In this article, we’ll explore Jim Cramer’s Exclusive List: 10 Stocks to Monitor Closely.
On a recent episode of Mad Money, Jim Cramer emphasized the risks of straying too far from technology stocks, particularly the dominant tech companies, in today’s market. He pointed out how JP Morgan, despite being one of the best-performing banks, caused a stir by cutting its forecast, warning that estimates might be overly optimistic. This news hurt the broader market, dropping it by 93 points, although the S&P 500 saw a slight rise of 0.54%, and the tech-driven NASDAQ gained 0.84%.
“In this market, every time you stray too far from technology, especially the tech titans, you ultimately get slapped in the face by reality. That’s what happened today when the largest, and arguably best-performing, bank in the world, laid a huge egg with its forecast. They told us the estimates are too high, maybe way too high. That spoiled a big chunk of the market, ultimately dipping 93 points. The S&P inched up 0.54%, but the tech-heavy NASDAQ still gained 0.84%.”
Cramer explained that since the Federal Reserve gave positive signals, investors had shifted away from tech into other areas of the market. This shift was part of the “broadening out” that many investors had been waiting for, as it was believed to signal a healthier market. Financial stocks, which make up around 13.3% of the S&P 500, had been a source of excitement for those tired of relying on the leading tech stocks.
“For the past couple of months, ever since the Fed gave us the all-clear signal, we’ve seen money flow out of tech into long-neglected regions of the stock market. This is the fabled “broadening out” that people spent all year clamoring for. When we bring in more groups of winners, we’re supposed to have a much healthier market, at least that’s what they say. There are tons of financials in the S&P 500, about 13.3% of the index and the strength in those stocks was a source of much joy for everyone who had gotten sick of The Magnificent Seven.”
However, as Cramer noted, economic uncertainty and disappointing forecasts from bank companies disrupted this broader market strength. Daniel Pinto, the bank company’s COO, dashed hopes by signaling that the outlook for the bank wasn’t as strong as expected. The key issue was that net interest income, a critical measure for banks, was projected to miss expectations due to reduced capital market activity. For Cramer, this underperformance highlighted the danger of moving away from tech stocks too soon.
“But a funny thing happened on the way to that broadened-out market: we got economic choppiness. Or to use a more accurate phrase, we got guide-downs that were intolerable to any of the leaders, and the kiss of death to the stock of the bank. You can’t be a leader when you’re slashing your forecast for H2. That’s when the shareholders kick you to the curb and find someone new to follow.
But today, Daniel Pinto, the bank’s President and Chief Operating Officer, lowered the boom on the optimists who desperately wanted to buy something other than tech. The big bank told us that things are less bullish than we thought. There isn’t as much capital markets activity as we’d hoped this quarter, and most importantly, the estimates for next year are too high because of a likely miss on net interest income.”
Our Methodology
This article talks about a recent episode of Jim Cramer’s Mad Money, where he discussed several stocks. From that discussion, ten companies were selected, and their hedge fund investments were analyzed. The companies are then ranked based on the level of hedge fund ownership, from the least owned to the most owned.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. 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).
Jim Cramer’s Exclusive List: 10 Stocks to Monitor Closely
10. Campbell Soup Company (NYSE:CPB)
Number of Hedge Fund Investors: 27
Jim Cramer discussed the performance of Campbell Soup Company (NYSE:CPB)’s stock. While it has done well in the past, he’s unsure if it can continue this trend. Campbell Soup Company (NYSE:CPB) recently announced its financial goals, which include steady growth in sales and earnings. Cramer points out that these numbers might not be as exciting as those from tech companies, but they’re still strong for a packaged food business. Campbell Soup Company (NYSE:CPB) is also changing its name to “The Campbell Company.”
“Over the past year, the stock of Campbell Soup Company had a great run, but can it keep running? Today, Campbell Soup Company (NYSE:CPB) hosted a huge investor day in New York City. Management introduced some long-term financial targets: 2 to 3% organic sales growth, 7-9% earnings per share growth. Well, these aren’t exactly blowout numbers if you’re in a tech stock, but they’re pretty darn good for a packaged food play. Oh, and guess what? They’re changing the name. No more ‘Soup,’ it’s just ‘The Campbell Company” starting later this year. My one worry here is this kind of stock tends to go out of style when the Fed starts cutting interest rates.”
