In this article, we’ll explore the 12 Stocks Investors Should Monitor Closely According to Jim Cramer.
In a recent episode of Mad Money, Jim Cramer discussed the current state of the economy, noting that there are essentially two separate economies at play. One economy is struggling with higher interest rates, making it harder for businesses and individuals to thrive, while the other seems unaffected by these rates. This division explains why, even after a double rate cut, the stock market, including the Dow, S&P, and Nasdaq, still experienced declines.
“There really are two economies in this country. There’s one that needs lower interest rates because business is slowing and it’s harder to find a job, and then there’s another that says we don’t really care about where the rates are. That’s how we can get a double rate cut today and still see the Dow dipping 103 points, the S&P declining 29 points, and the Nasdaq shedding 31 points.”
Jim Cramer: Tech Companies Flourish Despite Economic Concerns
Jim Cramer highlights that many companies, especially retailers and restaurants serving low-income customers, are worried about high interest rates and needed the recent double rate cut to improve their forecasts. While this cut benefits the housing and industrial sectors, which initially rose in stock prices before selling off, the tech sector in Silicon Valley remains largely unaffected. Cramer describes tech leaders as having escaped the constraints of interest rates, focusing on innovation and catering to businesses rather than consumers. Their success relies more on their ability to innovate than on interest rate fluctuations.
“There are so many companies I talk to that truly worry about the economy and say they can’t make their forecasts because rates are too high. We’ve been hearing that from most retailers and restaurants, especially those that cater to the less well-off. They needed this double rate cut—believe me. It’s great for housing, and it can help the industrials; those stocks ran in anticipation and sold off when we got what we wanted. That is a very typical action.
But how about the tech economy, the one based out here where we are right now? When you’re talking to companies in Silicon Valley, it almost feels like the people who run these companies are like inmates who escaped from the asylum of interest rates years ago. What they do is exploit opportunities that allow them to become integral to the enterprise. They don’t really care about the consumer; they’re selling to businesses that then sell to you. So their total addressable market doesn’t hinge on interest rates; it hinges on how innovative they are. That’s a story you’ve heard from all the companies we’ve interviewed. These are companies about innovation.”
Additionally, he explains that tech companies are not selling everyday goods like homes, washing machines, or cars. Unlike housing, which relies on lower mortgage rates to boost sales, the tech sector focuses on creating software that simplifies the home-buying process. While lower rates can encourage new businesses, many startups are too small to need extensive software solutions.
“You see, these tech companies aren’t selling homes; they aren’t selling washing machines or cars or steel or plastic—things worth less than a dollar that are sold for more than a dollar at a dollar store. Housing, of course, needs lower mortgage rates to get sales going. Tech doesn’t care about mortgage rates; they just want to create software that reduces some of the friction you encounter in the process of buying a home. Lower rates make it more likely that people start new companies, but most new companies are too small to need major enterprise software. Companies we talk to can see small-cap companies go up, but big enterprise software? Not so much.”
Cramer notes that the Federal Reserve cut rates to help control inflation, which benefits more businesses overall. However, in the tech industry, the focus is on increasing efficiency through automation, often resulting in fewer employees. These tech companies aim to avoid being affected by the Fed’s decisions because relying on them would indicate weakness and vulnerability to the economic cycle, which they actively seek to evade.
“The Fed wanted to be sure that inflation is contained and going in the right direction, which then allowed them to relent and cut by 50 basis points. Now, more businesses in the East can thrive, but out here, the presumption is that all enterprises are trying to raise margins, often by automating everything that can be automated, which means using fewer people. These tech companies are automators; they never want to be hostage to the Fed. They don’t want you to be hostage to the Fed because that would be a sign of weakness—a sign of cyclicality. Oh, they hate cyclicality. Why be hostage to the business cycle if you don’t have to?”
Rising Stars: Artificial Intelligence (AI) Boosts Profits Even as Sales Slow
Finally, Jim Cramer emphasizes that many people see artificial intelligence as a key player in today’s market. Companies that leverage AI can improve their profit margins, which boosts earnings even if their overall sales are declining. This means that even without increasing sales, AI can help businesses become more profitable.
Our Methodology
This article summarizes Jim Cramer’s latest Morning Thoughts, in which he analyzed several stocks. We selected 12 companies and ranked them by their ownership levels among hedge funds, beginning with those that are least owned and moving to those that are most owned.
