In this article, we will take a detailed look at Jim Cramer’s Latest Calls Before 2025 Begins: Top 10 Stocks.
Jim Cramer in a latest program talked about the market reaction to the Federal Reserve’s latest rate cut and its guidance that suggested fewer rate cuts moving ahead.
“I guess you could say the baby got thrown out with the bathwater. It was truly hideous, a little unexpected, and yes, wicked. Even though the market’s barely oversold, we may not get that quick snapback we normally expect in a deeply oversold market,” Cramer said.
Jim Cramer said Jerome Powell’s comments and tone were “stern” and his conference call “confounded” investors. Cramer said inflation has not come down enough and that has made the Fed’s job difficult.
Cramer then talked about different sectors and companies that need rate cuts amid a slowdown.
“I really wish the Fed hadn’t been so defensive about the need to cut rates going forward. A slower approach would have been much better. If they had explicitly taken a wait-and-see approach before this meeting, we’d be in a better position. This time, they telegraphed the wrong thing, hence today’s meltdown. However, if the weaker part of the economy deteriorates further or inflation comes down, the Fed still has room to cut. Here’s the bottom line: a previously data-dependent Fed chose not to be data-dependent today with its pronouncements, and that’s what drove the market down. This happened despite the quarter-point rate cut—something that’s typically good news for stocks—but it turned out to be the very opposite.”
READ ALSO 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In
For this article, we watched some latest programs of Jim Cramer and picked 11 stocks he is talking about. With each company, we have mentioned the number of hedge fund investors. Why are we interested in 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).
10. Ford Motor Co (NYSE:F)
Number of Hedge Fund Investors: 36
Jim Cramer in a latest program on CNBC expressed his concerns over rising warranty costs of Ford Motor Co (NYSE: F) and said the stock does not have a lot of “MOJO.”
“Ford does not have a lot of mojo in this note by Jefferies. This is one of the reasons—what can save the Fed when they cut. Ford has an inventory drifting up to 96 days. That says to me price cut, way too much, way too much. And by the way, that’s far more than GM—26. Wow. I mean, GM and Stellantis have much lower inventories.”
Ford shares have gained about 10% over the past 10 years, a stark contrast to the S&P 500’s 250%. Legacy automakers like Ford are grappling with challenges from newer competitors, the shift to electric vehicles (EVs), and the rapid rise of autonomous technology.
Ford’s Model e segment continues to drain cash as Ford works to strengthen its EV business. While the company has some strong products, it faces stiff competition from Tesla, Inc. (TSLA), Rivian Automotive, Inc. (RIVN), and other EV makers, leading to significant losses. Year-to-date, Ford’s EBIT has dropped to $8.1 billion, down from $9.4 billion in the same period last year.
Ford’s struggle to reduce warranty costs remains a concern. The company issued 62 recalls in 2024, far surpassing General Motors Company (GM), which had 33. Since 2021, Ford has had the industry’s highest recall rate, reflecting poorly on management’s efforts to lower warranty expenses and damaging the brand’s reputation.
9. Best Buy Co Inc (NYSE:BBY)
Number of Hedge Fund Investors: 37
Jim Cramer in a latest program on CNBC said he was surprised to see two bullish notes on Best Buy Co Inc (NYSE:BBY). He is still in a wait-and-see mode on the stock and said AI PCs have turned out to be a “plain out disappointment.”
“When they reported their quarter, it did not give you the kind of guidance that I wanted and the stock came all the way back down … I’m going to talk about it tomorrow in my investing club meeting. The AI PC did not work out. It does need rates lower. Appliances are not selling as well,” Cramer said.
Cramer is right. When 2024 started, everyone was excited about BBY amid AI PCs. DA Davidson analyst Michael Baker earlier this year said in a note that the last replacement cycle for laptops came during the pandemic and now that four years have passed on that cycle, consumers are ready to spend on new laptops, especially amid the AI wave.
Data also supported this trend. Market research firm Canalys estimated that one in five PCs shipped in 2024 will be AI-capable, translating into 170 million AI-capable PCs. Being a seller of laptops and PCs, Best Buy would be the direct beneficiary of this trend. However, so far, consumers have showed lack of enthusiasm for AI PCs.
8. Palantir Technologies Inc (NASDAQ:PLTR)
Number of Hedge Fund Investors: 43
Jim Cramer in a latest program analyzed why Wall Street missed the Palantir Technologies Inc (NASDAQ:PLTR) rally and how the company defies conventional valuation models.
“It has a tremendous business model that could change the entire Defense Department budget, but in some ways, Palantir is a renegade company playing by its own rules. Like AMC, the theater chain, the CEO actually caters not to Wall Street but to Main Street individual investors.