The positive outlook for Campbell Soup Company (NYSE:CPB) is based on its strong financial results, growth potential, and strategic plans. Campbell Soup Company (NYSE:CPB)’s snacks division, which includes popular brands like Goldfish, Snyder’s of Hanover, and Pepperidge Farm, is driving much of its growth, with annual expansion expected at 3-4%, surpassing the broader food industry. Campbell Soup Company (NYSE:CPB) is also making strategic moves in its Meals & Beverages division, including the acquisition of Sovos Brands and Rao’s sauces, enhancing its premium offerings and paving the way for more profitable growth.
Financially, Campbell Soup Company (NYSE:CPB) beat expectations in Q4 FY2024, posting an EPS of $0.63 and a 10.9% revenue increase. Campbell Soup Company (NYSE:CPB) aims for 7-9% EPS growth through fiscal 2027, supported by a $250 million cost-saving plan. Consumer demand for Campbell Soup Company (NYSE:CPB)’s affordable and well-loved brands further strengthens its revenue stability despite market fluctuations.
9. Wingstop Inc. (NASDAQ:WING)
Number of Hedge Fund Investors: 31
Jim Cramer is discussing Wingstop Inc. (NASDAQ:WING), a popular fast-casual chicken wing restaurant chain. Despite strong financial results, including a significant increase in sales, the stock price hasn’t risen much. Cramer believes that Wingstop Inc. (NASDAQ:WING) is undervalued and has the potential to continue growing. While it has seen a slight increase since the recent earnings report, it’s still down from its highest point. Cramer recommends paying attention to Wingstop Inc. (NASDAQ:WING) as it could be a good investment opportunity.
“What do we do with one of my favorite stocks, the stock Wingstop Inc., the largest fast-casual chicken wing chain on Earth? This longtime Cramer fave reported a strong quarter at the end of July, clean top and bottom line beat with a spectacular 28% – I’m going to say it again, 28% – domestic same-store sales growth. Yet the stock barely budged in response. Stock’s wrong, of course. It’s rallied a bit since then, but let’s not forget Wingstop Inc.’s up more than 130% over the past 12 months. That said, the stock’s almost – it’s down almost 12% from its all-time highs in June, so pay attention.”
The optimistic outlook for Wingstop Inc. (NASDAQ:WING) is based on its strong financial performance and aggressive growth plans. Wingstop Inc. (NASDAQ:WING) saw a 28.7% increase in same-store sales, largely due to higher transaction volumes, and added a record 73 new restaurants in the latest quarter, resulting in a 45.2% year-over-year growth in system-wide sales. Wingstop Inc. (NASDAQ:WING)’s adjusted EBITDA grew by an impressive 50.7%, demonstrating its ability to scale effectively. A key driver of this success is Wingstop Inc. (NASDAQ:WING)’s focus on digital innovation, with 68.3% of sales coming through digital channels.
Wingstop Inc. (NASDAQ:WING) also raised its Average Unit Volume (AUV) target to $3 million, reflecting confidence in its operational efficiency. Looking forward, Wingstop Inc. (NASDAQ:WING) plans to open 285 to 300 new restaurants globally in 2024 and expects domestic same-store sales to grow by around 20%. Its international expansion into markets like Canada and the UK, combined with its focus on AI-powered digital ordering, boosts its growth prospects.
Additionally, Wingstop Inc. (NASDAQ:WING)’s strong balance sheet allows for share buybacks and dividend increases, adding further value for shareholders. For long-term investors, Wingstop Inc. (NASDAQ:WING)’s steady expansion, strong digital sales, and solid cost management make it a promising opportunity for continued success.
Alger Small Cap Growth Fund stated the following regarding Wingstop Inc. (NASDAQ:WING) in its Q2 2024 investor letter:
“Wingstop Inc. (NASDAQ:WING) is a high-growth franchisor and operator of cooked-to-order fried chicken wings with over 20 different sauces that consumers have grown to love. The company operates just over 2,000 of its namesake stores around the globe, with the majority of those in the U.S. Shares contributed to performance during the quarter after the company reported strong fiscal first quarter operating results. The company reported better-than-expected revenues which were driven by several factors, including increased brand awareness through effective digital advertising, menu innovation such as its new chicken sandwich launch, and strong delivery service partnerships.”