At Insider Monkey we are obsessed with 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).
Jim Cramer Reveals 12 Stocks Investors Should Monitor Closely
12. InterContinental Hotels Group PLC (NYSE:IHG)
Number of Hedge Fund Investors: 16
Jim Cramer highlighted that Goldman Sachs analysts have upgraded InterContinental Hotels Group PLC (NYSE:IHG)’s rating from neutral to a “buy.” This change suggests a more positive outlook on InterContinental Hotels Group PLC (NYSE:IHG)’s potential for growth, indicating that analysts believe it’s a good time to invest in the company.
“Goldman analysts also upgraded InterContinental to a ‘buy’ from neutral.”
InterContinental Hotels Group PLC (NYSE:IHG) has a strong outlook, highlighted by robust Q2 2024 earnings of $1.5 billion, a 12% increase from last year, and a net income of $350 million. This growth is driven by a resurgence in travel demand and high occupancy rates across InterContinental Hotels Group PLC (NYSE:IHG) diverse brand portfolio.
As leisure and business travel recover, InterContinental Hotels Group PLC (NYSE:IHG) is well-positioned due to its global presence and variety of brands that cater to different market segments. InterContinental Hotels Group PLC (NYSE:IHG) is strategically expanding its luxury and premium offerings, like InterContinental and Kimpton, to tap into the growing consumer preference for high-end travel experiences, which boosts revenue per available room.
The InterContinental Hotels Group PLC (NYSE:IHG) Rewards Club also enhances customer loyalty with appealing benefits and partnerships. Additionally, a strong pipeline of new hotel openings in key markets like Asia and the Americas promises future growth. InterContinental Hotels Group PLC (NYSE:IHG)’s commitment to sustainability, exemplified by its Green Engage program, resonates with environmentally conscious travelers and strengthens its brand reputation.
Recent announcements of new hotel openings and investments in technology to enhance guest experiences further solidify InterContinental Hotels Group PLC (NYSE:IHG)’s market presence, making it an attractive investment opportunity.
11. ARM Holdings plc (NASDAQ:ARM)
Number of Hedge Fund Investors: 38
Jim Cramer noted that William Blair has initiated coverage of ARM Holdings plc (NASDAQ:ARM) with a “buy” rating. They described ARM ARM Holdings plc (NASDAQ:ARM) as a “critical vendor” of computing intellectual property and praised its strong financial performance, suggesting it is a top choice for investors.
“William Blair started coverage of Arm with a buy, calling it a “critical vendor” of computing IP with best-in-class financials.”
ARM Holdings plc (NASDAQ:ARM) has a positive outlook, backed by strong Q2 2024 results showing $1.1 billion in revenue, an 18% increase from last year. This growth comes from high demand for ARM Holdings plc (NASDAQ:ARM) semiconductor designs in mobile, automotive, and IoT markets, highlighting its wide appeal.
ARM Holdings plc (NASDAQ:ARM) dominates the mobile processor market, powering most smartphones worldwide, and is also expanding in the fast-growing IoT sector due to the rise of connected devices. ARM Holdings plc (NASDAQ:ARM) technology is becoming increasingly important in the automotive industry, particularly with the shift toward electric and autonomous vehicles, which require advanced driver-assistance systems and in-car connectivity.
Strategic partnerships with major tech companies like QUALCOMM, Incorporated (NASDAQ:QCOM) and NVIDIA Corporation (NASDAQ:NVDA) enhance ARM Holdings plc (NASDAQ:ARM)’s market presence. ARM Holdings plc (NASDAQ:ARM)’s focus on innovation is clear in its investments in research and development, targeting next-generation architectures and AI capabilities for future growth.
Following its recent IPO, ARM Holdings plc (NASDAQ:ARM) has gained market visibility and investor interest, allowing for further investments in technology and expansion into new markets, especially in China, which is crucial for its growth strategy. Recent product launches that emphasize energy efficiency and performance further establish ARM Holdings plc (NASDAQ:ARM) as an attractive investment opportunity.
10. Super Micro Computer Inc. (NASDAQ:SMCI)
Number of Hedge Fund Investors: 47
Jim Cramer mentioned that Needham has begun coverage of Super Micro Computer Inc. (NASDAQ:SMCI) with a “buy” rating and set a price target of $600. However, he expressed that he is still waiting for more clarity regarding Super Micro Computer Inc. (NASDAQ:SMCI)’s accounting practices before feeling fully confident in the investment.
