In this piece, we will look at Jim Cramer’s bold predictions about these AI stocks.
Given that AI has dominated stock market headlines for more than a year now, it’s no surprise that Jim Cramer of CNBC’s Mad Money and Squawk on the Street has also devoted quite a bit of airtime discussing the technology. He is extremely bullish on AI and has gone as far as to suggest that the world’s largest AI GPU company, the one run by Jensen Huang, is ushering in a new industrial revolution.
Don’t believe us? Well, take a look at his own words. In a recent Squawk on the Street appearance, Cramer said the following about Huang and his company:
“Industrial revolution, why can’t we believe? Do you remember, did you read that, book about John Garfield, where they talked about the telephone, and Alexander Graham Bell tries to get it into the centennial in Philadelphia, and only because the Brazilian guy there doesn’t get to represent it. And Alexander Graham Bell says you know this could revolutionize all of how we do things. And the American judges were like who is this clown?”
“I find over and over again that when you have the industrial revolutions no one really believes in them. And here’s Jensen Huang.”
One major AI announcement in January that has created quite a bit of a splash is President Trump’s $500 billion Stargate project. Trump announced the project joined by executives from several big tech companies. Cramer believes that Stargate might end up underpinning industrial growth in the US. Stargate might also require the US to build the energy infrastructure necessary to support massive data centers. According to Cramer:
“Crisis comes down to the fact that we had no real industrial growth in this country for decades so we haven’t had to build much energy infrastructure. Now all of a sudden these data centers start coming online like the ones that will be part of Stargate, the Oracle, SoftBank, OpenAI project… And these data centers consume insane amounts of electricity. It’s a level of demand that nobody saw coming. So after years where we spent more time decommissioning power plants and building new ones, we suddenly gotta go back into growth mode.”
These aren’t his only comments about Stargate. Cramer believes that the announcement might underlie a new paradigm shift in the US ecosystem. This ecosystem blossomed through the partnership between Bill Gates’ software company and OpenAI. However, Cramer believes that the shares of one of the world’s largest enterprise resource planning companies soared after the announcement because “maybe because there’s a reshuffling of the alliance. And the alliance could be in play.” He believes that “the fluid nature of things here is rather extraordinary” and that the firm might have replaced the software company:
“[the ERP provider] might have replaced Microsoft in an OpenAI joint venture. This would be extraordinary. And you know Carl, I don’t know whether Ellison [Larry Ellison] was doing a dance yesterday because he was so happy about this announcement. Or because he may have a real coup here. And betting against Ellison has been one of the biggest fools game in history. Man he was on his game yesterday.”
The booming demand for energy from AI data centers has injected fresh life into nuclear power companies. Some of these firms are up by a whopping 186% year-to-date. While Cramer is skeptical about the near-term returns offered by nuclear power stocks, one energy source that he believes might become popular again is coal. Here’s what he said in a recent Mad Money episode:
“Under this president, coal could have… a renaissance. Sure, coal’s time has come and gone, but it will come again because the data center inspired energy crisis really is so pressing that there’s not really a choice anymore. Yes, the demand is that great, [and] we so foolishly mothballed good nuke plants that it wouldn’t surprise me if coal’s long decline may have finally run its course.”
Our Methodology
To compile our list of Jim Cramer’s bold predictions about AI stocks, we scanned the stocks he mentioned in Mad Money and Squawk on the Street as far back as September 2024. Then, we picked out AI stocks and ranked them by the number of hedge funds that had bought the shares in Q3 2024.
For these stocks, we also mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds invest in? 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).
12. Super Micro Computer, Inc. (NASDAQ:SMCI)
Number of Hedge Fund Holders In Q3 2024: 33
Date of Cramer’s Comments: 09-05-24
Performance Since Then: -19.75%
Super Micro Computer, Inc. (NASDAQ:SMCI) is a computer hardware company that has been in the news for all the wrong reasons lately. The firm’s shares sank by 19% in August last year after short-seller Hindenburg Research claimed significant accounting improprieties and Super Micro Computer, Inc. (NASDAQ:SMCI) failed to file its annual report. Since then, Hindenburg has closed down and Super Micro Computer, Inc. (NASDAQ:SMCI) has announced that an internal probe found no evidence of fraud. On the day of the latter announcement, its shares surged by 28%. The firm is due to file its 10K report on February 25th. Here’s what Cramer said in September:
“I’m not a believer in this, to be honest. I thought the Hindenburg report was good. I wouldn’t have been as enthusiastic if it weren’t for that filing the company made the next day. I think Super Micro is good, but when you read the Hindenburg report, it’s clear they need to improve their accounting practices, and that’s what worries me.”
11. ARM Holdings plc (NASDAQ:ARM)
Number of Hedge Fund Holders In Q3 2024: 38
Date of Cramer’s Comments: 09-09-24
Performance Since Then: 29.46%
ARM Holdings plc (NASDAQ:ARM) is a British design house whose intellectual property powers up data center processors and most of the world’s smartphones. Since Cramer’s comments in September, the stock has gained 29.46% on the back of several catalysts. One such gain came in November when the stock added 4% following a strong Q3 earnings report. ARM Holdings plc (NASDAQ:ARM)’s stock has also gained 26.8% year-to-date. These gains are because of President Trump’s $500 billion Stargate AI plan in which investors believe ARM Holdings plc (NASDAQ:ARM) can play an important role. Here’s what Cramer said about the stock in September:
“Don’t forget about Arm, the 7-nanometer kingpin whose stock has more than doubled since it came public again roughly a year ago. That’s despite pulling back from $188 in early July to $125 today. Arm got a nice boost today on now-confirmed reports that its chip designs are being used in the just-launched iPhone 16. The processor is built on their architecture—that’s not a shocker, but some people don’t understand that.
On Friday, many were buzzing about the relentless decline in semiconductor firm Arm Holdings. The stock fell from $123 down to $117, and this was after already coming down from $132 at the end of the previous week. Arm seemed spent, done. Then, today, it shoots back up to $125—up 7%, supposedly because the new iPhone is using their latest design for custom processors. Something that should have been obvious to everyone for months! Was Friday’s sell-off based on pure emotion, and today’s rally just emotion right back? Or did nothing truly happen at all to Arm on either Friday or Monday?
Arm is unique in that it designs semiconductor architecture, licenses it out to chipmakers, and collects royalties on their sales. This gives them a nice, predictable revenue stream. Their technology is firmly entrenched in data centers, mobile devices, and even the CPU portion of NVIDIA’s top AI platforms. They’ll be big winners from a new smartphone upgrade cycle fueled by all this new AI functionality.
There’s a reason Apple went with Arm’s architecture—they dominate the mobile space. Again, I’d be a buyer into the recent weakness because I think the long-term upside potential is enormous, and I don’t mind that it’s up that much today. It can go further.
Here’s the bottom line: it’s time to fall back in love with semiconductors. Some of the most beaten-down chip stocks have been punished enough, and now you’re finally getting a chance to buy Arm and Micron.”