8. International Business Machines Corp. (NYSE:IBM)
Number of Hedge Fund Investors: 54
Jim Cramer is impressed with International Business Machines Corp. (NYSE:IBM)’s recent progress. He highlights their work with Watson, a powerful artificial intelligence system, and praises CEO Arvind Krishna for successfully transforming International Business Machines Corp. (NYSE:IBM).
“International Business Machines Corp. (NYSE:IBM) is doing quite well. We’re playing around with Watson for ESPN, which is unbelievable. I’m getting more and more impressed. Arvind Krishna has reinvented the company. He’s doing a terrific job.”
The positive outlook for International Business Machines Corp. (NYSE:IBM) is supported by its strong performance in artificial intelligence (AI) and hybrid cloud solutions, as well as steady earnings growth. International Business Machines Corp. (NYSE:IBM) has become a leader in enterprise AI with its “Watsonx” platform, which has generated over $2 billion since its launch and is fueling significant growth in AI and hybrid cloud areas.
In Q2 2024, International Business Machines Corp. (NYSE:IBM) reported earnings of $2.43 per share, surpassing analyst expectations, and achieved $15.77 billion in revenue—up 1.9% year-over-year—driven by a 7.1% increase in software revenue. International Business Machines Corp. (NYSE:IBM)’s gross profit margins improved to 56.8%, showing its operational efficiency. Despite economic uncertainties, International Business Machines Corp. (NYSE:IBM)’s strong demand for cloud and AI solutions, especially in its consulting and software segments, underscores its resilience. Consulting revenues reached $5.18 billion in Q2, contributing to its strong performance.
Additionally, International Business Machines Corp. (NYSE:IBM)’s commitment to shareholder value through dividends and effective cash flow management makes it attractive to long-term investors. With expected modest earnings growth and a focus on high-margin, innovative sectors, International Business Machines Corp. (NYSE:IBM) is well-positioned for continued success.
Diamond Hill Capital Long-Short Fund stated the following regarding International Business Machines Corporation (NYSE:IBM) in its first quarter 2024 investor letter:
“Among our bottom Q1 contributors short positions in Dick’s Sporting Goods, International Business Machines Corporation (NYSE:IBM) and Palomar Holdings. Though we believe the quality and durability of IBM’s free cash flow-generating capabilities remain questionable, investor sentiment has improved amid optimism for the company’s still-nascent AI product suite.”
7. Goldman Sachs Group Inc. (NYSE:GS)
Number of Hedge Fund Investors: 68
Jim Cramer believes that the stock price of Goldman Sachs Group, Inc. (NYSE:GS) is currently overvalued. He’s concerned that the lack of IPOs and mergers and acquisitions (M&As) might be due to the upcoming election, which could be freezing business activity. He’s waiting for other companies to release their financial results before making a significant investment in Goldman Sachs Group, Inc. (NYSE:GS), even though he admires the company.
“I want to wait till numbers come down from others. I was a little surprised that Goldman Sachs didn’t see more capital markets activity. I got to tell you, David Faber and I were talking about where are the IPOs? It’s September. Where are the M&As? I think that maybe the election has everything frozen. But that means Goldman Sachs’ stock numbers are too high, and therefore I don’t want to make a big commitment to the stock right here, even though I love the company.”
Goldman Sachs Group, Inc. (NYSE:GS) is a strong investment choice based on its recent performance and future plans. In Q2 2024, Goldman Sachs Group, Inc. (NYSE:GS) achieved significant financial results, with revenue hitting $12.63 billion and net income rising to $3.32 billion, a 15% increase from the previous year. This growth is largely due to Goldman Sachs Group, Inc. (NYSE:GS)’s success in investment banking and asset management. Goldman Sachs Group, Inc. (NYSE:GS) is also expanding its reach into digital banking and fintech, particularly with its growing Marcus platform. This expansion is positioning Goldman Sachs Group, Inc. (NYSE:GS) to benefit from the increasing demand for digital banking services.
Moreover, Goldman Sachs Group, Inc. (NYSE:GS) has shown strong resilience during recent market fluctuations, thanks to its well-diversified business and solid risk management strategies. The decision to boost its share repurchase program by $2 billion further demonstrates Goldman Sachs Group, Inc. (NYSE:GS)’s confidence in its financial health and future prospects. Overall, these factors point to a positive outlook for Goldman Sachs Group, Inc. (NYSE:GS), suggesting it has strong potential for continued growth and profitability.
6. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Investors: 92
Jim Cramer believes that Devon Energy (NYSE:DVN) is a more affordable option compared to Exxon Mobil Corporation (NYSE:XOM) and Chevron Corp. (NYSE:CVX). He finds Exxon Mobil Corporation (NYSE:XOM)’s dividend yield to be low, and Chevron Corp. (NYSE:CVX)’s is only slightly better. Cramer doesn’t consider this a favorable time to invest in oil companies, as demand has been weak and prices are declining.
“Devon is actually cheaper than Exxon Mobil Corporation. Exxon is expensive, with only a 3.4% yield. It’s not much better than Chevron, which yields 4.7%. It’s not a good time to own oil. Demand was never there, and prices are finally falling.”
The positive outlook for Exxon Mobil Corporation (NYSE:XOM) is based on its strong financial performance, strategic investments, and growth in production and low-carbon initiatives. In Q2 2024, Exxon Mobil Corporation (NYSE:XOM) earned $9.2 billion, or $2.14 per share, and generated $10.6 billion in cash flow from operations. It returned $9.5 billion to shareholders through dividends and share buybacks. Exxon Mobil Corporation (NYSE:XOM) also achieved a 15% increase in production, driven by record outputs from its Permian, Guyana, and Pioneer operations.
The acquisition of Pioneer Natural Resources (NYSE:PXD) further strengthens its position in high-return unconventional resources. Exxon Mobil Corporation (NYSE:XOM) is also making strides in the energy transition with investments in low-carbon technologies. Notable projects include a partnership with ADNOC to develop the world’s largest low-carbon hydrogen facility, and efforts in renewable energy storage and carbon capture.
Exxon Mobil Corporation (NYSE:XOM) is also expanding into innovative materials like Proxxima™ resin and carbon fiber applications. Bottomline, Exxon Mobil Corporation (NYSE:XOM)’s strong financials, growing production capabilities, and commitment to low-carbon solutions position it well for continued success and value creation in both traditional and emerging energy markets.
5. Oracle Corporation (NASDAQ:ORCL)
Number of Hedge Fund Investors: 93
Jim Cramer highlights Oracle Corporation (NASDAQ:ORCL)’s strength in the data center space, emphasizing that its centers have some of the most secure operations, the lowest costs, and minimal errors in the industry. This efficiency is achieved by automating operations, as Oracle Corporation (NASDAQ:ORCL)’s data centers are largely run by machines rather than humans, which helps eliminate mistakes. According to Cramer, this automation allows each data center to become more profitable as it grows, leading to higher earnings for the company. This performance was a key reason why Oracle Corporation (NASDAQ:ORCL)’s stock surged 11%, reflecting the market’s confidence in the company’s ability to drive significant growth in the technology sector.
“Oracle Corporation’s data centers boast some of the best security, lowest costs, and fewest mistakes. We know they won’t make mistakes because the company is staffing these monsters with nothing but machines. Each one will make more money, and the bigger they get, the higher the earnings will go. That’s why the stock shot up 11%. Technology up 11%!”
The optimistic outlook for Oracle Corporation (NASDAQ:ORCL) is based on its strong performance in cloud services, expanding AI capabilities, and strategic partnerships. In Q1 FY 2025, Oracle Corporation (NASDAQ:ORCL) exceeded expectations, with cloud revenue jumping 21% to $5.6 billion, and further growth is expected. A key development is Oracle Corporation (NASDAQ:ORCL)’s partnership with Amazon Web Services (AWS), which integrates Oracle Cloud Infrastructure (OCI) with AWS. This collaboration expands Oracle Corporation (NASDAQ:ORCL)’s presence in the cloud market by tapping into AWS’s large customer base.
Oracle Corporation (NASDAQ:ORCL) is also focusing more on AI-powered services like its HeatWave managed service for data analytics, positioning the company for long-term growth. With an 11% increase in its stock recently, contributing to a nearly 48% year-to-date gain, investor confidence in Oracle Corporation (NASDAQ:ORCL)’s future is strong. Oracle Corporation (NASDAQ:ORCL)’s leadership in enterprise software, combined with its ongoing advancements in cloud and AI, creates a strong case for continued growth.
