Jim Cramer Says We Are at a ‘Moment of Confusion’ with NVIDIA (NVDA)

We recently published a list of Jim Cramer’s Top Picks: 10 Stocks to Buy and Sell. Since NVIDIA Corp (NASDAQ:NVDA) ranks 1st on the list, it deserves a deeper look.

Commenting on the aggressive rate cut by the Federal Reserve, Jim Cramer said in a latest program on CNBC that the “double” rate cut was needed for the economy and it would help the housing market, industrials and companies catering to the “less well-off” households.

“There really are two economies in this country. There is the one that needs lower interest rates because business is slowing and it’s harder to find a job and then there is one that says we don’t really care about where the stinking rates are. That’s who we can get a double rate cut today and still going lower.”

Cramer said he is currently in Silicon Valley and after talking to many companies, he feels tech companies do not care about interest rates since they are selling to businesses. Cramer said these technology companies are focused on innovation.

For this article, we picked 10 stocks Jim Cramer recently talked about during his latest programs on CNBC. With each company we have mentioned the number of hedge fund investors. 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).

NVIDIA Corp (NASDAQ:NVDA)

Number of Hedge Fund Investors: 179

Jim Cramer in a latest program on CNBC talked about what he called the “complication” around understanding NVIDIA Corp (NASDAQ:NVDA) technologies and plans.

Cramer said some people believe there is a “slowdown” around Nvidia, but he rejected that notion.

“That’s just not true. There is no slowdown. What there is is a complication,” Cramer said.

Cramer specifically read a sentence from a latest release from Oracle about the company’s partnership with NVIDIA Corp (NASDAQ:NVDA) to explain what is the complication:

“New AI supercomputer, the largest in the cloud, to deliver up to 131,072 NVIDIA GPUs to enable customers to build, train, and inference AI at scale.”

Cramer said this sentence went “over his head” and he is trying to understand what that means.

“We are now in the moment where NVIDIA Corp (NASDAQ:NVDA) is too hard for people to understand and we need Jensen to explain it… So I’d say we are at a moment of confusion with Nvidia, not a moment of slowdown,” Cramer added.

Nvidia’s declines after the latest quarterly results were more or less expected amid Blackwell delay reports confirmed by management. However, the delays were mainly due to a change in Blackwell GPU mask. That does not affect the main functional logic or design of the chip, according to analysts. While Blackwell has been delayed for a few months, it does not change the core growth thesis for Nvidia.

Nvidia is set to see huge growth on the back of the data center boom amid the AI wave.

At Nvidia’s GPU Technology Conference in March 2024, CEO Jensen Huang estimated annual spending on data center infrastructure at about $250 billion. Over the next decade, this could total between $1 trillion and $2 trillion, depending on how long this level of investment continues. During the same Q&A session, Bank of America’s Vivek Arya echoed this estimate, suggesting the total addressable market would fall in the $1-2 trillion range, particularly as countries invest in their own AI infrastructure. By the end of the decade, spending could be at the high end of that range.

Of course, Nvidia won’t dominate the entire $2 trillion opportunity, as it faces competition from companies like AMD and internally developed AI accelerators from Google, Amazon, and even Apple. Some analysts believe Nvidia’s data center market share between 2025 to 2029 will be over $950 billion—less than half of the total market—but still enough to make it the leader in the sector.

Ithaka US Growth Strategy stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its Q2 2024 investor letter:

“NVIDIA Corporation (NASDAQ:NVDA) is the market leader in visual computing through the production of high-performance graphics processing units (GPUs). The company targets four large and growing markets: Gaming, Professional Visualization, Data Center, and Automotive. NVIDIA’s products have the potential to lead and disrupt some of the most exciting areas of computing, including: data center acceleration, artifi cial intelligence (AI), machine learning, and autonomous driving. The reason for the stock’s appreciation in the quarter was twofold: First, the stock benefi ted from tremendous excitement surrounding the further development of generative AI and the likelihood this would necessitate the purchase of a large number of Nvidia’s products far into the future; Second, Nvidia posted another strong beat[1]and-raise quarter, where the company upped its F2Q25 revenue guidance above Street estimates, showcasing its dominant position in the buildout of today’s accelerated computing infrastructure.”

Overall, NVIDIA Corp (NASDAQ:NVDA) ranks 1st on Insider Monkey’s list titled Jim Cramer’s Top Picks: 10 Stocks to Buy and Sell. While we acknowledge the potential of NVIDIA Corp (NASDAQ:NVDA), 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 NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: Analyst Sees a New $25 Billion “Opportunity” for NVIDIA and Jim Cramer is Recommending These Stocks.

Disclosure: None. This article is originally published at Insider Monkey.