We recently published a list of Jim Cramer Discussed These 6 Stocks Recently. In this article, we are going to take a look at where NVIDIA Corporation (NASDAQ:NVDA) stands against other stocks that Jim Cramer discussed.
On Tuesday, Jim Cramer, host of Mad Money, defended the growing wave of artificial intelligence investment, drawing a distinct line between this boom and previous capital expenditure surges. He argued that the AI movement stands apart from other booms driven by the private sector, largely because of the immense wealth backing it from Big Tech leaders. Cramer quipped:
“Bubble, bubble, bubble and you know how it just seeps into your consciousness? And that’s why I want to retire that word, instead talk about whether it’s a capital expenditure boom, one that might go bust. But it’s a boom. It’s not a bust.”
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Cramer highlighted that the economy has experienced many significant capital expenditure booms over time, noting that Deutsche Bank had recently published an impressive piece of research focused on these phenomena, examining both booms and busts.
The report from Deutsche Bank takes a look back at several major bubbles throughout history, including the explosive real estate market of the 20th century, as well as the dot-com and telecom booms, each of which culminated in significant losses. Yet, Cramer pointed out that not every capital expenditure boom ends in disaster. He cited various instances of successful themes that, despite their high risks, ultimately proved worthwhile. “These were fantastic themes, and no one ever called them bubbles,” he observed, adding that these movements, while capital-intensive, were largely initiated by government rather than the private sector. He added:
“This might be the boom that doesn’t go bust, because the players are so well capitalized. It simply doesn’t have to end that way…. But the bottom line: If you’re any of the hyper-competitive tech execs involved in the space race, you know what’s going on. You hate to lose and you won’t let it happen. After all, how do you think they got where they are in the first place?”
Our Methodology
For this article, we compiled a list of 6 stocks that were discussed by Jim Cramer during the episode of Mad Money aired on March 25. 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).
NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 223
NVIDIA Corporation (NASDAQ:NVDA) was mentioned as Cramer highlighted that while the private sector has historically relied on excessive debt and stock issuance for growth, today’s leading companies are financially strong and resemble well-funded nation states, with nearly unlimited resources, reducing their dependence on debt. He added:
“Lots of times I feel that it’s winner take all, losers take none but what if we’re looking at these generative AI platforms and agents in a way that’s too static, or maybe I am? What if there are so many uses once you build the thing that it’s stupid not to do so, which brings me to Jensen Huang, the CEO of NVIDIA, the biggest winner from the generative AI infrastructure build-out because only NVIDIA’s chips are strong enough, smart enough, and fast enough to develop things that we haven’t thought of yet, or things that sound like total science fiction.
NVIDIA chips will be vital to make these designs come to life and we don’t even know what those designs are yet… Believe me, owning NVIDIA’s become a heavy burden for me. It seems to be at the epicenter of the so-called bubble, which is now why it sells at just 26 times earnings. And by the way, that’s a true sign that people don’t believe anymore. NVIDIA’s current valuation basically says that Joe Tsai’s right, the bubble is about to pop.”
NVIDIA (NASDAQ:NVDA), known for its advancements in graphics, computing, and networking technologies, is seeing significant growth due to its GPUs and the CUDA software platform, both of which are important for AI infrastructure.
Overall, NVDA ranks 2nd on our list of stocks that Jim Cramer 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.
