We recently compiled a list of the Jim Cramer’s Latest Game Plan: 15 Stocks to Watch. In this article, we are going to take a look at where QUALCOMM Incorporated (NASDAQ:QCOM) stands against the other stocks in Jim Cramer’s latest game plan.
Jim Cramer, host of Mad Money, recently weighed in on the factors that will shape market movements this week, pointing to the Federal Reserve’s upcoming meeting and a slew of corporate earnings reports as key developments. However, despite the importance of these earnings, Cramer believes that the presidential election will take center stage and dominate the market’s attention.
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While acknowledging the significance of the election, Cramer emphasized that the Federal Reserve’s next decision is perhaps even more crucial for the markets. He noted that the bond market has been moving in an unfavorable direction, with the situation further complicated by a disappointing non-farm payroll report.
Though this report was skewed by hurricanes and labor strikes, it initially sparked a positive reaction in the bond market, pushing rates lower. Cramer had hoped that this would signal a positive shift, but the optimism was short-lived, as bond sellers quickly drove rates back up to their highest levels since early July.
“In my opinion, the Fed needs to cut rates again. In the last couple weeks, we’ve heard from too many businesses that have made it clear that we have a real slowdown on our hands. Economy’s a little shaky.”
Cramer also reflected on the Fed’s decision to reduce rates in September. He acknowledged that the bond market reacted negatively to the rate cuts at the time despite an economy that appeared relatively strong and a healthy labor market. Cramer discussed the possibility that if the Fed were to cut rates again, the market could see another unfavorable response. However, he remained unconcerned about this potential backlash, arguing that a rate cut could help to generate optimism in certain sectors.
“At this point in my view, if the Fed cuts rates next week, psychologically there’s some hope that we could see a pickup, particularly in housing and autos, two industries that seem to be losing strength by the day.”
Cramer highlighted that both presidential candidates appear willing to expand the federal budget. His main concern, however, was whether either candidate would be able to push their proposed agendas through Congress, a process he described as extremely difficult. Cramer noted that, in his opinion, presidential candidate Trump would likely be a bigger proponent of increasing the budget deficit than presidential candidate Harris, particularly due to the tax cuts Trump favors, which tend to result in larger deficits.
Stating his bottom line, Cramer said:
“… At the end of the day, the market’s still going to be hostage to the election, and perhaps more important, to the Fed meeting.”
Our Methodology
For this article, we compiled a list of 15 stocks that were discussed by Jim Cramer during the episode of Mad Money on November 1. 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 technician testing the latest 5G device, demonstrating the company’s commitment to innovation.
QUALCOMM Incorporated (NASDAQ:QCOM)
Number of Hedge Fund Holders: 100
Cramer mentioned that QUALCOMM Incorporated (NASDAQ:QCOM) is set to report its earnings on November 6 and highlighted chatter around its plan to buy Intel.
“… Qualcomm reports at the same time. Now, there have been stories floated about how CEO Cristiano Amon has been interested in buying Intel. Intel. They wanna buy ’em. I think he has to move fast because, after the quarter Intel reported yesterday, that stock’s going higher, regardless of whether it’s been booted from the Dow like it was this evening. Qualcomm itself is quite charmed. It tends not to go down on weak numbers and it soars on strong ones. Wow, that’s a very good risk reward, isn’t it?”
QUALCOMM (NASDAQ:QCOM) is a key player in the wireless industry, focusing on the development and commercialization of essential technologies, including integrated circuits, software, and licensing of intellectual property.
A significant legal challenge arose when Arm Holdings filed a lawsuit against Qualcomm in 2022, following Qualcomm’s acquisition of Nuvia. This legal dispute primarily concerns Qualcomm’s alleged failure to negotiate a new licensing agreement after the acquisition, which has critical ramifications for the future of its chip designs.
Arm claims that technology developed for Microsoft’s Copilot+ laptops is based on Nuvia’s chip architecture, a point of contention that has escalated tensions between the two companies. Additionally, Bloomberg News reported that Arm intends to cancel an architectural license agreement that permits Qualcomm to utilize Arm’s intellectual property in its chip designs. This cancellation, for which Qualcomm was given a 60-day notice in October, could severely impact Qualcomm’s operations.
The chip division is a substantial contributor to the company’s revenue, and its growth has outpaced that of the licensing segment. Without the architectural license, the company will face many difficulties regarding the sales of many new chip products.
As reported by Reuters in September, QUALCOMM (NASDAQ:QCOM) has been considering acquiring parts of Intel’s design business. This interest comes as Intel faces challenges in generating cash and seeks to divest certain segments. While specific details remain unconfirmed, sources indicate that the company is particularly focused on Intel’s client PC design division, among other potential design units.
Overall QCOM ranks 2nd on our list of the stocks in Jim Cramer’s latest game plan. While we acknowledge the potential of QCOM 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 QCOM 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.