We recently compiled a list of the Jim Cramer’s Top 12 Must-Watch Stocks. In this article, we are going to take a look at where Equity Residential (NYSE:EQR) stands against Jim Cramer’s other must-watch stocks.
In a recent episode of Mad Money, Jim Cramer traveled to Dreamforce to understand the true capabilities of artificial intelligence (AI) and to separate fact from hype. After diving deep into the topic, he feels more equipped to identify which AI claims are genuine and which are simply marketing fluff. He noted that there seems to be far more misleading information than real advancements.
“All right, I had to come all the way out here to Dreamforce, the Salesforce Tech Festival, to learn what artificial intelligence is really capable of and what’s pure hype. After immersing myself in AI, I feel a lot more confident in sorting out the real from the phony. And you know what? There’s a hell of a lot more phony than there is real. That’s why I want to show you which AI claims are meaningless and which ones are legit.
Look, I know this is Mad Money, not Mad AI. On a day like today, I could just focus on the Fed and only the Fed, whether we’ll get a quarter percent rate hike or maybe a half percent rate tomorrow. Today, the averages whipped around, finishing off 16 points, the S&P ending up 0.3%, and the NASDAQ inching up 2%. Stocks were all over the place.”
Maximizing Profit Potential Through Lower Rates and AI Innovation
Cramer emphasized that we don’t need expert predictions to see that interest rates are likely to drop, which is crucial for sustaining a bull market. He urged viewers not to overthink the situation and instead focus on promising opportunities, especially in the rapidly growing field of artificial intelligence.
“Today is proof that you can game the ungameable. But you don’t need a San Francisco weatherman to know which way the wind blows. In the end, we know rates are headed lower, not higher, and that’s what we need to sustain this bull market. Please do not overthink it. I’d rather focus on what can help us make some money, like the biggest theme in the world right now: artificial intelligence.”
While AI is causing excitement in the stock market, Cramer observed that its impact on the overall economy has been minimal so far. Some applications, like cost savings in corporate back offices, exist, but they aren’t groundbreaking. This lack of significant progress has led many analysts to suggest that the hype around AI may be turning into a bubble.
“Specifically, what does AI actually do? We’ve heard so much about this technology and how it’s going to revolutionize everything. Right now, though, we know that while AI has taken the stock market by storm, it really hasn’t taken the actual economy by storm. There are use cases, sure, back office corporate cost savings—nothing flashy. That’s why so many commentators now come on air and call the whole thing a bubble.”
Cramer explained that AI, particularly when paired with advanced computing from chip giants, can greatly enhance efficiency by allowing machines to perform tasks intelligently, similar to skilled humans. He pointed out that businesses strive to produce quality products, but a worker shortage, exacerbated by the COVID pandemic, has hindered their ability to connect with customers effectively. Sales associates often end up rushed and confused, which affects the customer experience.
“Let me tell you what AI really does. When coupled with accelerated computing, AI makes everything go faster. It rationalizes processes and can make machines behave like smart, good humans. Businesses want to produce good products and sell them to real people, whether for enterprises or homes—that’s capitalism 101. But right now, we don’t have enough workers to do it.
That became apparent during COVID. We can’t interact effectively because our sales associates are too busy to be anything but brisk or confused. They’re harried from the moment they come in to the moment they leave. It’s a late-stage capitalist directive. What can I say? What doctor has time to talk to you? What nurse practitioner can give you the time of day?”
Elevating Customer Service Through Advanced AI Agents
Cramer highlighted that companies are pushing their employees hard for profits, creating a stressful work environment. However, after attending Marc Benioff’s keynote, Cramer recognized the potential of a technology called Agent Force. This AI initiative can engage customers in a friendly manner, using personalized data to answer common questions efficiently.
Cramer believes AI is a great solution for customer service, offering clear assistance without the frustrations that often come from overwhelmed human employees. AI agents can listen, reason, and either direct customers appropriately or handle their inquiries independently.
“Companies are already squeezing as much as they can out of their employees to boost stock prices and profits for executives. Then it hit me while watching Marc Benioff’s incredible keynote today. He described an initiative called Agent Force, and I realized what this technology can really do. It has time for you, acknowledges you, and is polite. It can almost always answer your questions because there are only so many that get asked regularly, and it has the data to respond to your data. It knows your preferences.
This is the perfect way to handle customer interactions instead of relying on humans who can be unclear, impatient, or exhausted. Humans are, well, human, harried and ready to go home. But machines infused with AI are delightful, smart, and engaging. They don’t mind going to work, and that’s where these AI agents come in. The machines can listen, reason, and either direct you to the right place or handle everything themselves.”
He further explained that AI enhances customer experiences by remembering preferences, helping with returns, and suggesting alternatives based on past purchases. This reduces the need for interaction with human salespeople who may be stressed or impatient. If customers remain unsatisfied, they still have the option to speak to a human, but many might prefer friendly interaction with an AI agent.
