In this article, we will take a detailed look at 10 stocks Jim Cramer is bullish on.
In a recent episode of Mad Money, Jim Cramer talked about what he sees as Wall Street’s biggest oversights this earnings season, especially on a day when the Dow dropped 141 points, and the NASDAQ advanced 0.2%. Cramer highlighted the misleading narratives surrounding the impact of GLP-1 drugs on food and beverage companies, the reluctance to lower prices post-pandemic, the skepticism around AI investments, and the persistent belief that Intel remains dominant in the tech sector.
Cramer argues that if companies were more honest about their changing situations, they would gain credibility and potentially boost their stock prices. Instead, by withholding important details, they leave investors confused and more likely to make poor decisions.
“If companies just own up to their own changing circumstances, things would be so much easier for everybody. But who wants to admit mistakes? They earn a lot of credibility for themselves leading the higher stock prices down the line, instead their stocks languish as investors try to assess what’s really going on and they presume the worst not the best.” said Cramer.
In a time filled with so much misinformation, Cramer emphasized how easy it is to be misled and underscored the need to recognize these gaps. According to Cramer, despite approximately 20 million Americans reportedly using GLP-1 weight loss and diabetes drugs, food and beverage companies refuse to acknowledge any negative impact of these medications. They won’t even suggest it. Cramer argues that their denial of the effects of GLP-1 drugs is simply untrue.
“We know that people eat much less when they take these GLP-1s and consume less snack food because it tamps down on cravings. …These drugs are incredibly powerful. The idea they aren’t doing damage to the snack food companies is insane.”
Cramer commented on the rising prices, stating that most companies see no need to lower them, despite significant hikes during the pandemic. He pointed out that airlines, which have consistently underperformed, refuse to reduce fares, behaving as if the price hikes never happened.
“In the airlines, there are endless underperformers, they simply wouldn’t roll back prices, they act as if they didn’t even take them up in the first place.”
The same goes for hotels and entertainment venues, which sharply increased prices during the pandemic and now resist lowering them, even as demand forecasts decline. Cramer also noted that many restaurants either claim their price hikes haven’t hurt sales or refuse to acknowledge the need to roll back prices.
“They raised prices drastically during the pandemic. They won’t cap the raising prices too much even as the forecast is coming down hard.”
Discussing AI, Cramer strongly disagrees with Wall Street’s claim that AI investments are a waste of money. He points out that many believe big companies spending heavily on AI-related video chips aren’t seeing any significant returns, and are only investing to keep up with competitors (see 33 Most Important AI Companies You Should Pay Attention To).
“We’re constantly being told that none of the big companies spending a fortune in video chips for AI has seen any meaningful return on that investment. They’re only doing it to prevent their competitors from getting an edge. That’s what we keep on hearing. That’s absurd!”
Cramer also challenged the common belief that INTC remains a leader in its sector. He dismissed claims that the company is poised for a major comeback, particularly in data centers, and that it has a chip capable of rivaling its competitors’ dominance. He pointed out that the company’s financial health tells a different story, citing the company’s decision to cut its dividend last year and suspend the remainder this year. According to Cramer, these actions don’t signal dominance, and he warned that this is not the same semiconductor company it once was, despite what the company might claim.
“I keep hearing that Intel’s gonna make a huge comeback that is catching up the others in the data center. That the data center has an Nvidia killer in GE-3. That it’s using the chips to sack money from you and further it’s dominance. Dream on! Have you seen Intel’s balance sheet? Can you read one? Do you think a company that cut its dividend last year and then suspends what was left of it this year in order to assert its dominance?! Look, this is not the Intel of old even though we want it to be. Despite Intel’s protestations, I wouldn’t want to be Intel’s partner.”
For this article, we reviewed one of this week’s episodes of Jim Cramer’s Mad Money and picked ten stocks he discussed.
Jim Cramer’s Hottest Stock Picks
10. Chipotle Mexican Grill, Inc. (NYSE:CMG)
Number of Hedge Fund Investors: 60
Chipotle Mexican Grill, Inc. (NYSE:CMG) runs a chain of restaurants that offers a streamlined menu of Mexican-style dishes. Chipotle Mexican Grill, Inc. (NYSE:CMG) focuses on using fresh, high-quality ingredients and traditional cooking methods. Currently, Chipotle Mexican Grill, Inc. (NYSE:CMG) operates 3,460 locations across the USA and 70 international restaurants.
