In this piece, we will look at Jim Cramer’s bold predictions about these semiconductor stocks.
Semiconductor stocks were once again at the forefront of media and investor attention this week during the stock market selloff triggered by investor apprehensions about lower AI development costs courtesy of China’s DeepSeek AI models. Because AI has dominated headlines for more than a year now, most of Cramer’s attention during his morning appearances focused on the technology whether it was before or after the selloff.
Before the selloff, on Friday, the CNBC TV show host started out by discussing the applications of AI. While most of the public’s attention is focused on chatbots, AI’s business use cases are quite diverse. One such use case is in the healthcare industry and another comes through the financial services sector. Cramer commented on both of these:
“I think that what we’re not thinking about, like when I went to Jensen Huang’s panel on healthcare. It’s so much bigger than anything involving AI PC. I mean they’re really just talking about having the data to really attack every single disease and changing it from fatal to maintenance. You have tremendous number of people involved in trying to do that. Then you have Stripe there working with [the GPU company] to be able to do something revolutionary in finance. And then you have the banks working doing some revolutionary things trying to get people who’re doing S1s. . . .”
The DeepSeek AI selloff was notable particularly because of the impact on the shares of Wall Street’s favorite AI GPU company. The firm, which was the world’s most valuable company ahead of the selloff, bled close to $600 billion in market value and lost its top spot to the company behind the iPhone. For Cramer, while the lower AI development costs were commendable, the use cases for the AI GPU firm’s products were beyond large language models:
“Well, look, there’s no doubt about the cost is great for this. But if you’re gonna go forward and you’re gonna do what Jensen was talking about, which is anything physical, anything physical with Blackwell. It’s going to be better than what we do. I’m just saying that Jensen’s on a plane of his own. And that, if you have low commodity, Jensen’s got the three thousand dollar chip that can handle that. Was I shocked by this? No it was nice that they came up with such a low price.”
For semiconductor stocks, one AI-generate catalyst that did not materialize is the AI PC. These PCs use a special chip called a neural processing unit (NPU) along with CPUs and GPUs to run AI tasks. In an appearance before the DeepSeek selloff, Cramer mentioned a Morgan Stanley report that shared that 60% of people surveyed had accidentally bought an AI PC and more than 60% were uncomfortable paying extra for AI products. The report, which added that just 15% of the respondents had bought a new product because of AI was “perhaps the most damming piece” that Cramer had read.
He shared that “There’s absolutely no evidence of a super cycle whatsoever,” and cycled back to enterprise AI use cases by stating “I mean I think AI is very good when you listen to what Jamie Dimon [inaudible] to say, that AI is very good when you listen to what Marc Benioff has to say.”
Cramer added that not only was he wrong about the AI PC cycle as the PC he “thought we were all gonna upgrade. And now we’re all in wait-and-see mode,” but those who he knew had bought such a PC “haven’t used it or there’s a button there and it doesn’t work.”
Our Methodology
To compile our list of Jim Cramer’s bold predictions about stocks, we scanned the stocks he mentioned in Mad Money and Squawk on the Street after September 2024. 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: -19.70%
STMicroelectronics N.V. (NYSE:STM) is an industrial and automotive chips provider. Naturally, this leaves the firm vulnerable to broader global economic performance. Over the past year, the shares have lost 48.3%, and since Cramer’s remarks, they are down by 19.70%. January, in particular, hasn’t been a great month for STMicroelectronics N.V. (NYSE:STM)’s shares as they are down by 6%. The stock dipped by 8.9% on Wednesday after the firm refrained from providing guidance due to dim prospects of economic recovery. In his October remarks, Cramer shared:
“I think it’s fine.”
8. Texas Instruments Incorporated (NASDAQ:TXN)
Number of Hedge Fund Holders In Q3 2024: 57
Date of Cramer’s Comments: 10-18-24
Performance Since Then: -6.7%
Texas Instruments Incorporated (NASDAQ:TXN) is an American chip company that makes and sells embedded and analog chips for industrial, data center, and other use cases. The diversified product portfolio means that the firm is exposed to AI and non-AI spending. Since Cramer’s remarks, Texas Instruments Incorporated (NASDAQ:TXN) shares have lost 6.7%. This is because a large portion of its revenue is dependent on industrial firms. In fact, during H1 2024, 76% of the revenue was through these companies. Texas Instruments Incorporated (NASDAQ:TXN)’s shares lost 7.4% in January after a weak earnings report and shed another 3.5% during the DeepSeek selloff. Here’s what Cramer said in October:
“After the close, we hear from Texas Instruments. We’ve been hearing a lot about how semiconductor companies are in the doldrums, the ones without AI, that is. Tex Instruments falls into that category but this company’s become much more focused. I like it ahead of the quarter, even though it has a little more cyclicality than most chip makers.”