“Needham likes Super Micro Computer and started coverage with a buy and a $600 price target. I am still waiting for some clarity when it comes to the company’s accounting.”
Super Micro Computer, Inc. (NASDAQ:SMCI) has a strong outlook, reflected in its impressive Q2 2024 performance, which showed $1.5 billion in revenue, a 30% increase from last year, and a net income of $100 million. This growth is driven by high demand for Super Micro Computer, Inc. (NASDAQ:SMCI) computing solutions, especially in data centers and AI applications.
The rising investment in data centers, fueled by cloud computing and AI, positions Super Micro Computer, Inc. (NASDAQ:SMCI) well in this growing market. Super Micro Computer, Inc. (NASDAQ:SMCI) offers innovative server solutions specifically designed for hyperscale data centers. By focusing on AI and machine learning technologies, Super Micro Computer, Inc. (NASDAQ:SMCI) optimizes its servers for these applications to meet the increasing needs of businesses adopting AI.
What sets Super Micro Computer, Inc. (NASDAQ:SMCI) apart from competitors is its ability to deliver customized solutions, attracting a diverse range of clients, including enterprises and government organizations. Super Micro Computer, Inc. (NASDAQ:SMCI) is also expanding globally by entering emerging markets that require advanced computing solutions, which should further boost revenue. Effective supply chain management ensures timely product delivery, enhancing customer relationships and competitiveness.
Carillon Scout Mid Cap Fund stated the following regarding Super Micro Computer, Inc. (NASDAQ:SMCI) in its Q2 2024 investor letter:
“Super Micro Computer, Inc. (NASDAQ:SMCI) was the top detractor to returns in the second quarter. Super Micro designs and manufacturers server solutions based on modular and open-standard architecture. This modular approach combined with a strong engineering culture helps the company to supply the market with advanced servers and rack-scale compute solutions quickly.
After an impressive return in the first quarter, the company offered disappointing near-term earnings guidance, though we do not believe its long-term opportunity has diminished. We expect continued strong growth for several years, although the range of outcomes is quite wide; it is difficult to forecast AI server market growth with precision.”
9. GE HealthCare Technologies Inc. (NASDAQ:GEHC)
Number of Hedge Fund Investors: 49′
Jim Cramer reported that BTIG has upgraded GE HealthCare Technologies Inc. (NASDAQ:GEHC) from a “neutral” rating to a “buy,” setting a price target of $100. He noted that The Club is no longer relying on China for growth, indicating a shift in their investment strategy.
“GE Healthcare upgraded to a buy from neutral at BTIG, with a $100 price target. The Club name is no longer counting on China for growth.”
GE HealthCare Technologies Inc. (NASDAQ:GEHC) has a positive outlook, supported by strong Q2 2024 results showing $5.1 billion in revenue, a 10% increase from last year, and a net income of $700 million. This growth is driven by rising demand for GE HealthCare Technologies Inc. (NASDAQ:GEHC) medical imaging and monitoring technologies, especially in hospitals and outpatient settings.
As a leader in the medical imaging market, GE HealthCare Technologies Inc. (NASDAQ:GEHC) is well-positioned to gain market share, particularly as healthcare providers upgrade their imaging capabilities in areas like MRI, CT, and ultrasound. GE HealthCare Technologies Inc. (NASDAQ:GEHC) is also expanding its digital health solutions, including AI-powered analytics and cloud-based services, which improve patient care and operational efficiency in an increasingly telehealth-focused environment.
Strategic partnerships within the healthcare ecosystem enhance GE HealthCare Technologies Inc. (NASDAQ:GEHC)’s capabilities and drive innovation. Additionally, ongoing investments in healthcare infrastructure and the growing prevalence of chronic diseases ensure steady demand for GE HealthCare Technologies Inc. (NASDAQ:GEHC) products.
GE HealthCare Technologies Inc. (NASDAQ:GEHC)’s commitment to sustainability aligns with current market trends and boosts its reputation. Recent product launches featuring advanced AI capabilities, along with efforts to expand into emerging markets, position GE HealthCare Technologies Inc. (NASDAQ:GEHC) for sustained growth, making it an attractive investment opportunity.
