Jim Cramer’s Bold Predictions About These 12 AI Stocks

10. Dell Technologies Inc. (NYSE:DELL)

Number of Hedge Fund Holders In Q3 2024: 60

Date of Cramer’s Comments: 09-04-24

Performance Since Then: 4.28%

Dell Technologies Inc. (NYSE:DELL) is a computer hardware company that provides products to the consumer and enterprise industries. The only notable share price movement since Cramer’s quoted remarks has been a 12.3% share price drop in November following the firm’s third-quarter earnings. The results saw Dell Technologies Inc. (NYSE:DELL) forecast midpoint Q4 revenue at $24.5 billion which was lower than analyst estimates of $25.6 billion. Its PC revenue of $12.13 billion also missed analyst estimates of $12.43 billion. Another notable price movement was in October, and it stemmed from rival Super Micro’s woes. Here’s what Cramer said in September:

“This story is all about Dell making servers for the data centers that power artificial intelligence, along with new lines of AI-infused PCs. Unfortunately, the numbers were somewhat confusing, but I think that Wall Street got this one right—at least initially—as the stock timely rallied more than 4% last Friday before giving back all those gains today. Yep, Dell’s still worth owning here, and I’m going to tell you why. Let’s start with the numbers: Dell delivered a meaningful revenue beat driven by 38% growth from its Infrastructure Solutions division. Much better than expected, mostly thanks to heavy investment in AI infrastructure by corporate clients. In fact, their server and networking sales were up 80% year-over-year.

Dell’s other business, the Client Solutions Group, which includes the PC business, came in a little light, but not light enough to offset the strength in the infrastructure side. In the earnings release, Dell Vice Chairman and COO Jeff Clarke, an old hand, explained that “our AI momentum accelerated in Q2, and we’ve seen an increase in the number of enterprise customers buying AI solutions each quarter.” Notice the word “solutions”—I think that’s really important. It’s more than just a box. He added that AI-optimized server demand jumped by 23% compared to the previous quarter.

Now, last time Dell reported, some investors didn’t like the margins from Dell’s infrastructure business. Long story short, their earlier AI hardware sales mainly came from selling servers to large hyperscalers—here we’re thinking about Alphabet, Amazon, Meta—and those companies can drive a hard bargain. Dell was confident that the margins would improve later on as they sold more networking and storage equipment along with services, but hardly anyone was willing to give them the benefit of the doubt. Except me, maybe. That’s because I saw that Jeff was with Jensen—of course, Jensen Huang, CEO of Nvidia—at the GTC conference I attended.”