Jim Cramer noted that Chipotle Mexican Grill, Inc. (NYSE:CMG), often seen as one of the best-managed restaurant chains, has admitted that their high prices in California are impacting sales due to the state’s minimum wage increase. According to Cramer, Chipotle Mexican Grill, Inc. (NYSE:CMG) stands out because they are willing to recognize and address their issues. He emphasized that their success and strong stock performance come from their ability to own up to problems and make necessary changes.
“Chipotle, arguably the best run restaurant chain, admitted the raising price is too high in California because of the impact on the bottom line from the state minimum wage. It hurts sales and they acknowledge it. Is there any reason why Chipotle are the best acknowledge best-run restaurant chain with the best stock? They own what’s wrong, and they change it.”
In its most recent financial report, Chipotle Mexican Grill, Inc. (NYSE:CMG) reported a 14.3% increase in revenue compared to the previous year. This growth was fueled by both higher prices and more customers visiting its restaurants. Chipotle Mexican Grill, Inc. (NYSE:CMG)’s investment in online ordering and delivery has also paid off, leading to larger average sales per transaction. Additionally, Chipotle Mexican Grill, Inc. (NYSE:CMG)’s focus on introducing new menu items and special promotions helps maintain customer interest and keeps the brand fresh.
Ensemble Capital Management stated the following regarding Chipotle Mexican Grill, Inc. (NYSE:CMG) in its Q2 2024 investor letter:
“Finally, we’d like to discuss Chipotle Mexican Grill, Inc. (NYSE:CMG), a nice long term success story in our client portfolios that we recently sold out of due to its high valuation after holding for over 4 years. This was an exit that was driven by the strong performance of the stock, increasing about 370% over the past 4 years from March 2020 to June 2024.
Chipotle has been a very successful stock as a result of the strong business performance of the company. Under Brian Niccol, its CEO since 2018, it has accelerated its growth, improved operations and efficiency, and set its sights on higher goals in bringing its casual healthy Mexican cuisine to all of North America and increasingly, the world.
We first bought the stock in client portfolios in March 2020 on the thesis that there was substantial growth runway and margin leverage in the business as it scaled. The initial reaction of the COVID pandemic shutdowns on the stock was severe, with a nearly 50% drawdown, which provided the opportunity to start buying at prices that we believed offered good future returns. As it turned out, underlying acceleration in demand for Chipotle and its pricing power proved the strengths of its offering and business model shortly after…” (Click here to read the full text)
9. Costco Wholesale Corporation (NASDAQ:COST)
Number of Hedge Fund Investors: 65
Jim Cramer noted that “Costco have pushed prices back,” highlighting that this strategy is not a coincidence behind its strong performance. According to Cramer, Costco Wholesale Corporation (NASDAQ:COST) is among the best-performing in its sector because it has managed to adjust its prices effectively.
Costco Wholesale Corporation (NASDAQ:COST)’s membership model provides a reliable source of recurring revenue. With more than 120 million cardholders worldwide, the company benefits from a loyal customer base that appreciates its low prices and bulk buying options. In its latest financial report, Costco Wholesale Corporation (NASDAQ:COST) reported a 10.6% increase in revenue and an 8.4% rise in net income.
Costco Wholesale Corporation (NASDAQ:COST)’s focus on operational efficiency, including bulk purchasing and private label products, helps maintain competitive prices and attract customers. Additionally, Costco Wholesale Corporation (NASDAQ:COST)’s expansion into new physical locations and its successful investment in e-commerce have significantly boosted its market presence and online sales.
ClearBridge Sustainability Leaders Strategy stated the following regarding Costco Wholesale Corporation (NASDAQ:COST) in its Q2 2024 investor letter:
“Consumer staples holdings were also standouts in the quarter, such as Costco Wholesale Corporation (NASDAQ:COST), which continues to execute well and delivered better than expected earnings, helped by strong traffic driving better expense leverage. Customers also looked to be shifting toward more discretionary purchases.”
8. Starbucks Corporation (NASDAQ:SBUX)
Number of Hedge Fund Investors: 69
Starbucks Corporation (NASDAQ:SBUX), a top global coffee brand, is set for strong growth thanks to its loyal customers and solid financial results, including a 10% revenue increase from last year. Starbucks Corporation (NASDAQ:SBUX) is expanding in the U.S. and internationally by opening new stores and increasing its market presence. Starbucks Corporation (NASDAQ:SBUX) attracts new customers and encourages repeat business with its innovative drinks, seasonal offerings, and varied food menu. Its focus on sustainability and social responsibility also appeals to consumers who value ethical practices, enhancing its brand image and supporting its long-term success.