“So, what AI really is and what it does is provide us with something better than what we currently have. It’s a retailer that knows all about your preferences, can help you return an item, and asks if you want something different from what you bought last time. It frees you from the hassle of a human salesperson who might be frustrated or upset. And if you’re not satisfied, you can still speak to a human if you want to, but I doubt you will, because the AI agent is just so much more pleasant.”
Revolutionizing Everyday Life: How AI Outperforms Humans in Healthcare, Driving, and Beyond
Cramer also predicted that in ten years, people might wonder why they relied on human doctors when AI could provide more compassionate and effective care. These AI systems could analyze vast amounts of medical data to quickly identify serious health issues, making it easier to catch dangerous patterns before they escalate.
“It’s not just retail. In ten years, I think we’ll wonder why we ever wasted a doctor’s time when AI agents were so much better, kinder, and more empathetic. Doctors could analyze millions of test results that might have taken a decade to sort through, identifying dangerous patterns well before they become problematic, like melanoma, heart disease, or kidney cancer. It’s all in the data, and only AI can compile it in an accessible way.”
Additionally, Cramer noted that self-driving cars are becoming more common and are significantly safer than human drivers since they don’t get distracted or impaired. He mentioned that AI can handle tasks like proofreading without making mistakes, allowing law firms to operate with fewer associates.
“We see self-driving cars everywhere. They’re much safer than human drivers. They don’t drink and drive, they don’t even drink. An AI agent can proofread, correct, and never make a mistake. Law firms can now hire half as many associates because of this efficiency”
Finally, Cramer emphasized that AI agents generally outperform humans in most scenarios. For repetitive tasks, he believes it’s preferable to engage with a courteous and efficient AI rather than a stressed human who may not want to help.
“The bottom line is that if you let the AI agent do its job, it will outperform humans in the vast majority of cases. And for repetitive tasks, trust me: you’d much rather have a polite and friendly AI agent than a harried, angry, or exhausted human who really doesn’t want to deal with you.”
Our Methodology
This article provides a summary of Jim Cramer’s latest episode of Mad Money, where he reviewed several stocks. We picked 12 companies and ranked them based on how much they are owned by hedge funds, starting with the ones 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).
An exterior shot of a newly acquired apartment building, signifying the company’s acquisition of large residential properties.
Equity Residential (NYSE:EQR)
Number of Hedge Fund Investors: 30
Jim Cramer described Equity Residential (NYSE:EQR) as a fantastic stock, highlighting that it still offers a yield of about 3%. He acknowledged its significant gains but emphasized the ongoing housing shortage and Equity Residential (NYSE:EQR)’s extensive portfolio of apartment complexes, making it a strong investment choice.
“Total winner! Equity Residential is just an amazing stock. It still yields about 3%, and you can still make money on it. I know it’s up huge, but talk about a shortage in housing and apartment complexes, they’ve got them all!”
A promising report for Equity Residential (NYSE:EQR) is based on its solid fundamentals, favorable market conditions, and strategic efforts in the multifamily housing sector. Equity Residential (NYSE:EQR) operates in key urban areas where demand for rental housing is strong, driven by growing populations, a trend toward urban living, and challenges in homeownership affordability.
In its recent Q2 2024 earnings report, Equity Residential (NYSE:EQR)l announced revenues of $505 million, a year-over-year increase, and a funds from operations (FFO) per share of $0.85, which surpassed analyst expectations, indicating solid performance. Equity Residential (NYSE:EQR)consistently achieves rent growth and high occupancy rates, allowing it to benefit from strong apartment demand.
Equity Residential (NYSE:EQR) also focuses on enhancing tenant experiences through property upgrades and sustainability initiatives, which help retain tenants and attract environmentally conscious renters. As the multifamily rental market continues to thrive due to job growth and urbanization, Equity Residential (NYSE:EQR)’s strategic presence in high-demand cities like New York, San Francisco, and Washington, D.C. supports its growth potential. Recent acquisitions and partnerships to improve property management further enhance Equity Residential (NYSE:EQR)’s positive outlook.
Baron Real Estate Fund stated the following regarding Equity Residential (NYSE:EQR) in its Q2 2024 investor letter:
“In the second quarter, the shares of Equity Residential (NYSE:EQR), the largest U.S. multi-family REIT, appreciated due to continued strong operating updates, an improved full-year growth outlook, and faster-than-expected improvement in the company’s West Coast markets. Management has assembled an excellent portfolio of Class A apartment buildings located in high barrier-to-entry coastal markets with favorable long-term demographic trends and muted overall supply growth. Please see the “Top net purchases” for further thoughts on the company.
In the second quarter, we increased the Fund’s REIT exposure to best-in-class multi-family owners/operators Equity Residential and AvalonBay Communities, Inc. Our meetings with each management team supported our view that both companies are led by astute executives that are highly focused on driving value creation for shareholders…” (Click here to read the full text)
Overall EQR ranks 10th on our list of Jim Cramer’s must-watch stocks. While we acknowledge the potential of EQR as an investment, 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 EQR 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.