Jim Cramer’s 10 Handpicked Stocks to Watch

4. NVIDIA Corporation (NASDAQ:NVDA)

Number of Hedge Fund Investors: 179

Jim Cramer addressed concerns about NVIDIA Corporation (NASDAQ:NVDA)’s stock weakness and whether it signals an impending recession. He clarified that NVIDIA Corporation (NASDAQ:NVDA)’s recent quarter wasn’t impacted by low demand but rather by supply issues with its high-end Blackwell chips. The problem was not with demand but with NVIDIA Corporation (NASDAQ:NVDA)’s ability to produce enough chips due to these constraints. He noted that such fluctuations in NVIDIA Corporation (NASDAQ:NVDA)’s market cap are not unprecedented and will likely occur again.

“What about tech weakness as a recession signal? I keep hearing Nvidia may have missed its quarter due to economic softness. Let’s put that rumor to bed. The issue wasn’t demand; it was Nvidia’s inability to produce enough of its high-end Blackwell chips due to supply constraints. This wasn’t a demand issue.

Now, let’s address the overblown narrative surrounding Nvidia’s stock drop, which wiped out $279 billion in market capitalization. In isolation, that sounds terrifying, but keep this in perspective: Nvidia started the year with a $1.22 trillion market cap and soared to $2.93 trillion by the end of August. Yesterday’s drop to $2.65 trillion? Sure, it’s a big number, but in the context of a stock that’s up over 100% this year, it’s not as catastrophic as it seems.

This wasn’t the first time Nvidia’s market cap has dropped over $200 billion in a day, and it likely won’t be the last. Yet, I know what you’re thinking—Nvidia’s stock is on fragile ground. That’s fair. There are still far too many investors who don’t understand what Nvidia does or how it profits from the brainpower of CEO Jensen Huang and his team.

The stock can’t stabilize until these weak shareholders sell out. Meanwhile, we’re waiting to see how quickly Nvidia can get its Blackwell chip rolling and improve gross margins—the real reason for the stock’s recent pummeling.”

NVIDIA Corporation (NASDAQ:NVDA) is a leading player in the tech industry, particularly in AI, gaming, and high-performance computing. For Q2 2024, NVIDIA Corporation (NASDAQ:NVDA) reported record revenue of $13.51 billion, up 101% from the previous year, driven by a massive surge in demand for AI chips. NVIDIA Corporation (NASDAQ:NVDA)’s data center revenue soared by 171% to $10.32 billion, reflecting the growing need for GPUs in AI applications like generative AI and large language models.

NVIDIA Corporation (NASDAQ:NVDA)’s net income also jumped to $6.19 billion from $656 million a year earlier, and its earnings per share reached $2.70, exceeding Wall Street’s forecast. Recent updates highlight NVIDIA Corporation (NASDAQ:NVDA)’s expanding role in AI. In August 2024, NVIDIA Corporation (NASDAQ:NVDA) introduced its next-generation AI chip, the GH200 Grace Hopper Superchip, which is designed to further accelerate AI tasks.