We recently compiled a list of the Jim Cramer Talked About These 9 Nuclear Power and Quantum Computing Stocks. In this article, we are going to take a look at where GE Vernova Inc. (NYSE:GEV) stands against the other nuclear power and quantum computing stocks.
Jim Cramer, host of Mad Money, recently cautioned investors about the risks of speculating in sectors like nuclear power and quantum computing, suggesting it could take a long time before these fields generate meaningful returns. While Cramer acknowledged the optimism that accompanies the start of each new year, he pointed out that sometimes the enthusiasm surrounding certain industries is misplaced.
“This year, I see two themes that I want to caution people about: nuclear power and quantum computing. Both have promise, someday, but that day is not, just not near enough to justify the current valuations for these stocks.”
He clarified that while he does not view quantum computing as a hoax, he considers the current expectations surrounding the technology to be overly ambitious. The market, according to Cramer, is setting a low bar for progress in this area.
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“Look, I believe in nuclear power, but when GE Vernova, the company that arguably has the most to gain from it, says discouraging things about an uptick in commercial nuclear power coming any time soon, when quantum computing seems very much in its infancy, well, I fear people will get hurt speculating on even the biggest companies, let alone the smaller ones.”
The outlook for quantum computing became more uncertain last week when Nvidia CEO Jensen Huang stated that “very useful” quantum computers are at least a decade away. During a Q&A at Nvidia’s Consumer Electronics Show Financial Analyst event, Huang suggested that 15 years might be an optimistic estimate, while 30 years could be more realistic. This timeline left little room for optimism among investors who had hoped for quicker breakthroughs.
Cramer acknowledged the speculative nature of these sectors but advised investors to be cautious and realistic about the potential for short-term gains.
“You can speculate of course, but please understand that, like at all New Years, the animal spirits are in play for a few stocks and I don’t want you to be trampled by wayward bulls with visions of riches in front of their greedy eyes. You own Rigetti?… Take some gains and then go out and buy yourself a nice cashmere sweater.”
Our Methodology
For this article, we compiled a list of 9 stocks that were discussed by Jim Cramer during the episode of Mad Money on January 2. We listed the stocks in ascending order of their hedge fund sentiment as of the third quarter, which was taken from Insider Monkey’s database of 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).
An aerial view of a nuclear plant, its domes casting a unique shadow.
GE Vernova Inc. (NYSE:GEV)
Number of Hedge Fund Holders: 89
Cramer discussed how GE Vernova Inc. (NYSE:GEV), despite being “the most important builder of nuclear plants”, is bearish about the near-term prospects of the technology.
“I will say that the most important builder of nuclear plants in this country, GE Vernova is about as bearish as the promoters are bullish. I’ve tried to coax CEO Scott Strazik to be more positive on the prospects, but he won’t. After all the engineering hurdles, cost overruns, and balance sheet damage associated with his plants, he doesn’t expect anything commercially viable for about a decade so I don’t think you wanna be in any of these nuclear stocks for too long.”
GE Vernova (NYSE:GEV) operates as an energy company and is positioning itself as a key player in the nuclear energy space. CEO Scott Strazik recently spoke about the company’s approach to nuclear energy during its last earnings call, highlighting both existing infrastructure and future growth opportunities.
Strazik noted that the company’s equipment is already installed in 65 nuclear plants in the United States alone. He pointed out that upgrades to these existing plants could add up to 3 gigawatts of additional nuclear capacity. As the nuclear power industry looks ahead to the 2030s, Strazik expressed optimism, stating that the sector is poised to add substantial capacity, with a focus on validating and advancing the technology over the next decade.
Furthermore, GE Vernova (NYSE:GEV) is targeting substantial growth in the small reactor market. According to CNBC, the company aims to generate more than $2 billion in annual revenue from small reactors by the mid-2030s. The company projects a demand for up to 57 small reactors across its target markets, including the U.S., Canada, the United Kingdom, and Europe, by 2035.
Overall GEV ranks 3rd on our list of the nuclear power and quantum computing stocks Jim Cramer recently talked about. While we acknowledge the potential of GEV 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 GEV 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.