Jim Cramer observed that many restaurants deny their price hikes have hurt sales or resist lowering prices. He highlighted Starbucks Corporation (NASDAQ:SBUX) as an example, noting that while the company provides good deals for reward members, it struggles to attract new customers due to the lack of affordable entry-level options.
“Many of the restaurants have asserted that their price increases haven’t really hurt sales or in some cases refuse to admit that they need to roll them back. Starbucks gives good deals to its rewards members but they can’t seem to get new people to join. I think that’s because there’s no entry-level coffee offering with a low price to get people in the door. They don’t want to go there. Is anyone in the industry obtuse and in denial? No.”
Diamond Hill Select Strategy stated the following regarding Starbucks Corporation (NASDAQ:SBUX) in its Q2 2024 investor letter:
“Starbucks Corporation (NASDAQ:SBUX) is the global leader in the coffee industry. Given its significant scale, we believe Starbucks can maintain its average ticket growth and drive decent traffic growth, which should allow for some margin expansion. While macroeconomic and competitive pressures remain intense in China, the country accounts for a minimal percentage of today’s earnings, and we believe the current valuation embeds little to no contribution from China over the long term, which we view as too cynical. As the share price declined recently amid near-term concerns surrounding store sales in North America and China, we capitalized on what we considered an attractive entry point.”
7. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Investors: 88
Jim Cramer noted that Walmart Inc. (NYSE:WMT) has successfully reduced its prices, which is not a coincidence given that the company has been one of the top-performing retailers. Cramer pointed out that this price adjustment has played a key role in Walmart Inc. (NYSE:WMT)’s strong performance compared to its competitors.
“Walmart has pushed prices back. No coincidence that its been among the best performing retailers.”
Walmart Inc. (NYSE:WMT) presents a strong investment opportunity as it recently reported a 4.8% increase in revenue year-over-year, showcasing its solid financial health. Walmart Inc. (NYSE:WMT) has also improved its online platform and integrated it with its physical stores, making shopping more convenient and boosting sales. Its ability to offer low prices keeps it competitive and among the top retailers. Furthermore, Walmart Inc. (NYSE:WMT)’s efforts to cut carbon emissions and enhance supply chain efficiency are likely to strengthen its brand image and support long-term growth.
6. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Investors: 124
Jim Cramer emphasized that Advanced Micro Devices, Inc. (NASDAQ:AMD) is not just competing with Nvidia; it is dominating the market. According to Cramer, Advanced Micro Devices, Inc. (NASDAQ:AMD) is capturing a substantial portion of the market, far surpassing NVIDIA Corporation (NASDAQ:NVDA)’s high-end chip offerings.
“This is not the Intel of old, even though we want it to be. …AMD isn’t nipping at their heels. AMD is dominating. It’s actually taking gobs of market share.”
Advanced Micro Devices, Inc. (NASDAQ:AMD) is increasingly attractive due to several key factors. Advanced Micro Devices, Inc. (NASDAQ:AMD) has a strong reputation in gaming, with its GPUs and CPUs being popular among gamers and video editors. This success is evident from a 49% year-over-year rise in CPU sales.
Over the past decade, Advanced Micro Devices, Inc. (NASDAQ:AMD) has surged nearly 5,000%, reflecting impressive long-term growth. Revenue and operating income have also skyrocketed, up 312% and 169%, respectively. As Advanced Micro Devices, Inc. (NASDAQ:AMD) ventures into artificial intelligence (AI), the potential for substantial gains is high, with continued expansion in this rapidly growing sector.
5. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Hedge Fund Investors:135
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), the world’s leading semiconductor foundry, dominates the global market with over 50% share, making it a crucial supplier to major tech companies like Apple Inc. (NASDAQ:AAPL), NVIDIA Corporation (NASDAQ:NVDA), and Advanced Micro Devices, Inc. (NASDAQ:AMD). Its cutting-edge technology, including 5nm and 3nm chips, keeps Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) ahead of competitors and ensures consistent demand for its products.
To manage geopolitical risks and meet increasing global demand, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is expanding its manufacturing operations beyond Taiwan, with significant investments in the U.S. and Japan. This strategic move is reflected in Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)’s strong financial performance, with recent revenue reaching $20.82 billion and earnings per share at $1.48, both surpassing expectations.