Carillon Eagle Growth & Income Fund stated the following regarding Oracle Corporation (NYSE:ORCL) in its Q2 2024 investor letter:
“Oracle Corporation (NYSE:ORCL) stock rose to all-time highs after the company announced better than expected cloud infrastructure revenue. Oracle signed dozens of new customers, including two leaders in generative artificial intelligence. The backlog remains, and strong growth appears poised to accelerate.”
4. Advanced Micro Devices Inc. (NASDAQ:AMD)
Number of Hedge Fund Investors: 108
Jim Cramer discusses Advanced Micro Devices, Inc. (NASDAQ:AMD), a technology company. He recently started buying Advanced Micro Devices, Inc. (NASDAQ:AMD) shares after the stock price dropped significantly in July. Despite strong financial results and positive future outlook, Advanced Micro Devices, Inc. (NASDAQ:AMD)’s stock has continued to decline. Cramer believes that the current valuation is too low and that Advanced Micro Devices, Inc. (NASDAQ:AMD) is a good investment opportunity, especially considering its potential for growth under the leadership of CEO Lisa Su.
“Advanced Micro Devices, Inc. is an on-again, off-again Charitable Trust holding. By the way, we’ll be talking about it on Thursday at our monthly meeting. It’s now an “on” because we started buying some when it sold off in July. It actually began its slide in March and is now down close to 40% from its highs…
It’s the third-worst pullback of any chipmaker in the S&P 500. The stock is down 26% just from its lower high on July 10th. And even after rebounding a few bucks today, did you know that Advanced Micro Devices, Inc. is down for the year? Red for the year!
Really, Advanced Micro Devices, Inc.’s latest quarter was pretty good across the board. They posted modest sales and earnings beats, with better-than-expected guidance for the current quarter. The stock only jumped 4% on the news!
Now, Advanced Micro Devices, Inc. is expected to earn $5.45 per share next year, with that number growing to $7.24 per share in 2026. But in a few months, 2026 will be next year, at which point the stock would be selling for less than 20 times next year’s earnings. I believe in CEO Lisa Su, and I think Advanced Micro Devices, Inc. is a great buy into weakness. I’ve got to tell you, that puts it below a market multiple—and to me, that’s just wrong.”
A bullish thesis for Advanced Micro Devices, Inc. (NASDAQ:AMD) is built on its strong financial results and expanding presence in artificial intelligence (AI) and data centers. In Q2 2024, Advanced Micro Devices, Inc. (NASDAQ:AMD) delivered earnings per share of $0.69, surpassing expectations and beating revenue estimates by reporting $5.84 billion, an 8.9% year-over-year growth. This demonstrates the resilience of its products despite industry challenges.
Advanced Micro Devices, Inc. (NASDAQ:AMD) is positioned to benefit from the growing demand for AI and data center solutions, with its recent partnerships, including one with AWS for cloud computing, highlighting its strength in these sectors. Its EPYC processors and Instinct accelerators are key to driving future revenue as AI adoption grows. As AI and data centers continue to expand, Advanced Micro Devices, Inc. (NASDAQ:AMD)’s growth prospects are expected to remain strong, and analysts are projecting significant earnings growth over the next year, reinforcing its appeal as a long-term investment.
3. JPMorgan Chase & Co. (NYSE:JPM)
Number of Hedge Fund Investors: 111
Jim Cramer explains how JPMorgan Chase & Co. (NYSE:JPM)’s President, Daniel Pinto, recently delivered bad news to investors hoping for alternatives to tech stocks. The bank revealed that conditions are less favorable than expected, particularly in capital markets activity, and they anticipate missing next year’s earnings due to lower net interest income. This is a crucial metric for banks, especially when interest rates are falling. If even JPMorgan Chase & Co. (NYSE:JPM), one of the most prominent financial institutions, can’t meet expectations, it’s concerning for the rest of the sector. As a result, JPMorgan Chase & Co. (NYSE:JPM)’s stock dropped by 5%, pulling other bank stocks down with it.
“Today, Daniel Pinto, JPMorgan Chase & Co.’s President and Chief Operating Officer, lowered the boom on the optimists who desperately wanted to buy something other than tech. The big bank told us that things are less bullish than we thought. There isn’t as much capital markets activity as we’d hoped this quarter, and most importantly, the estimates for next year are too high because of a likely miss on net interest income.
