We recently published an article titled Jim Cramer Thoughts on 8 Stocks As He Discussed Market Froth. In this article, we are going to take a look at where NVIDIA Corporation (NASDAQ:NVDA) stands against the other stocks.
Jim Cramer, the host of Mad Money, discussed how “froth” is currently affecting the market, explaining that trend-driven stocks need to experience a decline before more stable stocks can begin to recover.
“The fad stocks, they need to go down before non-fad stocks can triumph. That’s what’s happening. It’s just a fact of life in this business.”
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After a rough week marked by a significant downturn in trendy stocks, Cramer pointed out that it is a rare positive sign in an otherwise negative environment that the trend seems to be running its course. Cramer reflected on the market’s performance, mentioning that the Dow managed to inch up by 33 points, while the S&P 500 fell by 0.5%. However, the Nasdaq dropped by 1.21%, turning negative for the year.
He also stressed that the decline primarily occurred toward the end of the trading day, which he found unusual and concerning, though he was not sure about the specific cause of the abrupt drop. “It was pronounced, it was nasty,” Cramer remarked, highlighting the sharpness of the downturn.
“Now, nobody wants anybody to lose money, including me, but there’s a thing called froth, and we gotta talk about it as froth is the enemy of prudence. Smart investing requires a degree of prudence, something that’s highly incompatible with froth.”
He explained that smart investment strategies require a certain degree of caution, which frothy market conditions cannot support. He pointed out that for a period, the market had been filled with froth but lacked prudence, especially evident during the turbulent trading seen late last week. However, Cramer noted that as the froth subsides, investors are turning to assets with more durability and longevity. He specifically mentioned that drug stocks have been performing well recently.
“So here’s the bottom line: Once these frothy momentum stocks come in enough, then we will finally be in a much more straightforward world, a world where what tends to rally is not the sizzle, but the steak.”
Our Methodology
For this article, we compiled a list of 8 stocks that were discussed by Jim Cramer during the episode of Mad Money aired on February 24. We listed the stocks in the order that Cramer mentioned them. We also provided hedge fund sentiment for each stock as of the fourth quarter of 2024, which was taken from Insider Monkey’s database of over 1,000 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A close-up of a colorful high-end graphics card being plugged in to a gaming computer.
NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 223
NVIDIA Corporation (NASDAQ:NVDA) was mentioned during the episode and here’s what Cramer had to say:
“It’s terrifying when you own a nuclear power derivative and a big nuclear believer says it might not need that much, that much energy. Either that or it isn’t going to order a lot of chips from NVIDIA, which reports Wednesday. I’m trying to prep you. Of course, this whole alleged slowdown in the data center occurs right in front of NVIDIA’s earnings. Here’s a terrific company with a stock that’s just absolutely wilted. I mean unbelievable.
Now it, it, has Nvidia been a part of the froth? Let’s just say that it won’t be if it keeps delivering the way it used to, but it will be if it gives up the ghost… Less frothy than usual, but still frothy. Nonetheless, that’s how NVIDIA feels to me… I still say own it, don’t trade it, but don’t have any expectations of this particular quarter.”
NVIDIA Corporation (NASDAQ:NVDA), recognized for its innovations in graphics, computing, and networking technologies, is experiencing substantial growth driven by its GPUs and the CUDA software platform, both of which play an important role in AI infrastructure. The company delivered another beat and raise quarter on Wednesday when it reported results for the fiscal fourth quarter of 2025, posting an EPS of $0.89 on revenue of $39.33 billion. The Street was looking for $0.85 in per share earnings on sales of $38.14 billion. Here’s what Cramer said after the company’s latest earnings beat on February 26:
“Now, I don’t wanna obscure the company where the stock… that I always say own, don’t trade Nvidia. After the close, it was a very good quarter. Everyone thought this would be the most eventful quarter of earnings season, but it was a non-event. Why? Because it was terrific and Jensen Huang gives us terrific numbers.
He’s about as steady as the president is mercurial. The company put up solidly better-than-expected sales and earnings with strong guidance for the quarter, driven by the strength of their new high-end chips, Blackwell chips. Fantastic. Bravo. While we still have to worry about tariffs and export restrictions, I have to tell you, the numbers were excellent.”
Overall NVDA ranks 5th on our list of the stocks Jim Cramer recently discussed. While we acknowledge the potential of NVDA 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 time frame. If you are looking for an AI stock that is more promising than NVDA 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.
