We recently published an article titled Jim Cramer Discusses These 10 Stocks & An Outfit Better Than DeepSeek. In this article, we are going to take a look at where NVIDIA Corporation (NASDAQ:NVDA) stands against the other stocks.
In his recent appearance on CNBC’s Squawk on the Street, Jim Cramer spent nearly all of the show either discussing stocks or the changed environment for AI data center stocks after the DeepSeek selloff. During the selloff, Wall Street’s favorite AI GPU stock lost close to $600 billion in market capitalization. Since then, AI data center investors have been greeted with several optimistic earnings call announcements that counter the narrative of DeepSeek leading to lower AI data center capital expenditure and lower demand for its products.
Since the selloff though, the stock still hasn’t risen to its former glory. While it dropped by 17% during the day and has gained 12.5% since then, the shares are still down by 6.6%. The shares appear to have regained some of their value due to growing evidence showing that the demand for AI chips still exists.
The rise is also relevant when we consider Cramer’s remarks in the selloff’s immediate aftermath. Back then, the CNBC host had outlined that he was watching two key metrics to determine the fate of the AI stock According to Cramer, the first metric is energy spending. Investors have piled into nuclear energy stocks due to the industry’s demand for clean energy to power gigawatt data centers. Cramer believes that any drawdown in energy spending or a slowdown of plans such as those to revive the Three Mile Island nuclear reactors could signal a paradigm shift in AI data center investing.
The second metric is GPU orders. On this front, earnings calls from big tech firms have painted an optimistic picture as no firm has significantly reduced their expenditure. Yet, Cramer had cautioned back then “But that’s not, necessarily, what people are going to announce, ‘listen, I’ve decided. . . If this thing only needs one-tenth of the power, one-tenth of the compute, well I’m going to cut my orders by nine-tenths.’ I’ve not heard that yet, but this thing is. . . a steamroll.”
While capital expenditure spending by big tech for data centers is an estimate of future capital outlays, a similar metric is the revenue earned by chip manufacturers. On this front, the world’s largest contract chip manufacturer based in Taiwan announced in February that it had earned a cool $8.93 billion in January to mark an impressive 39% annual growth. This revenue is from chips that will ship later this year, and it presented investors with insight into semiconductor demand immediately after the DeepSeek selloff. Although, granted that these orders were likely made before the selloff, the shares of the AI GPU stock jumped by 2.7% on the news.
During his show, Cramer shared details of a website that he came across. He outlined “Now there’s an outfit that I’ve been dealing with called you dot com. . . .I really like you dot com. It’s one of those companies that is really ahead of DeepSeek, it’s way ahead,” he shared. Cramer’s initial takeaway was that You.com’s advantage could hurt the GPU company. But, when he dug deeper, he found that the GPU company was actually one of the website’s biggest investors.”
Commenting on this discovery, he outlined “Once again you just find this, the long knives came out, whether it be China or whether it be Biden or whether it be these big hyperscalers, that said listen we don’t want [to buy the GPU company’s stock], we wanna scale back in [the stock] and then something happened which just said, you know, I guess we can’t.”
Our Methodology
To make our list of the stocks that Jim Cramer talked about, we listed down the stocks he mentioned during CNBC’s Squawk on the Street aired on February 5th.
For these stocks, we also mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds invest in? 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 In Q3 2024: 193
NVIDIA Corporation (NASDAQ:NVDA) is the leading AI GPU designer that continues to make headlines in 2024. It started the year with a catchy CES keynote that saw CEO Jensen Huang extend the narrative about the firm’s GPUs to humanoid robots. Yet, less than a month later, NVIDIA Corporation (NASDAQ:NVDA)’s shares lost 17% during the DeepSeek AI selloff as investors pondered whether low AI development costs would lead to lower GPU spending. Cramer’s comments surrounded both these factors:
“[on cloud miss stemming from more demand than capacity] Yes it does [says good things for NVIDIA]. It says great things. Now, what people are still concerned about is if notice in their verbiage, that they’re gonna be the first to sell Blackwell. Well, wait a second I thought Blackwell was selling like mad. So that was a pause. Second, we have one more in this gauntlet, will Amazon say that they’re going to pause. Why didn’t Alphabet say, you know what, in light of DeepSeek, we’re going to maybe pause our spend but they couldn’t because they’re an honest company and obviously the CFO’s not gonna let them do that.”
“I mean, Carl, we sold down NVIDIA cause of a belief that it didn’t need all this capex. So far, everyone has said they do, Amazon’s the one that has the most that they’re working on, that’s away from NVIDIA. But, if Amazon says you know what, we’re gonna [inaudible] capex, then NVIDIA’s going to go up rather dramatically.”
“[On Citi reducing NVIDIA price target] I saw that. Right I mean I read through that and I said to the guys, I said to Jeff Marks and Ben Stoto, all right, here they go, here come the downgrades. The downgrades seemed almost out of sync. It really was much more of like all right, this thing’s not moving, so like let’s get away from it. It was not substantive. The only substantive thing I really found was that I keep thinking that Blackwell, which is the next generation, is selling like mad and to have the first customer, to learn that the first customer is finally taking it, tells me that it’s going to be much more forward and not now in front of us. But it’s going to happen, because obviously if you’re spending all this money you’re gonna get Blackwell. Then you say to yourself, why do you need Blackwell? Why do you need this incredibly important platform that has software? Well you need it for both inference and you need it for training. There are people who said with DeepSeek you don’t.”
“Now there’s an outfit that I’ve been dealing with called you dot com. . . .I really like you dot com. It’s one of those companies that is really ahead of DeepSeek, it’s way ahead. So I said oh my god, this is going to hurt NVIDIA. And he’s, well no actually they’re our largest investor. Once again you just find this, the long knives came out, whether it be China or whether it be Biden or whether it be these big hyperscalers, that said listen we don’t want NVIDIA, we wanna scale back in NVIDIA and then something happened which just said, you know, I guess we can’t. So I keep coming back to, well NVIDIA’s figured this out but people don’t want, people want a price break from NVIDIA. They do. Maybe a lot of this was, okay Jensen Huang, while you’re off there in the lunar new year and meeting the president, we need a better deal because this thing’s rumored to be thirty five thousand. It’s not a chip. We keep using the term chip. It’s a platform with software. That was another thing that people missed on DeepSeek. Platform with software. They can charge more and you can use the current plug it into the software.”
“I talked with Jensen about Blackwell. Blackwell’s video. I know that I talk too much about robots. And I know that. But if everyone gets a robot, which is the vision of the guy who runs DOGE, then we would all need a lot of NVIDIA power. Cause NVIDIA has robots that don’t walk into walls. And aren’t stupid. Let’s go back to and rewind the tape [about] why we liked NVIDIA so much. They were so far ahead of everybody else, well what happened? We found out that AMD has fallen behind. We found out the hyperscalers tended to need more than they got. We did get a DeepSeek story out of China. Which said that they didn’t spend a lot to be able to develop this product which I think is now proven to be false. That’s not just a Peter Navarro narrative, an anti-China narrative. There was a sense that maybe the Chinese lied.”
Overall NVDA ranks 4th 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 some 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.
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Disclosure: None. This article is originally published at Insider Monkey.