When asked if Taiwan Semiconductor Manufacturing Company (NYSE:TSM) is a good long-term buy, Jim Cramer responded positively, saying it’s a solid investment despite ongoing concerns about Taiwan.
“I think you’re fine. I think that there’s always going to be a worry about Taiwan. I think that if you go back to what Lisa Su said, she didn’t tell you not to worry about it because nobody says that. She says, you know, this one is not going to be a problem, and I’m with her”. Cramer said.
Cooper Investors Global Equities Fund stated the following regarding Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its Q2 2024 investor letter:
“Unsurprisingly the portfolio’s best performers in the very short term reflect this pattern, having narrowed to those most obviously exposed to the AI story – Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) and Alphabet. While the portfolio has owned semiconductor companies for years it remains diversified and is underweight the group from an active risk perspective, dragging on relative performance in the last six months. The portfolio is currently positioned to take advantage of the Value Latency we see in smaller sized companies, and the performance of the quarter has been more aligned with those factors.
While this positioning is painful in the short-term, we see considerable embedded value in our portfolio. We also see considerable risks and uncertainties existing in the AI theme that are not reflected in the Value Latency on offer in many stocks that have surged.
Returning to the AI story, today the portfolio has around 10% of capital invested across TSMC and Alphabet. We think TSMC has a tremendous opportunity to extract more value from the profit pool currently being enjoyed by its downstream customers.”
4. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Investors:165
Jim Cramer pointed out that Alphabet Inc. (NASDAQ:GOOG) isn’t just purchasing video chips for AI out of general concern about competition. Instead, they’re particularly worried that Meta might overtake them, and Cramer believes this concern is justified.
“Google aren’t buying because they’re worried that the other guys might do something. They’re specifically worried that Meta is going to catch and pass them and they should be.”
Alphabet Inc. (NASDAQ:GOOG)’s leadership in artificial intelligence (AI), along with its seamless integration of AI into its products—ranging from search and advertising to cloud services and hardware—positions the company for sustained growth. The stability of Alphabet Inc. (NASDAQ:GOOG)’s financial health is underpinned by its search advertising, which continues to be a major revenue source.
Furthermore, Alphabet Inc. (NASDAQ:GOOG)’s extensive ecosystem, including Android, Chrome, Google Maps, and YouTube, enhances user engagement and drives revenue growth through its interconnected services. In Q2 2024, Alphabet Inc. (NASDAQ:GOOG) reported $85 billion in revenue, a 14% year-over-year increase, largely driven by a 29% rise in Google Cloud revenue to $10.35 billion.
Cooper Investors Global Equities Fund stated the following regarding Alphabet Inc. (NASDAQ:GOOG) in its Q2 2024 investor letter:
“Unsurprisingly the portfolio’s best performers in the very short term reflect this pattern, having narrowed to those most obviously exposed to the AI story – TSMC and Alphabet Inc. (NASDAQ:GOOG). While the portfolio has owned semiconductor companies for years it remains diversified and is underweight the group from an active risk perspective, dragging on relative performance in the last six months. The portfolio is currently positioned to take advantage of the Value Latency we see in smaller sized companies, and the performance of the quarter has been more aligned with those factors.
While this positioning is painful in the short-term, we see considerable embedded value in our portfolio. We also see considerable risks and uncertainties existing in the AI theme that are not reflected in the Value Latency on offer in many stocks that have surged.
Returning to the AI story, today the portfolio has around 10% of capital invested across TSMC and Alphabet. Meantime, Alphabet has multiple value levers to pull across AI-augmented search, YouTube (now the ‘must-have’ streaming platform for young people) and Google Cloud.”
3. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Investors:186
NVIDIA Corporation (NASDAQ:NVDA) stands to gain substantially from the surging demand for AI, particularly as more companies and researchers invest in AI development. The continuous growth in AI training within data centers is the main force driving NVIDIA Corporation (NASDAQ:NVDA)’s revenue.
Although AI technology is expected to advance significantly over the next decade, the current demand already signals a strong outlook for NVIDIA Corporation’s (NASDAQ:NVDA)’s business. UBS analysts anticipate a 27% increase in NVIDIA Corporation (NASDAQ:NVDA) from its current $118 price, which would raise its forward price-to-earnings ratio to 54, indicating strong confidence in Nvidia’s future growth.
