Jim Cramer in a recent program on CNBC discussed the massive tech sell-off on the back of a new AI LLM model from Chinese startup DeepSeek. Cramer was frank and honest about the level of confusion in the market and said he does not know the implications of the new model on US tech stocks given the lack of data and specifics. He thought out loud about the factors that can weigh on US companies after the breakthrough achieved by DeepSeek:
“There could be some serious buyer’s remorse now. Maybe all the spending going to (Jensen Huang’s company) was needless overpay. Maybe the gigantic number of data centers being built, which are a huge driver of growth in our country, simply aren’t needed. Maybe all the cooling process expenses are a big mistake. Maybe the rush to reopen old nuclear plants, put up more renewable generation, and even bring back coal is totally unnecessary. Today, the air went out of every one of these balloons.”
Cramer said he’d be looking out to know how many chips DeepSeek required to reach this software breakthrough to gauge the impact on demand for US AI chip companies. He said stocks could either rebound from all of this or continue to slide:
“And whether numbers now have to come down because there will be a freeze in spending as clients reassess those multi-billion dollar orders. Maybe it’ll be like the pause in the internet build-out of 2000 that turned out not to be a pause at all, but a collapse.”
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For this article, we picked 10 stocks Jim Cramer recently talked about in his programs on CNBC. 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10. MicroStrategy Inc (NASDAQ:MSTR)
Number of Hedge Fund Investors: 25
When asked about MicroStrategy Inc (NASDAQ:MSTR), Jim Cramer said in a latest program that if investors want exposure to bitcoin, they should just buy bitcoin and stay away from MicroStrategy.
“Look, I say if you want to own Bitcoin, own Bitcoin. I own Bitcoin; you should own Bitcoin. Bitcoin is a great thing to have in your portfolio, but not MicroStrategy Inc (NASDAQ:MSTR)—just own the Bitcoin, that’s enough.”
MSTR is a risky stock. Why? MicroStrategy Inc (NASDAQ:MSTR) has become the largest corporate holder of Bitcoin, with a current valuation of approximately $48 billion for its 461,000 BTC as of January 2025. This represents about 2.2% of the total Bitcoin supply. A 70% drop in Bitcoin’s price could lead to an 80%-90% or greater decline in MicroStrategy Inc (NASDAQ:MSTR) stock, as Bitcoin has historically dropped by 70%-80% after post-halving price peaks.
MicroStrategy Inc (NASDAQ:MSTR) revenue is down 7.35% year-over-year for the last trailing 12 months and 10.3% year-over-year for Q3 2024. While its BI software segment is growing, it cannot rise to significant levels and makes up for a very small portion of the overall revenue.
Greenlight Capital stated the following regarding MicroStrategy Incorporated (NASDAQ:MSTR) in its Q4 2024 investor letter:
“There is an open debate as to whether Bitcoin will at some point enter the mainstream as an official currency. In fact, there is a bill before Congress for the U.S. to establish a “Strategic Bitcoin Reserve” and buy one million Bitcoins over five years. The bill’s purpose appears to be the use of public funds to ramp up the price of Bitcoin, thereby enhancing the wealth of existing Bitcoin holders. This seems a dubious use of taxpayer funds, but the new administration has a lot of Bitcoin-owning supporters, so it might happen. More likely, cooler heads will decide that the government should not borrow another trillion dollars in the bond market to speculate in Bitcoin and that there is, in fact, nothing strategic about doing so.
One of the biggest owners of Bitcoin is MicroStrategy Incorporated (NASDAQ:MSTR). While MSTR owns a small software business, its principal pursuit is buying Bitcoin. In practice, MSTR is an investment company that buys and holds Bitcoin.2 MSTR trades at a large premium to the value of the underlying Bitcoin it holds. The idea is to raise money from new investors at a premium and use the proceeds to buy more Bitcoin. Since the Bitcoin that MSTR buys costs less than the Bitcoin-implied value of MSTR’s stock, the new investment is dilutive to new investors but accretive to existing investors. MSTR’s promoters have labeled the return to existing investors created by this scheme the “Bitcoin yield”. As Bitcoin itself yields nothing, the Bitcoin yield is simply a measure of the Ponzi finance’s effectiveness. Lately, it has been pretty effective.”
9. Ford Motor Co (NYSE:F)
Number of Hedge Fund Investors: 36
Jim Cramer in a recent program on CNBC told investors about the issues with Ford Motor Co (NYSE:F).
“All right, here’s the problem with Ford Motor Co (NYSE:F): they’ve got big warranty issues, and they’re all coming back to haunt them because it costs so much to fix the cars. I’ve got to tell you, autos are a part of the economy where people are saying, “We need rate cuts, we need rate cuts.” And Ford Motor Co (NYSE:F), in particular, trading at five times earnings, tells me something is wrong there.”
