We recently compiled a list of the Jim Cramer’s Best Performers List: 12 Stocks Cramer is Talking About. In this article, we are going to take a look at where NVIDIA Corporation (NASDAQ:NVDA) stands against the other best performers on Jim Cramer’s list.
On a recent episode of Mad Money, Jim Cramer took a moment to celebrate the two-year anniversary of the current bull market. He mentioned that this particular bull market has been quiet and gentle, which he attributes to the unusual circumstances surrounding its rise. “The whole first year of this bull’s life was an anomaly. That’s because the Fed was furiously tightening and the market went up anyway,” Cramer explained.
He emphasized that for the past two years, opportunities have been evident, stating, “Every night I say there’s always a bull market somewhere, and for the last two years, well, it’s been right in front of you.”
Cramer then went on to discuss the lead performing stocks and ended the segment, saying:
“The bottom line, if you’re going to buy these stocks, I’d go first with Nvidia, then with Broadcom, and finally Fair Isaac, if only because we need something that’s not connected to the data center, even as we know, it will remain a strong story for the ages.”
Cramer also advised investors to shift their focus away from the consumer price index (CPI) report, suggesting that its significance has diminished since the Federal Reserve began cutting rates.
“We had to be concerned about this stuff when the Fed was on the warpath, either raising rates or leaving them higher for longer. Now, though, the Fed is your friend, so I wouldn’t obsess about the details.”
He did emphasize, however, that the monthly labor report remains important in the current climate. He remarked on the tendency for many to become “Fed watchers,” suggesting that this reliance on government data can detract from the deeper analysis of individual companies. Cramer referenced Austan D. Goolsbee, president of the Chicago Fed, who advised against an overemphasis on CPI data, as the Fed is unlikely to base decisions on it. Cramer explained:
“When the Fed’s raising rates in order to stamp out inflation, it can be very important. When we’re in a rate hike cycle, you’re trying to figure out when that’s going to end. But we’re not in that kind of cycle anymore. We’re in a rate cutting cycle.”
Cramer explained that last month the Fed implemented a double rate cut, setting a downward trend that is expected to continue. He added:
“Sure, if we had a huge spike in the CPI this morning, then maybe the Fed would change its stance. But that would have to be an extreme reading. And there’s nothing extreme about today’s 2.4% inflation number, just a tick above the expected 2.3, still down from the 2.5% reading from the prior month.”
Cramer concluded with a strong reminder about the nature of investing. “Forget the macro, people. It’s not that meaningful when the Fed’s cutting rates. And keep your eyes on the prize: Earnings,” he urged. Ultimately, he reinforced that earnings dictate stock prices in the long run, and that’s where the focus should be for those looking to make money in the market.
Our Methodology
For this article, we compiled a list of 12 stocks with the biggest gains over the past 2 years that were mentioned by Jim Cramer during his episode of Mad Money on October 10. 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).
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: 179
Here’s what Cramer had to say about NVIDIA Corporation (NASDAQ:NVDA):
“People are just beginning to realize that maybe it wasn’t just a gaming company with some real fast graphics chips…Eventually, NVIDIA and its renaissance man, CEO Jensen, pioneered both accelerated computing and generative AI. We speak too much about the latter, not enough about the former. Accelerated computing is what makes things really work here. In other words, NVIDIA created machines that think faster than you do and soon will do almost anything better than you can do
Now, I don’t want you freaking out. We’re in charge here. We make the decisions, but AI saves a lot of time… which is why it’s such a revolutionary technology for the enterprise and it’s about to get even better because we’ll see an amazing jump on the fly thinking from generative AI when NVIDIA’s new line of Blackwell chips gets fully deployed next year. They are so powerful, so fast, these guys basically invented a chip that is so quick that it created the entire AI business outta thin air. It wasn’t possible before, but now it can do incredible things and very soon it’ll be both faster and better.
By the way, I think it’s gonna do some stuff with video that’s gonna blow you away. I’ve never seen a company have such demand for its products, including demand from Tesla, which needs Nvidia for self-driving cars… The whole thing’s remarkable and the stock’s 1072% gain over the past two years was right there for the taking. As CNBC Investing Club members well know, I do think it’s got more upside, which is why I always say own it, don’t trade it. It does put a smile on my face.”
NVIDIA (NASDAQ:NVDA) initially gained widespread recognition in 1999 with the introduction of the GeForce 256, celebrated as the world’s first graphics processing unit (GPU). Today, it maintains a dominant position in the GPU market, largely thanks to its A100 and H100 chipsets, which have significantly contributed to the company’s record revenue and profit growth over the past few years.
The company’s new Blackwell series GPUs are anticipated to become a major product for the company. CEO Jensen Huang recently expressed excitement about the overwhelming demand for Blackwell, commenting that interest is incredibly high and that many are eager to be at the forefront of this innovation.
Among the noteworthy advancements is NVIDIA’s (NASDAQ:NVDA) concept of “physical AI,” which involves the deployment of semi-autonomous robots capable of interacting in real-world environments. A significant partnership with Foxconn, the electronics supplier, is already in place to develop and train AI-driven robots.
In the second quarter, the company reported a remarkable 122% increase in revenue compared to the previous year, reaching $30 billion. It was fueled by a heightened demand for data center GPUs, particularly the H100 and H200 models.
Overall NVDA ranks 2nd on Jim Cramer’s list of best performing stocks. 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 timeframe. 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.
Read Next: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. This article is originally published at Insider Monkey.