In this article, we’ll explore Jim Cramer’s Top 10 Must-Watch Stocks Today.
Jim Cramer recently discussed Nvidia’s latest earnings report on Mad Money. Despite a solid quarter, the company did not exceed the high expectations set by investors and failed to deliver its key products quickly enough to sustain its previous extraordinary performance. This disappointment led to a relatively muted market reaction, with only modest movements in major indices.
“Turns out that the company is mortal after all. Even though it reported a great quarter last night, it wasn’t able to deliver its key product fast enough to allow the company to do what it’s done so many times before: blow away earnings and raise forecasts to unfathomable levels. The company didn’t define today’s trading because it failed to dazzle in the way that so many money managers had come to expect. The major indices didn’t move much—the Dow advanced 244 points, the S&P was basically flat, and the NASDAQ dipped just 0.23%.”
Cramer expressed relief that the company’s quarter brought an end to the unrealistic expectations that had surrounded the stock. He emphasized that the company is not a miracle company but a firm specializing in high-performance chips that enhance productivity and problem-solving. Cramer noted that the market had unfairly elevated the company to a status where it was expected to perform miraculous feats beyond its actual capabilities.
“My response to all this? Goodness gracious! With this quarter’s results, the albatross of perfection is now gone; the millstone has been shredded. As much as I love the company, I’m thrilled that we can finally return to a market where there are many important stocks representing many important trends, rather than just one stock capturing the attention of legions of investors—many of whom have no idea what it does, let alone where it fits into the technological food chain.
What I’m saying is that, in the end, the company isn’t a concept; it’s not a cult; it’s not a miracle maker. It’s a company that designs incredibly fast chips that enable rapid calculations to help companies speed up problem-solving and improve productivity. You can’t ask the company’s Blackwell chip to cure cancer or put a man on Mars, and it certainly can’t bring about world peace. Yet, when you look at how this stock was trading in recent weeks, the market was basically asking CEO Jensen Huang to do all these things and more.”
He believes the company should be held as an investment, not traded based on fluctuating expectations. While acknowledging that the stock had become overvalued before the quarter, Cramer maintains his belief in the company’s value.
“Right now, it looks like the company can expand customer gross margins—important but not earth-shaking, especially since the enterprise is the client, not you; you won’t even see it. Now that this quarter is in the rearview mirror, my hope is that those who wagered on the stock, rather than invested in the company, will finally move on. No more exacting comparisons with AMD, please. We need to go back to a world where we value the company like any other company, with a reasonable price-to-earnings (P/E) multiple based on its growth.”
Jim Cramer also addressed the question of whether AI investments are yielding tangible returns, especially in terms of improving gross margins. He noted that many of the most convincing AI applications have taken time to develop. Early investment in AI often focuses on training models, and only after this stage can AI start delivering practical benefits. Cramer emphasized that AI’s most significant impacts are typically in enterprise settings rather than for individual consumers.
“For the skeptics, the most compelling AI use cases have been slow to develop. Much of the early investment goes toward training AI models. Only after this process comes to fruition can artificial intelligence actually do something useful for users. It’s important to note that most areas where AI is truly useful are enterprise-oriented.
As a consumer, you may not see how effective these models can be. Keep the term “enterprise” in mind, because it means it’s not aimed at individual users. That’s why tonight I’m going to start something new: a running list of some of the best AI use cases we’ve heard about.”
To highlight the progress in this area, Cramer is introducing a new feature: a running list of notable AI use cases. He pointed out that some AI applications have been in use for a while. For instance, OpenAI generates revenue from its ChatGPT offerings, with a free version available alongside paid subscriptions like ChatGPT Plus for $20 a month and more expensive options for businesses.
“Some of these have been around for a while. For example, there’s a free version of ChatGPT, but OpenAI generates revenue from $20-a-month ChatGPT Plus subscriptions, as well as higher-priced offerings for enterprise customers. The same goes for Gemini and Claude, which have similar pricing. Microsoft’s Copilot functionality and Adobe’s Firefly tools have also been part of their broader product suite since late last year. Both are money makers.”
Our Methodology
This article reviews a recent episode of Jim Cramer’s Mad Money, where he highlighted ten stocks with notable growth potential. It also examines hedge fund perspectives on these stocks, ranking them from least to most owned based on hedge fund ownership.
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 Top 10 Must-Watch Stocks Today
10. MP Materials Corp.(NYSE:MP)
Number of Hedge Fund Investors: 28
MP Materials Corp. (NYSE:MP) stands out as a strong investment due to its crucial role as a top U.S. producer of rare earth materials, which are essential for electric vehicles (EVs), renewable energy technologies, and advanced electronics. Despite a $34 million net loss in Q2 2024 from reduced revenue in rare earth concentrates, MP Materials Corp. (NYSE:MP) remains vital in the supply chain, especially for neodymium-praseodymium (NdPr) oxide, which is key for EV motors.