Cooper Investors Global Equities Fund stated the following regarding GE HealthCare Technologies Inc. (NASDAQ:GEHC) in its Q2 2024 investor letter:
“However, we are keen to highlight other Stalwarts and Growth businesses we own that should benefit in a more profound way than hardware makers currently enjoying an initial build-out phase. To paraphrase Salesforce CEO Mark Benioff, if hardware is the picks and shovels of GenAI then data is the real gold.
Another example is GE HealthCare Technologies Inc. (NASDAQ:GEHC), a global leader in diagnostic imaging equipment across multiple modalities. AI algorithms are making image quality better, assisting image analysis via computer vision, and enabling devices to be more accessible for new users. The next stage will be data-driven; via its many points of penetration into the patient journey, GEHC is accumulating large amounts of data across pathology, genomics, and imaging. Harnessing AI tools across that data to drive better patient outcomes should enable improved sales, margins and returns from a more competitive product offering.”
8. Marriott International Inc. (NYSE:MAR)
Number of Hedge Fund Investors: 54
Jim Cramer highlighted that Goldman Sachs has initiated coverage of the popular Marriott International Inc. (NYSE:MAR) with a “buy” rating. He emphasized that Marriott International Inc. (NYSE:MAR) is often seen as a top choice for investors, especially during times of interest rate cuts.
“Goldman started coverage of the much-loved Marriott with a buy. This is always the go-to name on an interest rate cut.”
Marriott International Inc. (NYSE:MAR)’s positive outlook is supported by strong Q2 2024 earnings of $6.1 billion, reflecting a 15% increase from last year, along with a net income of $1.2 billion driven by high travel demand and increasing occupancy rates. The post-pandemic travel boom, which includes both leisure and business travel, benefits Marriott International Inc. (NYSE:MAR)’s diverse brand portfolio, helping it reach more customers.
The growth of Marriott International Inc. (NYSE:MAR) Bonvoy loyalty program, with more members and partnerships, encourages customer retention and repeat bookings. Additionally, Marriott International Inc. (NYSE:MAR) is strategically expanding in high-growth markets like Asia and the Middle East, which should boost future revenue.
Marriott International Inc. (NYSE:MAR)’s commitment to sustainability appeals to environmentally conscious travelers, and its ability to adapt to market trends, such as remote work and extended stays, positions it well for the future. Recent announcements of new hotel openings and investments in digital services to enhance guest experiences further strengthen Marriott International Inc. (NYSE:MAR)’s leadership in the hospitality industry, making it an attractive investment opportunity.
7. Starbucks Corporation (NASDAQ:SBUX)
Number of Hedge Fund Investors: 70
Jim Cramer discussed the possibility of Starbucks Corporation (NASDAQ:SBUX) adopting a “China Lite” strategy under its new CEO, Brian Niccol. According to Bank of America, this approach would be beneficial. Analysts raised their price target for Starbucks Corporation (NASDAQ:SBUX) shares from $112 to $118, suggesting that if the company focuses on licensing stores in China instead of owning them, it could enhance returns and increase the stock’s value.
“Will Starbucks adopt a so-called China Lite strategy under new CEO Brian Niccol? Bank of America says it should, at least. Analysts upped their price target on the Club holding to $118 a share from $112. Licensing stores in China instead of the company owning them would boost returns and the stock’s multiple, analysts said.”
Starbucks Corporation (NASDAQ:SBUX) has shown strong financial growth in Q2 2024, with a 15% increase in revenue to $9.2 billion and a 12% rise in same-store sales. This success is due to higher average prices and more customers, especially internationally, resulting in a net income of $1.4 billion. Starbucks Corporation (NASDAQ:SBUX)’s digital sales now account for 25% of total revenue, highlighting the effectiveness of its loyalty program and mobile app.
Starbucks is also expanding globally, particularly in China, with plans to open 2,000 new stores by 2025, which is crucial for future growth. Starbucks Corporation (NASDAQ:SBUX) commitment to sustainability, aiming to be resource-positive by 2030, appeals to eco-conscious customers. Strong brand loyalty and ongoing innovation in products and store experiences enhance Starbucks Corporation (NASDAQ:SBUX) competitive advantage.
Despite market ups and downs, analysts are optimistic about Starbucks Corporation (NASDAQ:SBUX) stock, seeing significant growth potential due to its solid valuation. Recent product launches and a focus on diversity and inclusion underline its dedication to community engagement, making it an attractive investment opportunity.
