 20% revenue increase year-over-year. Additionally, AI product sales are expected to remain steady, with Microsoft optimistic that Azure will gain momentum in the second half of the fiscal year due to new data center investments.
Overall MSFT ranks 7th on our list of stocks to watch according to Jim Cramer. While we acknowledge the potential of MSFT 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 MSFT 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 was originally published at Insider Monkey.