The difference is that when it comes to enterprise software, you don’t use price-earnings models. You use this difficult-to-understand Rule of 40, where you add the revenue growth rate to the earnings before interest and margin. If the sum is above 40, then you’ve got a winner. Most companies that are losing money can’t reach that number, but some can if they have incredible revenue growth.
Palantir Technologies Inc (NASDAQ:PLTR) appeared to be losing money hand over fist, but it passed the Rule of 40 test with flying colors. Since then, the growth’s been accelerating rapidly, and the profits are exploding. It’s among the fastest growers in the entire industry—top of the Rule of 40-plus. Like Tesla, Palantir is tight with Trump,” Cramer said.
So why didn’t we see it? Because the CEO was too brash and the actual business too opaque. By nature, what they do is secretive.”
What makes Palantir Technologies Inc (NYSE:PLTR) one of the top AI stocks? Its technologies are actually solving the problems of businesses. Palantir’s data technology Ontology is solving the famous hallucination problem for AI systems, thanks to the company’s years of experience with military and defense systems. Earlier this year at an event with customers, Palantir Technologies Inc (NYSE:PLTR) shared some specifics on how its customers are being able to reduce costs and increase profits due to its artificial intelligence platform (AIP) that was launched about a year ago.
Airbus accelerated A350 production by 33%, BP reduced costs per barrel by 60%, and Jacobs Connect cut power usage by 30%. Panasonic decreased waste by 12%, ESI Group sped up ERP harmonization by 70%, and PG&E reduced transformer ignitions by 65%. Eaton boosted productivity by 25%, while Tyson Foods achieved $200 million in cost savings.
Fidelity Growth Strategies Fund stated the following regarding Palantir Technologies Inc. (NASDAQ:PLTR) in its Q3 2024 investor letter:
“Untimely ownership of Palantir Technologies Inc. (NASDAQ:PLTR) (+47%) also hurt the fund’s relative result. This software and services firm, which operates in both government and commercial segments, saw strong growth during the quarter, largely driven by its “AIP” – or Artificial Intelligence Platform – offering. In early August, the company reported Q2 financial results that mostly met somewhat lofty expectations. We established a sizable holding in Palantir Technologies during the quarter, and at quarter end it was the second-largest position and a slight overweight.”
7. Sirius XM Holdings Inc (NASDAQ:SIRI)
Number of Hedge Fund Investors: 49
When asked about his opinion on Sirius XM Holdings Inc. (NASDAQ:SIRI), Jim Cramer recommended investors to move on from the stock:
“The numbers aren’t there. The numbers aren’t there. We’ve got to move on from that one. I don’t care that it’s already down, but the numbers are not there for SIRI.”
Weitz Multi-Cap Equity Fund stated the following regarding Sirius XM Holdings Inc. (NASDAQ:SIRI) in its Q3 2024 investor letter:
“This quarter, Liberty SiriusXM successfully completed its merger with SiriusXM, simplifying a complicated ownership structure by transforming our holdings of Liberty’s tracking stock into a direct interest in the satellite radio business. Unfortunately, the merger comes as investors are concerned with recent, negative subscriber trends and diminished cash flow that have pressured shares of both entities this year. As a result, the new Sirius XM Holdings Inc. (NASDAQ:SIRI) is on detractors list for the quarter. At current prices, we believe investors are overly pessimistic about SiriusXM’s future cash flows, and modestly added to our position. There were no new businesses added to the portfolio this quarter, nor any exits (our shares of Liberty SiriusXM were converted into shares of the new SiriusXM Holdings in the merger).”
6. Reddit Inc (NYSE:RDDT)
Number of Hedge Fund Investors: 52
Jim Cramer has been bullish on Reddit Inc (NYSE:RDDT) but the stock’s bull run has him recommending investors to wait for a pullback. In a latest program, Cramer said:
“I like Reddit, but you know what? Reddit now has a parabolic chart, and I don’t know what to do about it. It’s just going bonkers, and I wish it had a pullback before I could recommend it. It’s an extraordinary chart, but it has just moved up too much.”
With over 80 million daily active users, Reddit Inc (NYSE:RDDT) remains one of the fastest-growing social media platforms in the world. While Facebook and Twitter show signs of maturing growth, Reddit Inc (NYSE:RDDT) still has huge upside potential as more and more people flock to Reddit discussion boards for authentic opinions and discussion. User input from millions of people on various topics freely accessible to anyone is Reddit Inc (NYSE:RDDT)’s moat. As of 2023, users posted 16 billion comments on the platform, according to the company. That’s why companies are flocking to pay money to Reddit to use its data to train their AI models. Reddit Inc (NYSE:RDDT) has a licensing agreement with Alphabet Inc.’s Google worth $60 million to help train large language models. Reddit Inc (NYSE:RDDT) has signed licensing agreements totaling $203 million, with terms lasting two to three years. The company generated approximately $20 million from AI content deals last quarter and expects to exceed $60 million by year-end. Reddit Inc (NYSE:RDDT) has signed licensing agreements totaling $203 million, with terms lasting two to three years.