The key metric for banks, one that analysts expect to be good when rates are coming down, is net interest income. In short, JPMorgan Chase & Co. is going to miss the numbers next year. If the “beacon of finance” can’t make the estimates, how the heck will anyone else? So, the stock comes down 5%, at one point even uglier, and the rest of the banks roll over.
It gets worse. Last year, Pinto said the company was slated to spend between $1 billion and $2 billion on tech. This year, JPMorgan Chase & Co. is spending $2 billion, but a lot of that is related to cracking down on fraud. Great, that’s a deadweight loss for the bank—a must-spend with no real return on investment. There’s an opportunity for AI to help them cut costs, especially among the 100,000 to 250,000 people in call centers or doing other back-office jobs, what he calls “operational” roles. Now, many of these people will be “impacted”—which, I guess, is code for laid off. The rest will be part of what he calls “operational efficiencies,” meaning getting more productivity from the same people.
The good news here is that at least JPMorgan Chase & Co. will have some lower expenses over the next three to five years. Given that everything else is going the wrong way, maybe someday, at some point, there will actually be a return on investment in AI. But you can’t just say that out loud because it would require admitting that a lot of “deadwood” is about to get chopped—and deadwood, of course, means people. Wall Street used to actually say stuff like that, but these days we come up with cleaner, more indirect euphemisms. “Hey, we don’t do layoffs anymore, we find efficiencies, we right-size the workforce.”
JPMorgan Chase & Co. (NYSE:JPM) is expected to perform well due to its strong financials, solid balance sheet, and strategic approach to the economy. In Q2 2024, the bank reported a 20% increase in net revenue from the previous year, reaching $51 billion, driven by higher interest rates and strong results from its consumer banking, asset management, and corporate services divisions.
With $4.1 trillion in assets and $341 billion in stockholders’ equity, JPMorgan Chase & Co. (NYSE:JPM) is well-equipped to handle market fluctuations. The bank has successfully taken advantage of rising interest rates, boosting its net interest income, while its diverse revenue sources, including investment banking and wealth management, help protect against rate changes.
Additionally, JPMorgan Chase & Co. (NYSE:JPM)’s investments in AI and technology are set to improve efficiency and drive long-term growth. With analysts increasing earnings forecasts and predicting strong Q3 results, JPMorgan Chase & Co. (NYSE:JPM) is in a strong position for continued financial success.
Carillon Eagle Growth & Income Fund stated the following regarding JPMorgan Chase & Co. (NYSE:JPM) in its first quarter 2024 investor letter:
“JPMorgan Chase & Co. contributed positively to performance following solid financial results and positive guidance for the remainder of 2024. Moreover, growing chatter around rising capital markets activity likely contributed to the stock’s strong performance relative to other banks. Recall that JPMorgan has a robust capital markets franchise.”
2. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Investors: 179
Jim Cramer believes that NVIDIA Corporation (NASDAQ:NVDA)’s recent revenue shortfall is primarily due to production delays for their new AI chip, Blackwell. He emphasizes that the demand for this chip remains extremely high, and NVIDIA Corporation (NASDAQ:NVDA) is making progress in addressing the supply issues. Cramer doesn’t see this as a significant setback for NVIDIA Corporation (NASDAQ:NVDA)’s overall performance.
“Now, I don’t see much evidence of this, though the bears will point to NVIDIA Corporation’s failure to report a spectacular revenue beat. But that only happened because their new AI chip, Blackwell, got delayed. They’re having trouble producing it at scale, which is totally reasonable. But they’ve basically solved the problem now. It’s a supply problem, not a demand problem. Demand is off the charts.”
NVIDIA Corporation (NASDAQ:NVDA) offers a strong bullish case, supported by its outstanding financial performance and leadership in AI and GPU technology. In Q2 FY2024, NVIDIA Corporation (NASDAQ:NVDA) posted remarkable earnings, with revenue soaring to $13.51 billion, a 101% year-over-year increase, largely driven by booming demand for AI and data center products. Notably, data center revenue surged by 171% to $10.32 billion, as businesses ramped up investments in AI infrastructure.