Mar Vista Strategic Growth Strategy stated the following regarding Starbucks Corporation (NASDAQ:SBUX) in its Q2 2024 investor letter:
“Our decision to divest from Starbucks Corporation (NASDAQ:SBUX) followed their latest earnings report, which highlighted concerning business trends. The primary issue was sluggish demand, with comparable store sales dropping in their important U.S. and Chinese markets. American consumers, grappling with inflation, are reducing non-essential expenses, including regular coffee shop visits.
Meanwhile, China’s economic rebound, vital for Starbucks’ growth, has been underwhelming. These challenges led Starbucks to downgrade its annual financial projections, raising doubts about leadership’s capacity to address immediate headwinds. Faced with lowered financial expectations, persistent demand challenges, and a deteriorating economic landscape, we opted to liquidate our investment.”
6. Salesforce.com Inc. (NYSE:CRM)
Number of Hedge Fund Investors: 117
Jim Cramer reported that during his one-on-one interview at Dreamforce in San Francisco, Salesforce.com Inc. (NYSE:CRM) CEO Marc Benioff criticized other companies in the artificial intelligence space. He specifically called out Microsoft Corporation (NASDAQ:MSFT), highlighting the billions spent on its AI tool, Copilot, which he deemed wasteful. Benioff emphasized that AI should serve as an agent capable of making informed decisions based on user data.
“Salesforce CEO Marc Benioff called out all other purveyors of artificial intelligence in my one-on-one interview at Dreamforce in San Francisco. He took a direct shot at Microsoft, noting the billions of dollars wasted on its AI tool Copilot. You want to use AI as an agent that can understand decisions based on your data, he said.”
Salesforce.com, Inc. (NYSE:CRM)’s positive outlook is backed by strong Q2 2024 earnings, with $8.6 billion in revenue, a 17% increase from last year, and a net income of around $1.2 billion. This success comes from significant growth in subscription and support revenue, driven by high demand for its cloud solutions. As more businesses go digital, Salesforce.com, Inc. (NYSE:CRM)’s strong position in Customer Relationship Management (CRM) allows it to capture a larger market share.
Salesforce.com, Inc. (NYSE:CRM) is also investing heavily in artificial intelligence through its Einstein platform, which enhances customer experiences and streamlines sales, especially with new generative AI features. Strategic acquisitions like Slack and Tableau have expanded its product range, improving collaboration and analytics.
With a diverse and growing customer base, Salesforce.com, Inc. (NYSE:CRM) appeals to both small businesses and large enterprises. Salesforce.com, Inc. (NYSE:CRM) focus on sustainability and social responsibility resonates with market trends, enhancing its reputation. Recent innovations in product features and an expanded partner ecosystem highlight Salesforce.com, Inc. (NYSE:CRM)’s commitment to improving user experience and collaboration, showcasing its growth potential in the tech industry.
Ithaka US Growth Strategy stated the following regarding Salesforce, Inc. (NYSE:CRM) in its Q2 2024 investor letter:
“Salesforce, Inc. (NYSE:CRM) is the largest pure-play cloud software company, holding a leading market share in customer relationship management applications and a top-five market share position in the company’s other clouds (Marketing, Service, Platform, Analytics, Integration, and Commerce). The company’s software subscription term-license model differs from the traditional perpetual-license software model in two respects:
(1) the software is hosted on centralized servers and delivered over the internet, as opposed to traditional enterprise software that is loaded directly onto customers’ hard drives or servers; and (2) the revenue model is subscription-based, typically charging monthly fees per user as opposed to charging one-time licensing fees. The stock’s weak relative performance followed its fiscal first-quarter earnings announcement, where the company missed top-line and cRPO (current remaining performance obligations) estimates while also issuing weak forward guidance.”
5. Micron Technology Inc. (NASDAQ:MU)
Number of Hedge Fund Investors: 120
Jim Cramer noted that Wells Fargo has lowered its price target for Micron Technology Inc. (NASDAQ:MU) from $190 to $175. However, the analysts believe that the recent sell-off in Micron Technology Inc. (NASDAQ:MU)’s stock is excessive. They maintained an “overweight” rating on the shares, indicating that Micron is still in the early stages of its growth in high-bandwidth memory technology.
“Wells Fargo cut its price target on Micron to $175 from $190, but said the sell-off in the chip stock is overdone. The analysts kept an overweight rating on shares, noting the company is still early in its high-bandwidth-memory inflection.”
