In this piece, we will look at Jim Cramer’s bold predictions about these semiconductor stocks.
As 2024 comes to a close, the semiconductor industry has seen its fair share of fireworks. While firms like Wall Street’s favorite AI GPU stock are the ones that have caught investor attention, not all chip stocks have performed well. Just like the economy, where firms exposed to AI-driven data center spending have performed well, semiconductor stocks that are geared towards AI have also seen their fortunes soar while others haven’t been so lucky.
As an example, consider the stock price performance of two of the most well-known semiconductor stocks in the world. The first ranks 3rd on our list of Jim Cramer’s Bold Predictions About These 15 AI Stocks while the second ranks 12th. The first stock is the GPU stock we mentioned above while the second is the world’s largest integrated chip manufacturer. An integrated chip manufacturer, for those out of the loop, is a firm capable of designing and manufacturing its chips. Looking at their share price performance, the first stock has gained 184% year-to-date while the second is down by 57.5% over the same time period.
So why does their performance lie on the opposite ends of the spectrum? Well, the first company has sustained investor optimism because its products are market leaders in terms of computing AI workloads. Even so, while the shares are up by 184%, they had already gained 173% by mid-October. Since then, the stock has added just 4% as Wall Street is in wait-and-watch mode regarding the demand for AI services among businesses and users and the GPU supply chain of the company.
However, while the GPU maker hasn’t impressed in terms of returns in the final quarter, the integrated chip manufacturer has stunned with its fall from grace. From the start of the year to July-end, its shares had lost 36%. While that was bad on its own, the firm’s second-quarter earnings report led to nothing but a bloodbath. It caused a whopping 34.6% share price drop over the next couple of days. So what happened? Well, starting from the financial figures, its Q2 earnings per share of two cents fell way short of consensus analyst estimates of $10 cents. The revenue wasn’t great either, as while the firm earned $12.83 in the second quarter, analysts had expected it to bring in $12.94 billion.
But an earnings and revenue miss rarely wipes a third of a stock’s value. Along with the dismal financial results, the firm also revealed that not only would it cut 15% of its workforce, but it would also stop paying a dividend in Q4. Naturally, investors weren’t impressed and they weren’t optimistic about the firm’s future trajectory either. Since the earnings, the stock is up by 2.5% though as its CEO’s sudden exit and whispers of a divestiture of the costly chip manufacturing business to ease costs seemed to have piqued investor attention.
The start of December has also seen another interesting, albeit long-term, development for the semiconductor industry. The semiconductors, or chips, that currently power our computers and phones rely on classical computing which uses bits for computing. Quantum computing, on the other hand, expands the processing power significantly over classical computing by relying on qubits instead. In December, Google revealed its Willow quantum computing chip which it claims is capable of processing a problem that would take a classical supercomputer 10 septillion years in less than five minutes. More importantly, Google claimed to have manufactured the chip itself – a development that broadens the number of companies capable of manufacturing advanced processors.
The announcement injected fresh life into quantum computing stocks which have gained as much as 281% since Willow was revealed. This is despite the fact that no semiconductor foundry is capable of manufacturing quantum computing chips at scale. And why would they? After all, the use cases for quantum computers are limited as well, as opposed to the billions of chips used in personal computing applications.
For his part, Cramer isn’t a fan of quantum computing either. Commenting on the negative share price movements following the Federal Reserve’s well-televised conference earlier this month, he likened the sentiment in quantum computing to a hype bubble. The market won’t recover quickly according to Cramer as “rampant Bitcoin speculation, after speculation in nuclear power, after speculation in quantum computing” pushed stocks higher than their fundamentals would justify. Further commenting on the industry, he stated:
“How are these companies going to, how is D-Wave Quantum by the way, how is that going to quantum? When we don’t even know what quantum is? It’s a nonfungible token, right? Cause you know what a fungible token was?”
Our Methodology
To compile our list of Jim Cramer’s bold predictions about semiconductor stocks, we scanned the stocks he mentioned in Mad Money and Squawk on the Street as far back as in August. Then, we picked out semiconductor 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).