Jim Cramer emphasizes that NVIDIA Corporation (NASDAQ:NVDA)’s CEO, Jensen Wong, has been confidently stating that purchasing Nvidia chips could potentially quadruple returns. He stresses that this isn’t a mere speculation but a reality, and questions how much anyone has actually gained by betting against Wong’s predictions over the years.
“Nvidia’s Jensen Wong has been telling you can get 4x your money if you buy his chips. That’s 4x return. I think Meta could end up getting that. The others, they actually have to spend to play catchup. It’s not mythical, it’s reality. How much money have you made over the years betting against Jensen Wong?”
2. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Investors:246
Jim Cramer points out that skeptics should take notice of Meta Platforms, Inc. (NASDAQ:META)’s recent achievements with their computing power. Meta Platforms, Inc. (NASDAQ:META) has rapidly emerged as a leading generative AI platform with Meta AI, which Cramer himself has switched to because of its impressive performance.
“Memo to the clueless naysaying individuals: Have you seen what Meta Platforms has been doing with their computing power? They have, out of nowhere, become one of the most popular generative AI platforms with Meta AI. You have to try. I have switched to it. It is that good. Meta has been using their Nvidia purchases to make instagram reels much more relevant to you, much faster, cleaner. Meta has the best numbers of any of the tech titans. You think that’s some sort of coincidence?
Meta Platforms, Inc. (NASDAQ:META) is experiencing impressive financial growth, highlighted by a 22% year-over-year revenue increase and a 73% surge in net income for Q2 2024. This growth is driven by Meta Platforms, Inc. (NASDAQ:META)’s disciplined cost management and its substantial investments in AI infrastructure. Meta Platforms, Inc. (NASDAQ:META) is planning capital expenditures between $37 billion and $40 billion this year, including the purchase of 350,000 Nvidia GPUs to strengthen its AI capabilities.
Meta Platforms, Inc. (NASDAQ:META)’s open-source AI model, Llama 3.1, is particularly noteworthy for its cost efficiency and its ability to drive faster innovation through collaboration. As digital advertising spending continues to increase, Meta Platforms, Inc. (NASDAQ:META)’s platforms, such as Instagram and Facebook, are expected to retain their dominant positions, further boosting the company’s growth outlook.
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Investors: 302
Amazon.com, Inc. (NASDAQ:AMZN)’s cloud computing division, Amazon Web Services (AWS), is experiencing significant growth, with a 19% year-over-year revenue increase and a 75% jump in operating income last quarter. This success is largely fueled by the strong demand for AI services and the ongoing transition of corporate IT infrastructure to the cloud. Additionally, Amazon.com, Inc. (NASDAQ:AMZN)’s entry into the healthcare market, particularly through Amazon Pharmacy, is showing promising results, with growing consumer adoption and increasing market share.
Despite a recent dip in Amazon.com, Inc. (NASDAQ:AMZN)’s stock price, Wall Street analysts remain optimistic, consistently rating the stock as a “buy” and projecting substantial upside. Recent business developments, including securing NBA media rights and a successful Prime Day event, further support Amazon.com, Inc. (NASDAQ:AMZN)’s strong growth outlook.
Jim Cramer explained that investors are hesitant to buy Amazon.com, Inc. (NASDAQ:AMZN) because they are concerned about the potential threat from Meta. They fear that Meta Platforms, Inc. (NASDAQ:META) might catch up to and even surpass Amazon.com, Inc. (NASDAQ:AMZN). This concern is well-founded, as Meta Platforms, Inc. (NASDAQ:META)’s advancements could pose a significant challenge to Amazon.com, Inc. (NASDAQ:AMZN)’s market position.
Diamond Hill Select Strategy stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q2 2024 investor letter:
“Among our top individual contributors in Q2 were Amazon.com, Inc. (NASDAQ:AMZN), Texas Instruments and Mr. Cooper Group. Internet retail and cloud infrastructure company Amazon is benefiting from strong profitability, particularly in its Amazon Web Services (AWS) business. Shares also received a boost amid growing optimism around the demand for AWS as Amazon customers’ investments in generative AI projects continue growing.”
While we acknowledge the potential of Amazon.com, Inc. (NASDAQ:AMZN), 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 AMD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: Analyst Sees a New $25 Billion “Opportunity” for NVIDIA and Jim Cramer is Recommending These 10 Stocks in June.
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