7. Lam Research Corporation (NASDAQ:LRCX)
Number of Hedge Fund Holders In Q3 2024: 58
Date of Cramer’s Comments: 10-18-24
Performance Since Then: 15.4%
Lam Research Corporation (NASDAQ:LRCX) is an American firm that makes machines used in chip fabrication. The shares have gained 15.4% since Cramer’s remarks on the back of TSMC raising capital spending, analyst coverage, and a strong earnings report. The gains are despite the fact that Lam Research Corporation (NASDAQ:LRCX)’s shares dipped by 5.8% during the DeepSeek selloff. After its fiscal third quarter revenue forecast of $4.65 billion beat analyst estimates of $4.34 billion, the shares jumped by 7.4%. Here’s what Cramer had said about Lam Research Corporation (NASDAQ:LRCX) in October:
“… Now, Lam Research is a much better company than ASML. I think it’ll tell a good story. I think it’s got a healthy buyback. Very risky, though. If it’s just only because expectations have been lowered here, it might work. But the problem with Lam is, is that what happens if ASML is at all right, then Lam won’t pop. But that’s not that big a risk.”
6. Marvell Technology, Inc. (NASDAQ:MRVL)
Number of Hedge Fund Holders In Q3 2024: 70
Date of Cramer’s Comments: 12-16-24
Performance Since Then: -7.5%
Marvell Technology, Inc. (NASDAQ:MRVL) is a chip company that designs and sells products for data center use. Like its peer Broadcom, the firm has been a major AI beneficiary as investors have piled into it over hopes of selling custom AI chips. Marvell Technology, Inc. (NASDAQ:MRVL)’s shares are down by 7.5% since Cramer’s remarks in December. The stock first dropped by 15.6% in December after Broadcom revealed that it could capture a large chunk of the custom AI chip market in 2027. Marvell Technology, Inc. (NASDAQ:MRVL)’s stock shed an additional 19% during the DeepSeek selloff. Here is what Cramer had said in December:
(Commenting on CEO’s stock buying) “That’s Matt Murphy. He’s just, Matt bought a ton of stock, 40 points ago he was very visible about it, said listen I think the stock is going higher. In terms of visible opportunities where you watch insider buying, there was nothing like this. People didn’t think anything of his million, million dollar buy. People have to understand there are still some things out there that have some wisdom. Like insider buying, you don’t buy for any reason other than you think your stock will go up. You sell for a million reasons David, you only buy for one reason.”
5. Micron Technology, Inc. (NASDAQ:MU)
Number of Hedge Fund Holders In Q3 2024: 107
Date of Cramer’s Comments: 12-18-24
Performance Since Then: -9.4%
Micron Technology, Inc. (NASDAQ:MU) is an American memory manufacturer that is the only US-based firm capable of making the chips. While its memory chips are used in AI GPUs, the stock has struggled as of late since Micron Technology, Inc. (NASDAQ:MU) is exposed to broader personal computing and non-AI enterprise IT spending. Since Cramer’s remarks, the shares have lost 9.4%. Two events have driven the drop. First, Micron Technology, Inc. (NASDAQ:MU)’s shares dipped by 16% after its second fiscal quarter EPS guidance of $1.43 missed analyst estimates of $1.79. Then, while the shares surged by 10.5% in January after NVIDIA confirmed that it was supplying it with memory chips for AI GPUs, they dropped by 11.7% during the DeepSeek selloff as NVIDIA’s orders were questioned. Here’s what Cramer said about the stock in December:
“and you have Micron which goes up every day which is setting up for failure unfortunately I don’t like that’s reporting tonight.”
4. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders In Q3 2024: 107
Date of Cramer’s Comments: 10-04-24
Performance Since Then: -32.15%
Advanced Micro Devices, Inc. (NASDAQ:AMD) is a CPU and GPU designer that has struggled lately. Over the year, its shares have lost 30% and they have shed 32% since Cramer’s comments. Advanced Micro Devices, Inc. (NASDAQ:AMD) has struggled because it has failed to compete with NVIDIA in the AI GPU market and analysts have soured on the prospects of the PC market this year. Additionally, the firm was believed to stand to benefit from AI PC demand, and as that hasn’t materialized, the shares have lost more value. Here’s what Cramer said:
“Not to be outdone, Lisa Su, the CEO of AMD, will hold an analyst day and it’s entitled Advancing AI 2024. It starts at noon. Today, when the stock was plummeting, I told investing club members at my 10:20 morning meeting that Su’s presentation could show this charitable trust holding in a whole new light, even as they’ve been raising their AI sales forecast quarter after quarter after quarter. I think it’s a buy ahead of the meeting, although the stock did run eight points after we talked about it at the morning meeting.”
3. Broadcom Inc (NASDAQ:AVGO)
Number of Hedge Fund Holders In Q3 2024: 128
Date of Cramer’s Comments: 10-10-24
Performance Since Then: 21.86%
Broadcom Inc (NASDAQ:AVGO) is a semiconductor company whose chips are used in enterprise and personal computing applications. It’s been one of the biggest beneficiaries of the AI wave with the stock rising by 38% in December after management shared that it was eyeing a $60 billion to $90 billion custom AI chip opportunity in 2027. However, Broadcom Inc (NASDAQ:AVGO)’s shares sank by 7.4% during the DeepSeek selloff. However, the stock did gain 5.2% on Friday after Meta announced it would increase MTIA chip deployment. Here’s what Cramer had said about the firm in October:
“Broadcom makes data center plumbing, but also has a broadband infrastructure business, including cell phones. Now, we had CEO Hock Tan on when he went to San Francisco. He told an incredible story. I was so excited, I was jazzed about it, but nobody listened.
Well, now they’ll listen. Stock just hit an all the time high today. It’s not done. I’d hold onto it, especially since its VMware division helps data centers cut harbor costs and operate much more efficiently. And it has really turned the corner. I like that stock very much.”
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: 4%
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is the world’s largest contract chip manufacturer. The shares are up by 4% since Cramer’s remarks as the firm has managed to post consistent revenue growth and profit from the rising demand for AI chips. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)’s shares dipped by 13% during the DeepSeek selloff, after they had gained 5% earlier in the month after contract manufacturer Foxconn reported a jump in revenue due to AI and server demand. Here is what Cramer had said about Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) 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: 10-10-24
Performance Since Then: -6.2%
NVIDIA Corporation (NASDAQ:NVDA) is the largest AI GPU designer in the world. Since its products are industry leaders in terms of performance, their potential demand has injected trillions of dollars into the firm’s market capital. For the latter half of 2024, NVIDIA Corporation (NASDAQ:NVDA)’s stock was tepid as investors waited to see whether its products would ship in sufficient volumes. Ahead of the DeepSeek selloff, the shares were up by 3.1% but they dipped by 17% during the day. Here’s what Cramer had said in October:
“People are just beginning to realize that maybe it wasn’t just a gaming company with some real fast graphics chips…Eventually, NVIDIA and its renaissance man, CEO Jensen, pioneered both accelerated computing and generative AI. We speak too much about the latter, not enough about the former. Accelerated computing is what makes things really work here. In other words, NVIDIA created machines that think faster than you do and soon will do almost anything better than you can do
Now, I don’t want you freaking out. We’re in charge here. We make the decisions, but AI saves a lot of time… which is why it’s such a revolutionary technology for the enterprise and it’s about to get even better because we’ll see an amazing jump on the fly thinking from generative AI when NVIDIA’s new line of Blackwell chips gets fully deployed next year. They are so powerful, so fast, these guys basically invented a chip that is so quick that it created the entire AI business outta thin air. It wasn’t possible before, but now it can do incredible things and very soon it’ll be both faster and better.
By the way, I think it’s gonna do some stuff with video that’s gonna blow you away. I’ve never seen a company have such demand for its products, including demand from Tesla, which needs Nvidia for self-driving cars… The whole thing’s remarkable and the stock’s 1072% gain over the past two years was right there for the taking. As CNBC Investing Club members well know, I do think it’s got more upside, which is why I always say own it, don’t trade it. It does put a smile on my face.”
NVDA is a stock Jim Cramer talked about in October. 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 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.
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