5. Walt Disney Co (NYSE:DIS)
Number of Hedge Fund Investors: 76
Jim Cramer in a latest program on CNBC said he has “turned positive” on Walt Disney Co (NYSE:DIS). Talking about a bullish analyst note on the stock, Cramer said:
“Streaming getting into profitability and then showing, starting to show significant margin improvement will be very important and I think the parks are going to surprise.”
Meridian Hedged Equity Fund stated the following regarding The Walt Disney Company (NYSE:DIS) in its Q2 2024 investor letter:
“The Walt Disney Company (NYSE:DIS) operates a diversified entertainment business with theme parks, media networks, and streaming services. We own Disney because we believe its strong brand, valuable IP, and expanding streaming offerings will drive sustainable long-term growth. The company’s stock, however, underperformed in the quarter due to concerns about a slowdown in growth at its theme park division. While park revenue still grew by 10% year-over-year, management’s commentary suggested a moderation in post-pandemic demand and rising costs, leading to a disappointing outlook for park operating income in the second half of the year. This overshadowed the positive news that the company’s streaming segment, driven by strong subscriber growth at Disney+, reached profitability ahead of schedule. We held our position and will continue to monitor the performance of the theme park division.”
4. Oracle Corp (NYSE:ORCL)
Number of Hedge Fund Investors: 91
When asked about Oracle Corporation (NYSE:ORCL), here is what Jim Cramer said during the Lightning Round segment of his program on CNBC:
“We don’t care where the stock is coming from, we care where it’s going to. Unfortunately, I do think after that last quarter, the stocks that do not make the quarter are being punished here and will continue to be punished until we get better news. So, Oracle Corp (NYSE:ORCL) does go lower in my opinion.”
Parnassus Value Equity Fund stated the following regarding Oracle Corporation (NYSE:ORCL) in its Q3 2024 investor letter:
“Oracle Corporation (NYSE:ORCL) announced second-quarter results that exceeded consensus expectations, driven by growth in its cloud infrastructure business, which is benefiting from demand for AI applications. Investor sentiment was further bolstered by the company’s announcement of a new partnership with Amazon.”
3. Tesla Inc (NASDAQ:TSLA)
Number of Hedge Fund Investors: 99
Jim Cramer in a latest program discussed the reason why some remained on the sidelines on Tesla Inc (NASDAQ:TSLA) and missed the post-election rally. Cramer mentioned slowing EV sales, concerns around a possible clash between Musk and Trump down the road and headwinds in China as some of the reasons that compelled many to doubt Tesla stock. However, Cramer believes Tesla has become a stock that can keep going higher irrespective of the state of its underlying business.
“Once you get a CEO with that kind of political influence, it’s easy for the faithful to imagine unlimited possibilities. This means they’re no longer constrained by the price-to-earnings multiple—they’ll pay anything for Tesla Inc (NASDAQ:TSLA), much higher than these prices. They’re actually insensitive to price. Oh, and did I mention that the brokerage firm Mizuho just upgraded the stock from hold to buy based on an improving outlook under the Trump administration?”
Looking beyond the recent spike in Tesla shares amid Donald Trump’s victory, Tesla’s fundamentals are challenged. How? Tesla Inc’s (NASDAQ:TSLA) key robotaxi event was short on details. Notably absent was the discussion of a “more affordable” model that Musk had previously mentioned to boost confidence in Tesla’s vehicle sales growth outlook.
What about the $30,000 price tag claim?
Musk has indicated that the Cybercab will have a production cost of approximately $30,000. Operating within the robotaxi fleet is projected to cost around $0.20 per mile. With a production cost of $30,000, the retail price of the Cybercab is likely to exceed this figure. For instance, if the Cybercab is priced at $30,000 per unit, that translates to $15,000 per seat. In contrast, the average price per passenger seat in Tesla Inc (NASDAQ:TSLA)’s most affordable long-range RWD Model 3—factoring in full self-driving (FSD) licensing—is under $10,000 ($29,990 post-incentive vehicle price plus $8,000 for the FSD license, divided by four passenger seats). Regarding operational costs, while the Cybercab is expected to cost $0.20 per mile, charging the Model 3 is estimated at under $0.10 per mile, leaving a significant margin to cover maintenance and downtime.