Ford’s Model e segment is burning a lot of cash and faces intense competition. For the year-to-date period, Ford Motor Co (NYSE:F) EBIT has dropped to $8.1 billion from $9.4 billion a year ago. The stock is also seeing major downward revisions to its EPS for the next few quarters. Over the past three quarters, cumulative losses in this segment have reached $3.7 billion, up from $3.1 billion last year.
8. BlackRock Inc (NYSE:BLK)
Number of Hedge Fund Investors: 37
Jim Cramer in a latest program on CNBC recommended investors to buy BlackRock Inc (NYSE:BLK) shares and said BLK is a “fundamental” holding of his charitable trust.
“BlackRock Inc (NYSE:BLK) is a fundamental position for the portfolio in my Charitable Trust. The way this stock works is it has a big move, then it rests, another big move, then it rests. Overall, the long-term growth rate is fabulous, and I think it’s going to stay that way. I’d like you to buy the stock.”
The London Company Large Cap Strategy stated the following regarding BlackRock, Inc. (NYSE:BLK) in its Q3 2024 investor letter:
“BlackRock, Inc. (NYSE:BLK) – Shares of BLK rallied during 3Q as organic growth improved sequentially. Our long-term view of BLK has not changed. In the near-term, strong equity market performance is supportive of AUM and fee growth, and, visibility on declining interest rates is a potential tailwind to the fixed income ETF business. We continue to view BLK as a long-term share gainer with a broad spectrum of solutions, and we appreciate the strong balance sheet and steady capital return.”
7. Coterra Energy Inc (NYSE:CTRA)
Number of Hedge Fund Investors: 39
Jim Cramer was recently asked about Coterra Energy Inc (NYSE:CTRA) in the Lightning Round segment of his program on CNBC. Here is what he said in response:
“We sold a little Coterra Energy Inc (NYSE:CTRA) because it’s been up in a straight line—it was in a parabolic move. Now we’re watching and waiting. But I do think it’s the cheapest natural gas company, which is very good for a president who wants to export natural gas.”
Diamond Hill Mid Cap Strategy stated the following regarding Coterra Energy Inc. (NYSE:CTRA) in its Q3 2024 investor letter:
“Among our bottom Q3 contributors were Civitas Resources, Coterra Energy Inc. (NYSE:CTRA) Energy and Ashland. Oil and gas exploration and production companies Civitas Resources and Coterra Energy were pressured against a backdrop of weakening future global oil demand, which weighed in turn on West Texas Intermediate (WTI) and Brent crude prices and, consequently, the energy sector overall.”
6. Digital Realty Trust Inc (NYSE:DLR)
Number of Hedge Fund Investors: 52
Jim Cramer in a latest program on CNBC said Digital Realty Trust Inc (NYSE:DLR) is an “overheated” stock amid the data center boom and he wants investors to wait before buying it.
“I want you to wait until that comes down. That’s another stock that got overheated because of the data centers. We cannot, we cannot, we cannot get involved with a parabolic move of a stock that could go much lower. It’s at a 2.9% yield—I think a 4% yield is probably right for that one.”
5. Chipotle Mexican Grill, Inc. (NYSE:CMG)
Number of Hedge Fund Investors: 69
Jim Cramer was recently asked about Chipotle Mexican Grill, Inc. (NYSE:CMG). Cramer recommended investors buy and hold the stock.
“Somebody came out today and said they think the growth rate for next year won’t be that high. That was a devastating call, and what did the stock do? It went up anyway. My take is this: I think Scott Boatwright is doing a good job. I have no desire to trade Chipotle Mexican Grill, Inc. (NYSE:CMG)—that’s been a sucker’s game. Let’s just own it. If it comes down, we’ll buy a little more. That’s the Chipotle story—it’s not a trade; it’s an investment.”
Chipotle has offered strong guidance for FY2025, projecting 315 to 345 new company-operated restaurant openings. The company has also sustained its high single-digit growth trend while maintaining a strong balance sheet. Its cash position stands at $698.54M (down 13.3% QoQ, up 15.9% YoY) with no significant debt.
ClearBridge Growth Strategy stated the following regarding Chipotle Mexican Grill, Inc. (NYSE:CMG) in its Q4 2024 investor letter:
“We also initiated a position in fast casual restaurant chain Chipotle Mexican Grill, Inc. (NYSE:CMG). The recent pullback in shares related to a moderation in industry-wide restaurant sales and CEO Brian Niccol’s August departure created an attractive entry point into a company with industry-leading unit economics in a still underpenetrated market. Chipotle plans to double its store footprint over time while executing initiatives to increase volume growth through technology enhancements, reduced mobile order friction and higher production during peak hours. Better throughput, technological integration and improved mix should help to drive continued margin expansion. Chipotle further diversifies the portfolio, adding to consumer discretionary where we have historically had less exposure.”