9. STMicroelectronics N.V. (NYSE:STM)
Number of Hedge Fund Holders In Q3 2024: 18
Date of Cramer’s Comments: 10-04-24/10-07-24
Performance Since Then: 10.38%
STMicroelectronics N.V. (NYSE:STM) is a Swiss semiconductor company that primarily caters to the needs of automotive and industrial firms. Since non-AI semiconductor demand has been soft in 2024 due to global economic sluggishness and high interest rates, the stock is down 47% year-to-date. STMicroelectronics N.V. (NYSE:STM) has cut forecasts multiple times in 2024. In July, the firm cut guidance to a midpoint of $13.45 billion down from an earlier $14.5 billion which led its stock to shed 15%. The shares have been muted since then, and while they haven’t posted any gains, they haven’t lost much either. Cramer didn’t think the stock would fall further in October, as when he was asked about STMicroelectronics N.V. (NYSE:STM)’s prospects, he simply replied that he thought “it’s fine.” Since his remarks, the shares have lost an additional 10% particularly as Europe’s slow economic growth and Germany’s economic problems have meant that STMicroelectronics N.V. (NYSE:STM)’s nine-month revenue from Europe dropped by 31% in September.
8. 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: 2.92%
ARM Holdings plc (NASDAQ:ARM) is a British semiconductor design firm whose designs are used in most of the world’s smartphone processors and GPUs. Additionally, advances in semiconductor fabrication have made its designs suitable to be implemented on data center and laptop processors as well. Consequently, ARM Holdings plc (NASDAQ:ARM) plays a key role in the semiconductor company. The firm’s shares nevertheless dipped in November when its midpoint fiscal Q3 revenue forecast of $945 million was just a million over analyst forecasts. Investors were expecting ARM Holdings plc (NASDAQ:ARM) to profit from the AI revolution, but the disappointing forecast meant that the shares dipped by 2%. The shares fell by an additional 4% in December when a court sided with Qualcomm in a patent licensing dispute with ARM Holdings plc (NASDAQ:ARM). Here’s what Cramer said in September:
“Don’t forget about ARM Holdings plc (NASDAQ: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 Holdings plc (NASDAQ: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 Holdings plc (NASDAQ: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 Corporation (NASDAQ:NVDA)’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 Inc. (NASDAQ:AAPL) went with ARM Holdings plc (NASDAQ: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 Holdings plc (NASDAQ:ARM) and Micron Technology, Inc.(NASDAQ:MU) at a discount.”
7. Lam Research Corporation (NASDAQ:LRCX)
Number of Hedge Fund Holders In Q3 2024: 58
Date of Cramer’s Comments: 9-16-24
Performance Since Then: -3.22%
Lam Research Corporation (NASDAQ:LRCX) is one of the few companies in the world capable of manufacturing machines that are used in semiconductor fabrication. Since it depends on the health of the broader semiconductor industry for prosperity, sluggishness in consumer electronics, automotive, and industrial sectors has meant that Lam Research Corporation (NASDAQ:LRCX)’s shares are down 2% year-to-date. The stock fell by 11% in October when chip-making equipment giant ASML disappointed investors with its soft guidance. The firm has also been hurt due to its Chinese exposure, with 42% of its sales being from China. Here’s what Cramer said about Lam Research Corporation (NASDAQ:LRCX) in September:
“I think Lam is dramatically oversold. I think it could be a coiled spring. Maybe it has 50 points down, but I think it could have 200 points up. I agree with you, and I’ve known the company for a very long time, certainly more than the traders who are dumping it right now. So anyway, don’t try to chase this move out of tech, please. I’ve seen this kind of thing before, it’s just not worth your effort. It will only result in you churning your dollars and losing money.”
6. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders In Q3 2024: 68
Date of Cramer’s Comments: 09-06-24
Performance Since Then: 0.04%
Intel Corporation (NASDAQ:INTC) is the integrated chip manufacturer that we covered in detail in the introduction to this piece. The introduction is sufficient to describe in detail the turmoils that it has faced in 2024. Now, the keys to Intel Corporation (NASDAQ:INTC)’s hypothesis are its 18A manufacturing technology and a potential spinoff of its manufacturing business to reduce costs. Since September, the stock has been rather muted and while it hasn’t recovered from the July bloodbath, the shares have posted modest gains. Major developments have included the surprise departure of CEO Patrick Gelsinger and Intel Corporation (NASDAQ:INTC)’s $8.5 billion chipmaking grant from the US government potentially being under threat and an impediment to its spinoff plans. Here’s what Cramer said:
“The Financial Times reports that Intel has been rocked by key defections, including Stuart Pann who was named head of the foundry business in 2023. Shlomit Weiss, a key designer, departed in April. Coupled with stock price declines, the deck looks increasingly stacked against CEO Pat Gelsinger’s turnaround plans.”
