We recently compiled a list of the Don’t Miss Out: Jim Cramer’s 10 Key Stocks to Watch. In this article, we are going to take a look at where QUALCOMM Incorporated (NASDAQ:QCOM) stands against Jim Cramer’s other key stocks to watch.
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.”
Unlocking Profit Potential with Lower Rates and AI
Jim Cramer stated that today’s market movements show it’s possible to navigate unpredictable conditions. He emphasized that we don’t need expert predictions to see that interest rates are likely to decrease, which is essential for maintaining a bull market. He advised against overthinking the situation and suggested focusing on profitable opportunities, particularly the growing importance 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.”
Cramer pointed out that while AI is generating excitement in the stock market, its impact on the broader economy has been limited. There are some practical applications, like cost savings in corporate back offices, but nothing particularly groundbreaking. This is why many analysts are starting to label the hype around AI as 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.”
Jim Cramer explained that AI, especially when combined with advanced computing from chipmakers, significantly speeds up processes and enables machines to act intelligently, similar to capable humans. He noted that businesses aim to create quality products for consumers, but a shortage of workers has become a major issue, particularly highlighted during the COVID pandemic. This has led to sales associates being too busy to engage effectively with customers, resulting in rushed and confusing interactions.
“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. Business wants 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?”
Transforming Customer Service with Superior AI Agents
Cramer pointed out that companies are pushing their employees hard to boost profits, which can create a stressful environment. However, after attending Marc Benioff’s keynote, he recognized the potential of a technology called Agent Force. This AI initiative can engage with customers politely, and efficiently answering common questions by using personalized data.
Cramer argued that AI is an ideal solution for customer service, as it can provide clear and friendly assistance without the frustrations that often come from human employees who are overwhelmed and eager to leave. AI agents can listen, reason, and either direct customers appropriately or handle their inquiries on their own.
“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 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.”
Jim Cramer explained that AI offers a better experience than what we currently have. For instance, in retail, AI knows customer preferences, helps with returns, and suggests alternatives based on previous purchases, reducing the need to deal with human salespeople who might be stressed or impatient. If customers are still unhappy, they can opt to talk to a human, but they might prefer the friendly interaction with the 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 added that AI’s potential extends beyond retail. He believes that in ten years, we might wonder why we relied on doctors when AI agents could provide kinder, more empathetic care. These AI systems could analyze millions of test results, quickly identifying serious health issues like melanoma, heart disease, or kidney cancer, making it easier to spot dangerous patterns before they become serious problems. AI’s ability to compile and analyze data effectively is key to this advancement.
“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, Jim Cramer pointed out that self-driving cars are becoming more common and are significantly safer than human drivers since they don’t get distracted or impaired. He noted that AI can also handle tasks like proofreading and correcting errors without making mistakes. This efficiency allows 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 often perform better than humans in most situations. For repetitive tasks, he believes it’s preferable to interact with a courteous and efficient AI rather than a stressed or frustrated human who may not want to engage.
“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 summarizes Jim Cramer’s latest Morning Thoughts, highlighting ten key stocks he reviewed. We ranked them by hedge fund ownership, from the least to the 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).
A technician testing the latest 5G device, demonstrating the company’s commitment to innovation.
QUALCOMM Incorporated (NASDAQ:QCOM)
Number of Hedge Fund Investors: 100
Jim Cramer reported that JPMorgan has lowered its price target for QUALCOMM Incorporated (NASDAQ:QCOM) from $230 to $210 per share but maintained its buy rating. Analysts noted that QUALCOMM Incorporated (NASDAQ:QCOM) is likely to lose modem revenue as Apple continues to develop and source its mobile components.
“JPMorgan cut its Qualcomm price target to $210 per share from $230 but kept its buy rating. The analysts said, however, that Qualcomm is about to lose modem revenue as Club name Apple Inc. (NASDAQ:AAPL) continues efforts to make and source mobile components in-house.”
QUALCOMM Incorporated (NASDAQ:QCOM) is backed by strong earnings, its leadership in 5G technology, and growing opportunities in the automotive and IoT markets. In its latest quarterly report, QUALCOMM Incorporated (NASDAQ:QCOM) reported revenues of $8.45 billion for Q3 2023, fueled by high demand for smartphone chips and increased royalty income.
As a major player in the 5G market, QUALCOMM Incorporated (NASDAQ:QCOM) stands to benefit from the rapid global adoption of 5G technology, which is essential for smartphones and many connected devices. QUALCOMM Incorporated (NASDAQ:QCOM) is also expanding into the automotive sector with its Snapdragon platform for advanced driver assistance systems (ADAS) and connected vehicles, presenting significant growth opportunities.
Additionally, QUALCOMM Incorporated (NASDAQ:QCOM) is forming strategic partnerships with leading tech companies to enhance its market position and drive innovation. Recent announcements about new automotive partnerships and advancements in 5G technology underscore QUALCOMM Incorporated (NASDAQ:QCOM)’s commitment to future growth, supporting a strong bullish outlook on its prospects.
Aristotle Capital Value Equity Strategy stated the following regarding QUALCOMM Incorporated (NASDAQ:QCOM) in its Q2 2024 investor letter:
“QUALCOMM Incorporated (NASDAQ:QCOM), a leading wireless communications technology company, was the largest contributor for the quarter. After a period of weaker global demand for smartphones (driven by a slowdown in China) and elevated channel inventory, demand from Chinese handset manufacturers accelerated 40% year‐over‐year. More importantly, in our opinion, Qualcomm continues to execute on a previously identified catalyst of shifting its business mix beyond smartphones.
The company announced increased progress for its automotive and Internet of Things (IoT)solutions. Within auto, the increase in vehicle content has resulted in 35% year‐over‐year revenue growth, with a design win pipeline of ~$45 billion, keeping the company on track to achieving ~$4 billion in auto‐related revenues by 2026. In recent years, despite persistent threats of insourcing from large clients (most notably Apple), Qualcomm has been able to retain its high market share in handsets while simultaneously expanding in non‐smartphone devices.
We believe this progress is a testament to Qualcomm’s history of high (and productive) R&D spending, resulting in technological superiority. We believe Qualcomm’s technologies will continue to benefit as the world stays on a path toward a proliferation of connectivity between varying devices and as AI applications extend from the cloud to on‐device.”
Overall QCOM ranks 4th on our list of Jim Cramer’s key stocks to watch. While we acknowledge the potential of QCOM 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 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.