NVIDIA Corporation (NASDAQ:NVDA)’s strategic partnerships with companies like VMware Inc. (NYSE:VMW), Snowflake Inc. (NYSE:SNOW), and Hugging Face further bolster its position in the AI ecosystem, while its H100 GPUs continue to set benchmarks in AI model training. New product releases, such as the GeForce RTX 4060 and AI Workbench, reinforce NVIDIA Corporation (NASDAQ:NVDA)’s growth across multiple sectors. Looking forward, NVIDIA Corporation (NASDAQ:NVDA) projects even stronger results for Q3 2024, with expected revenue of $16 billion and gross margins between 74.8% and 75.5%.
Analysts remain highly optimistic about NVIDIA Corporation (NASDAQ:NVDA)’s future, driven by its technological dominance and the expanding global demand for AI. This combination of innovation, strategic partnerships, and market leadership makes NVIDIA Corporation (NASDAQ:NVDA) a compelling investment opportunity.
1. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Investors: 184
Jim Cramer believes that Wall Street is underestimating the significance of the Apple Inc. (NASDAQ:AAPL) iPhone 16 launch. He points out that previous iPhone models have also faced initial criticism, but have ultimately proven successful. Cramer emphasizes that the incremental improvements in the iPhone 16 contribute to increased usage of Apple Inc. (NASDAQ:AAPL)’s services, a growing revenue stream that will eventually surpass the iPhone. While customer reaction to the new phone is uncertain, Cramer believes that the improvements will be highly valued by millions of users, making Apple Inc. (NASDAQ:AAPL) a strong long-term investment.
“Wall Street doesn’t seem too excited about the launch of the Apple Inc. iPhone 16 yesterday, but let me tell you something about this product. Every iPhone has been criticized as a disappointment at launch, except for the first couple of models. Every iPhone supposedly offers only incremental improvements. Don’t bother reading the reviews. That’s what they’ll tell you every single time…
As an Apple aficionado, I want to point out that all of these improvements mean a step up in how many people use Apple’s Services. This is the important revenue stream because one day it will surpass the iPhone as the dominant earnings driver. The service revenue stream is often overlooked, even though it’s becoming a larger and larger part of the puzzle…
We don’t really know how customers will react to the new phone. It’s always been guesswork. But what isn’t guesswork is that these incremental improvements are astonishing features to tens or even hundreds of millions of people. That’s what keeps you owning and not trading the stock of Apple Inc., one of the greatest wealth creators of all time.”
The positive outlook for Apple Inc. (NASDAQ:AAPL) is based on its strong growth potential, despite some short-term challenges. Although iPhone 15 sales in China have been weak, analysts expect a significant upgrade cycle, with anticipation for over 270 million units, especially as the iPhone 16 nears its 2025 release. Apple Inc. (NASDAQ:AAPL)’s services segment, including the App Store, is thriving, with Q1 2024 revenue reaching a record $23.1 billion and showing strong double-digit growth.
Apple Inc. (NASDAQ:AAPL) is also advancing in artificial intelligence, integrating AI into products like the iPhone 16 and the Vision Pro headset, which positions Apple as a leader in AI innovation. Despite some difficulties in hardware sales, Apple Inc. (NASDAQ:AAPL)’s resilient gross margins and strong profitability from its services support its financial stability.
Baron Technology Fund stated the following regarding Apple Inc. (NASDAQ:AAPL) in its Q2 2024 investor letter:
“The Fund’s chief relative detractor was Apple Inc. (NASDAQ:AAPL), even though it was a meaningful contributor to absolute performance, as we added to our Apple position significantly during the period. We bought Apple well, but in 20/20 hindsight we didn’t buy enough. Because Apple has an oversized weight in the Benchmark (its average weight was 15.7% for the period), when Apple’s stock outperforms (it appreciated 23.0%), it has generally been a headwind to relative performance. Our Apple underweight accounted for 33% of our relative underperformance for the period.
This quarter we increased the size of our position in Apple Inc., a leading technology company known for its innovative consumer electronics products like the iPhone, MacBook, iPad, and Apple Watch. Apple is a leader across its categories and geographies, with a growing installed base that now exceeds 2 billion devices globally. The company’s attached services – including the App Store, iCloud, Apple TV+, Apple Music, and Apple Pay – provide a higher margin, recurring revenue stream that both enhances the value proposition for its hardware products and improves the financial profile. Apple now has well over 1 billion subscribers paying for these services, more than double the number it had just 4 years ago…” (Click here to read more)
While we acknowledge the potential of Apple Inc. (NASDAQ:AAPL), our conviction lies in the belief that under the radar 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 the ones on our list but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
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