5. Micron Technology, Inc. (NASDAQ:MU)
Number of Hedge Fund Holders In Q3 2024: 107
Date of Cramer’s Comments: 09-09-24
Performance Since Then: 2.74%
Micron Technology, Inc. (NASDAQ:MU) is the only American pure-play memory chip manufacturer. The firm depends quite a bit on a robust consumer chip demand for its sales. Therefore, while Micron Technology, Inc. (NASDAQ:MU) is also a leading manufacturer of advanced HBM3e memory chips used in AI GPUs, the firm has nevertheless struggled due to sluggishness in the broader memory industry. Its shares sank by 16% in December after Micron Technology, Inc. (NASDAQ:MU)’s fiscal second quarter guidance of $7.9 billion missed analyst estimates of $8.98 billion by a whopping $1 billion. This wiped out all gains in September when the stock soared by 14.7% after Micron Technology, Inc. (NASDAQ:MU)’s fiscal Q1 guidance of $8.7 billion beat analyst estimates of $8.28 billion. Here’s what Cramer shared in September:
“Micron Technology Inc. (NASDAQ:MU) is now in its 2025 fiscal year, where it’s expected to earn $9.59, with that number growing to nearly $13 the following year. In other words, Micron Technology Inc. (NASDAQ:MU) is trading at less than 7 times next year’s fiscal earnings estimates. That’s insanely cheap—but remember, that often means people don’t believe in the estimates. That’s how it gets to seven times. I understand that, but I think the estimates are okay.”
4. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders In Q3 2024: 107
Date of Cramer’s Comments: 8-21-24
Performance Since Then: -20.64%
Advanced Micro Devices, Inc. (NASDAQ:AMD) is a semiconductor designer that designs and sells CPUs, GPUs, custom chips, and other products. It enjoys a unique position in the market courtesy of being able to compete with Intel in the CPU market and NVIDIA in the GPU market. As a result, any firm-specific weakness from either means that Advanced Micro Devices, Inc. (NASDAQ:AMD) can eke out market share for itself. Its shares haven’t done well in the fourth quarter primarily due to Advanced Micro Devices, Inc. (NASDAQ:AMD)’s inability to wrest market share away from NVIDIA and analyst concerns of a slower PC market in 2025. The stock fell by 10.6% in October after the firm’s Q4 guidance of $7 billion missed analyst forecasts of $7.54 billion. Here’s what Cramer said in August:
“I think you can buy more. AMD has been on a steady upward trend this week, and Lisa Su made a great acquisition. Her products, especially for accelerated computing, are terrific. Yes, for AI and generative AI, they are outstanding. Buy more AMD, just as we’ve been doing for the club.
“Listen, guys, it’s driving me crazy—not everything you hear is consequential. There’s a lot of noise; there are a lot of data points that don’t mean anything. Sometimes, companies just have their consumers’ backs, and that’s where the business goes. The economy is fine, and that’s all that matters.”
3. Broadcom Inc (NASDAQ:AVGO)
Number of Hedge Fund Holders In Q3 2024: 128
Date of Cramer’s Comments: 09-06-24
Performance Since Then: 76.5%
Broadcom Inc (NASDAQ:AVGO) is a diversified semiconductor company with a presence in the semiconductor and software markets. Its semiconductor business provides modems, embedded processors, ASICs, and other chips. A tight market for NVIDIA’s GPUs and the firm’s chip design strengths have led to investor hopes of Broadcom Inc (NASDAQ:AVGO) capturing the AI market through its custom products. These expectations came to the forefront in December when Broadcom Inc (NASDAQ:AVGO)’s shares surged by a whopping 38% over the next two days after the firm’s fiscal fourth-quarter results saw it project a $60 billion to $90 billion AI revenue opportunity in 2027. Here’s what Cramer said in September:
“Broadcom gave us results that showed a tad bit of weakness in artificial intelligence orders, and the pin action took down the whole darn cohort. I don’t believe AI is a bubble, but these stocks are still up a great deal, especially in August. And September tends to bring out sellers when you get just in-line numbers. That’s what we got from Broadcom. It was in line, it wasn’t a shortfall.
“Ben Reitzes, who I quote a lot because he’s really smart, said Broadcom was hurt by some choppiness in Google orders. That wasn’t clear from the conference call, but it makes a lot of sense. That business will bounce back.
“The issue here isn’t Broadcom’s reaction, which took down most of the tech. No, it’s the overreaction to Broadcom that seemed to cascade into finance and then anything cyclical. The pain was palpable. To me, this is all about the zeitgeist, not the facts, because so many companies are doing well despite the slowing economy. However, you can’t waste time arguing with the sellers who suddenly want nothing whatsoever to do with this market. Nothing’s going to stop them from taking profits out of fear.”
2. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Hedge Fund Holders In Q3 2024: 158
Date of Cramer’s Comments: 10-17-24
Performance Since Then: -2.05%
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is the world’s most advanced and largest contract chip manufacturer. Its leading-edge 3-nanometer manufacturing process is the most technologically advanced and used by Apple for the iPhone and MacBook’s processors. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) also enjoys sizable yield and efficiency advantages over rivals. Along with Apple, it also counts other big-ticket tech names such as NVIDIA and Qualcomm as its customers. The stock soared by 10% in October after Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)’s Q3 revenue of T$325 billion beat analyst estimates of T$300 billion. Here’s what Cramer said in October:
“… If you didn’t listen to Taiwan Semi’s conference call last night, you missed out on a performance that explains so much of what’s going on in this market, in the world.
“I’m talking about the off-the-charts demand for chips that enable artificial intelligence. Those are almost all manufactured by Taiwan Semi, which is the crucial cog in the semiconductor machine. That’s how you know this move is for real.
“This company is the biggest and the best. Last night was a tour de force show, especially for one customer, Nvidia. They might as well have entitled the conference call in praise of Nvidia because Nvidia is crushing it in partnership with this amazing Taiwanese company. I talk about Nvidia a great deal, but I don’t say much about Taiwan Semi, which is wrong. See, like most American semiconductor companies, Nvidia is actually more of a designer. Taiwan Semi is the company that builds the product.. You can’t have Nvidia without Taiwan Semi.
“How close are they? Let me quote from Doctor C. C. Wei, he’s a PhD and chairman and CEO of Taiwan Semi ‘So one of my key customers said the demand right now is insane.’ Well, the key customer is Nvidia. And like Nvidia’s redoubtable, implacable CEO Jensen Huang, Wei says that the demand for AI chips ‘is real, and I believe it is just the beginning of the demand.
“Bingo. There it is. Unlike ASML, the semiconductor equipment maker that gave you a sob story about the whole industry the other night, with the exception of AI, Taiwan Semi’s focused on the cutting edge of the industry. That’s what they are. They know it because they use it. As Wei said, ‘We have our real experience. We have been using AI and machine learning in our fab and R&D operations. By using AI, we are able to create more value by driving greater productivity, efficiency, speed, qualities.
“He goes on to explain that Taiwan Semi’s customers would say the same thing. What a contrast to the lame ASML call that caused so many people to sell Nvidia. Panic, panic, and once again revved up the chip obituary machine.”
1. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders In Q3 2024: 193
Date of Cramer’s Comments: 8-20-24
Performance Since Then: 7.73%
NVIDIA Corporation (NASDAQ:NVDA) is the world’s leading AI GPU designer. Since OpenAI publicly unveiled ChatGPT, the firm’s shares have gained more than 700%. Yet, since their July peak, NVIDIA Corporation (NASDAQ:NVDA)’s shares have added just 1.62% as investors wait to see how its Blackwell GPUs perform and whether any rivals pop up. The stock has also been hit with speculation of rivals stealing NVIDIA Corporation (NASDAQ:NVDA)’s AI GPU market share due to supply constraints and high prices. NVIDIA Corporation (NASDAQ:NVDA)’s stock dipped by 3% in December after Broadcom shared that it can earn as much as $90 billion in AI revenue by 2027. Here’s what Cramer said about the firm in August:
“I almost feel like you can guess it—it’s Nvidia. It’s the king, and the rest of the market is made up of its pawns, marching to Nvidia’s drum. Remember this morning when I was on the call and said, “Look, Nvidia is almost too important. There’s too much pressure on Nvidia—can it sustain it? I don’t want Nvidia to be Samson.
“Take a look at this daily chart of Nvidia, going back to February. By the way, Larry, who advised selling Nvidia just before it peaked in the spring, predicted the stock would rise again in late May. Larry and his video calls have closely tracked the stock’s short-term cycle in red, which has followed the share price surprisingly well.
“Unfortunately, the short-term cycle now projects that Nvidia should peak sometime next week, leading to a sell-off that may extend through mid to late October. Nvidia reports next week, and the long-term cycle indicates a bottom around the same time. Given that Larry sees Nvidia as the lynchpin of the market, it makes sense that the cycle forecast predicts a downturn for Nvidia, aligning with expectations for the S&P 500.
“Yes, Nvidia is that influential. The chart interpreted by Larry Williams suggests that we might experience some pain as August ends, which could continue through mid to late October. I hope he’s wrong this time, but it’s wise to consider his analysis seriously. For my money, there’s a good chance he could be right, especially if Nvidia’s outlook isn’t strong.”
NVDA was a semiconductor stock Cramer mentioned in August. While we acknowledge the potential of NVDA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. 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.
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