There is a lot of hype around Tesla Inc (NASDAQ:TSLA) robo taxis but many believe they will not be enough to fix the company’s long-term challenges.
What are these challenges?
Tesla Inc’s (NASDAQ:TSLA) product lineup is showing signs of stagnation, with over 95% of sales still coming from the Model 3 and Model Y. Meanwhile, competitors are rolling out more advanced models. Even Rivian’s CEO suggested Tesla Inc (NASDAQ:TSLA) could be nearing market saturation for these models. According to Reuters, Tesla’s market share in Europe is slipping as legacy automakers like BMW post stronger sales. Chinese competitor BYD is also gaining ground in Europe, despite talk of tariffs.
Baron Opportunity Fund stated the following regarding Tesla, Inc. (NASDAQ:TSLA) in its Q3 2024 investor letter:
Tesla, Inc. (NASDAQ:TSLA) designs, manufactures, and sells EVs, related software and components, and solar and energy storage products. Tesla shares contributed to performance during the quarter, reflecting increased investor confidence and optimism in Tesla’s AI initiatives, stabilization in the company’s industrial operations, including strong growth in its energy segment, and the anticipated launch of new vehicle models in the first half of 2025. After years of industry-wide investments in autonomous vehicles, advancements in AI technology have accelerated the development of autonomous driving technology. Tesla deployed its AI-based Full Self Driving (FSD) solution last year and has demonstrated rapid improvements in driving performance. It has articulated a goal of achieving nearly a 20-fold improvement in miles driven between critical disengagements – soon exceeding 10,000 miles – over a two-month period this fall.
AI relies on vast amounts of high-quality data and computational power, and we believe Tesla possesses distinct assets that will serve as a strong foundation for its AI initiatives. Since 2016, every Tesla vehicle produced has been outfitted with cameras and essential hardware, resulting in millions of connected cars globally that gather data from billions of miles driven each year by the Tesla fleet. This rich and unique dataset is invaluable for FSD training. Tesla is also differentiating with its AI training compute factory. Tesla finished 2023 with close to 15,000 NVIDIA H100 chip equivalents in training computation power. By the second quarter of 2024, it doubled this capacity. In the third quarter, the company activated its advanced training data center in Texas, which should allow the company to harness up to 90,000 H100 equivalent compute power by the end of 2024 – six times the compute capacity it had at the beginning of the year and by far the world’s largest autonomous driving training cluster. Unlike any other automotive company, Tesla is investing billions of profits generated by its automotive segment in its AI initiatives aiming to capture material share in lucrative markets of autonomy and robotics…” (Click here to read the full text)
2. Uber Technologies Inc (NYSE:UBER)
Number of Hedge Fund Investors: 136
Jim Cramer in a latest program talked about the underperformance of Uber Technologies Inc (NYSE:UBER) shares and said he likes the stock:
“It is discouraging. And I find that Uber Technologies Inc (NYSE:UBER), I personally think that a lot of it, the chart, it looks like a terrible chart. A lot of it is people right now have decided these companies are going to get hurt by, uh, by ride sharing. I don’t believe that. I think that Uber’s attractive and it’s come down a lot and I do like it.”
1. Netflix Inc (NASDAQ:NFLX)
Number of Hedge Fund Investors: 121
Jim Cramer in a latest program discussed how Netflix Inc (NASDAQ:NFLX) stock defied its doubters and kept rising despite concerns around its business model.
“We watch all sorts of programming from other countries because Netflix Inc (NASDAQ:NFLX) has taught us to like subtitles. It’s insane how good this company is—honestly, convincing Americans to read subtitles might be the most important cultural event of the 21st century.
And yet, Wall Street doubted Netflix the whole way, especially with their new ad-supported subscription tier. They didn’t get it perfect right out of the box, so many following the company presumed it was a bust. Oh, it was hardly a bust, and it’s just going to get bigger. Of course, it’s easy to say now that it wasn’t—you could’ve seen it—but those who spend their lives analyzing the company thought otherwise. They said, ‘Stay away,’ and these are the professionals. Who are we to doubt the professionals?
And then there’s the multiple—the darn price-to-earnings multiple. Netflix Inc (NASDAQ:NFLX) was always selling at 50 times earnings, which is just too high for people who care about valuation. But those people aren’t the general public. They aren’t the home gamers. The home gamers who love Netflix—they won. A cold stock? A cold stock that’s up 89% for the year.”
While we acknowledge the potential of Netflix Inc (NASDAQ:NFLX), 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 NFLX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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