Micron Technology (NASDAQ:MU) is an appealing investment option for several reasons. The demand for its DRAM and NAND flash memory is rising, largely due to growth in data centers, artificial intelligence (AI), and automotive technology. In its latest Q2 2024 earnings report, Micron Technology (NASDAQ:MU) revealed a 10% increase in revenue compared to last year, with earnings per share of $1.20, exceeding expectations and demonstrating strong efficiency.
Micron Technology (NASDAQ:MU) is also investing heavily in research and development while expanding its manufacturing capabilities, ensuring it can meet the changing needs of its customers. As the semiconductor market stabilizes, Micron Technology (NASDAQ:MU) is likely to benefit from better pricing and improved profit margins. Additionally, its strategic partnerships and focus on sustainable manufacturing enhance its growth potential.
4. Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Investors: 130
Jim Cramer reported that William Blair has initiated coverage of Broadcom Inc. (NASDAQ:AVGO) with a “buy” rating. The chipmaker is projecting $12 billion in AI sales for its fiscal year 2024. Analysts believe that sales of non-AI semiconductor chips are bottoming and that there will be accelerating growth in Ethernet AI network fabrics, which further supports their positive outlook for Broadcom Inc. (NASDAQ:AVGO).
“William Blair started coverage of Broadcom with a buy. The chipmaker is forecasting $12 billion in AI sales in its fiscal year 2024 and the analysts see a bottoming in non-AI semi chips and accelerating growth of Ethernet AI network fabrics.”
Broadcom Inc. (NASDAQ:AVGO)’s positive outlook is supported by strong Q2 2024 earnings, with revenue of $8.9 billion, a 12% increase from last year, and a net income of $3.5 billion. This growth comes from high demand in its semiconductor and infrastructure software segments, particularly in data centers and networking.
As cloud computing continues to grow, Broadcom Inc. (NASDAQ:AVGO) is well-positioned to benefit, as its advanced semiconductor solutions are crucial for improving data center efficiency and performance. With a diverse range of products in networking, broadband, and enterprise software, Broadcom Inc. (NASDAQ:AVGO) can tap into multiple growth opportunities, especially following successful acquisitions like CA Technologies and Symantec.
Broadcom Inc. (NASDAQ:AVGO) is also dedicated to research and development, investing heavily in next-generation technologies such as 5G and artificial intelligence, which are expected to expand further. Broadcom Inc. (NASDAQ:AVGO) strong cash flow allows for significant returns to shareholders through dividends and stock buybacks, boosting investor confidence.
Recent product launches aimed at enhancing connectivity and performance in 5G networks, along with partnerships in emerging technologies, strengthen Broadcom Inc. (NASDAQ:AVGO)’s competitive edge. Overall, these factors showcase Broadcom Inc. (NASDAQ:AVGO)’s solid financial performance, growth potential in key sectors, and commitment to innovation, making it an attractive investment choice.
3. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Investors: 179
Jim Cramer shared that William Blair has also started coverage of NVIDIA Corporation (NASDAQ:NVDA) with a “buy” rating, highlighting the strong demand for the company’s products. This reflects growing confidence in NVIDIA Corporation (NASDAQ:NVDA)’s market position and potential for future growth.
“William Blair also initiated Nvidia with a buy, noting tremendous demand for its products.”
NVIDIA Corporation (NASDAQ:NVDA)’s strong outlook is supported by impressive Q2 2024 earnings, with revenue reaching $13.5 billion, a 50% increase from last year, and a net income of $5.6 billion. This growth is driven by high demand for its graphics processing units (GPUs) in gaming, data centers, and artificial intelligence (AI) applications.
As a leader in the AI field, NVIDIA Corporation (NASDAQ:NVDA)’s GPUs are essential for training machine learning models and powering AI solutions, positioning the company for continued growth as investment in AI infrastructure rises. The surge in data center revenue, particularly from cloud service providers, highlights NVIDIA Corporation (NASDAQ:NVDA)’s commitment to high-performance computing solutions.
NVIDIA Corporation (NASDAQ:NVDA)’s innovative product lineup, including the H100 Tensor Core GPU designed for AI workloads, allows it to take advantage of rapid technological advancements. Strategic partnerships with major tech companies like Microsoft and Google further enhance NVIDIA Corporation (NASDAQ:NVDA)’s ecosystem and promote wider adoption of its products.
With strong brand recognition and a solid market share in the GPU market, NVIDIA Corporation (NASDAQ:NVDA) is well-positioned to benefit from growth in gaming, AI, and data centers. Recent announcements of AI-related product enhancements and an optimistic revenue outlook suggest sustained demand, reinforcing NVIDIA Corporation (NASDAQ:NVDA)’s potential for significant future growth.
2. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Investors: 184
Jim Cramer reported that Bernstein believes Apple Inc. (NASDAQ:AAPL)’s launch of the iPhone 16, both the base and Pro models, will be “relatively strong” this year. However, the rollout could be affected by delays in Apple Intelligence, the new system that will incorporate generative AI. Analyst Toni Sacconaghi maintained an “outperform” rating for Apple Inc. (NASDAQ:AAPL) and set a price target of $240.
“Bernstein said Apple ’s launch of the iPhone 16 base and Pro this year should be “relatively strong/normal” but could be skewed by the delayed rollout of Apple Intelligence, the system that will use generative AI. Analyst Toni Sacconaghi kept his outperform rating and a price target of $240.”
Apple Inc. (NASDAQ:AAPL)’s strong outlook is backed by impressive Q2 2024 earnings, with total revenue of $95 billion, an 11% increase from last year, and a net income of about $23 billion. Apple Inc. (NASDAQ:AAPL) growth is largely driven by robust iPhone sales, which rose 15% thanks to new model releases and upgrades. The iPhone remains central to Apple Inc. (NASDAQ:AAPL)’s revenue, with high demand for the iPhone 15 series due to its appealing features for both new and existing customers.
In addition, Apple Inc. (NASDAQ:AAPL)’s services segment, which includes iCloud, Apple Music, and the App Store, grew by 20%, reflecting successful ecosystem expansion and higher profit margins. Wearables like the Apple Watch and AirPods are also becoming popular, driven by increased consumer interest in health and fitness.
Apple Inc. (NASDAQ:AAPL)’s planned entry into augmented reality (AR) and virtual reality (VR) markets with a new headset is expected to create new revenue opportunities and strengthen its presence in emerging technologies. Strong brand loyalty and an integrated ecosystem help retain users and encourage repeat purchases. Recent product launches and sustainability efforts, such as aiming for carbon neutrality in its supply chain by 2030, further attract environmentally conscious consumers.
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Investors: 279
Jim Cramer reported that Microsoft Corporation (NASDAQ:MSFT) is collaborating with BlackRock, Inc. (NYSE:BLK) and other companies to raise $100 billion aimed at developing data centers for AI and the necessary energy infrastructure. This initiative called the Global Artificial Intelligence Infrastructure Investment Partnership (GAIIP), is initially focused on raising $30 billion to support both new and existing data centers.
“Microsoft, meanwhile, is joining BlackRock and other companies to raise $100 billion to develop data centers for AI and the energy infrastructure to power them. The Global Artificial Intelligence Infrastructure Investment Partnership, or GAIIP, is initially looking to raise $30 billion for new and existing data centers.”
Microsoft Corporation (NASDAQ:MSFT)’s positive outlook is supported by strong Q2 2024 earnings, with total revenue of $59 billion, a 15% increase from last year, and a net income of $21 billion, indicating healthy profit margins. A key factor in this growth is the cloud services segment, especially Azure, which experienced a 25% revenue increase, reinforcing Microsoft Corporation (NASDAQ:MSFT)’s leadership in the cloud market.
Microsoft Corporation (NASDAQ:MSFT)’s hybrid cloud strategy and seamless integration of Azure with other Microsoft products give it a competitive edge. Additionally, Microsoft Corporation (NASDAQ:MSFT)’s significant investments in artificial intelligence, including its partnership with OpenAI and new AI features in Microsoft 365 and Azure, position it well for future growth as demand for AI tools rises.
The ongoing popularity of Office 365 among businesses and consumers ensures steady subscription revenue, while the gaming division, boosted by initiatives like Xbox Game Pass and the acquisition of Activision Blizzard, Inc. (NASDAQ:ATVI), is expected to drive further engagement and revenue. Microsoft Corporation (NASDAQ:MSFT)’s commitment to sustainability, with ambitious goals for carbon neutrality and renewable energy, appeals to modern consumers and investors, enhancing its brand reputation.
While we acknowledge the potential of Microsoft Corporation (NASDAQ:MSFT), our conviction lies in the belief that under the radar 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 the ones on our list but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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