Jim Cramer finds MP Materials Corp. (NYSE:MP)’s situation difficult due to the company’s ongoing struggle to achieve profitability. He stresses that for any company, including MP Materials Corp. (NYSE:MP), being profitable is crucial. Without overcoming its current financial losses, MP Materials Corp. (NYSE:MP)’s future remains uncertain.
“I find this situation challenging because while they need to make a lot of money, they’ve been struggling. It’s crucial for companies to be profitable, and if they don’t overcome their current losses, it becomes irrelevant. That’s where I stand with MP.”
The positive long-term outlook of MP Materials Corp. (NYSE:MP) is driven by the growing global need for rare earth elements, fueled by the rapid increase in EV adoption and the expansion of renewable energy. MP Materials Corp. (NYSE:MP)’s integrated approach—covering mining, processing, and refining—positions it well to benefit from this rising demand. MP Materials Corp. (NYSE:MP) is also increasing its production capabilities, which should improve revenue and profitability as market conditions recover.
Analysts are generally optimistic, with some price targets reaching $30, showing confidence in MP Materials Corp. (NYSE:MP)’s strategies and its role in reducing U.S. reliance on Chinese rare earth supplies. Moreover, MP Materials Corp. (NYSE:MP)’s efforts to enhance domestic production align with trends favoring local supply chains, offering further growth potential in the long term.
Bernzott Capital Advisors US Small Cap Value Fund stated the following regarding MP Materials Corp. (NYSE:MP) in its first quarter 2024 investor letter:
“Materials were the leading detractors to performance. Our exposure to MP Materials Corp. (NYSE:MP) was the main culprit, as the stock declined by 28% as prices for their critical commodity output NdPr exhibited weakness due to seasonality factors and lower demand from Electric Vehicles and other industrial applications. Despite the sell-off, we increased our position in the stock as we believe the long-term fundamentals remain intact.”
9. SAP SE (NYSE:SAP)
Number of Hedge Fund Investors: 31
Jim Cramer highlighted SAP SE (NYSE:SAP), a major company that manages technology for large enterprises. He emphasized that SAP SE (NYSE:SAP) has a strong product offering and noted the potential of its prowess in enterprise software.
“SAP is a giant company that helps coordinate technology at the enterprise level. We know they’ve got a really good product. We’ve had them on before. “
Ave Maria World Equity Fund stated the following regarding SAP SE (NYSE:SAP) in its first quarter 2024 investor letter:
“SAP SE (NYSE:SAP) provides enterprise application software products worldwide. SAP is successfully transitioning from a perpetual license model to a SAAS model, which we believe will lead to an increase in TAM (total addressable market), higher margins and lower capital intensity.”
SAP SE (NYSE:SAP) is an attractive investment due to its strong financial performance, leading position in cloud computing, and strategic focus on artificial intelligence (AI). In its recent Q2 2024 earnings report, SAP SE (NYSE:SAP) showed a solid 9.7% increase in revenue to $8.29 billion, surpassing expectations. Cloud revenue is a key growth driver, with estimates suggesting a 24% to 27% rise in cloud and software revenue, reaching €29.0 to €29.5 billion in 2024.
SAP SE (NYSE:SAP)’s AI initiatives, including SAP Joule, which will handle 80% of its most common transactions by the end of 2024, are set to improve efficiency and enhance customer experience. This AI-driven approach is likely to boost SAP SE (NYSE:SAP)’s market appeal further. Additionally, SAP SE (NYSE:SAP)’s stock recently hit a 52-week high of $220.32, signaling strong investor confidence. Analysts are generally positive, with many raising their price targets, reinforcing a bullish outlook for SAP SE (NYSE:SAP)’s continued growth and leadership in the market.
8. Best Buy Co. Inc.(NYSE:BBY)
Number of Hedge Fund Investors: 37
Jim Cramer finds it highly satisfying when a stock he supports performs exceptionally well despite being targeted by short sellers. Best Buy Co. Inc.(NYSE:BBY)’s recent sales report exceeded expectations, countering predictions that it might follow in Circuit City’s footsteps and struggle against Amazon Inc. (NASDAQ:AMZN). Cramer notes that Best Buy Co. Inc.(NYSE:BBY)’s results showed an improving trend, with sales picking up towards the end of the quarter.
“Few things in this business are more satisfying than outsmarting the short sellers who bet against one of your favorite stocks, which then performs remarkably well. That’s how I feel about Best Buy, the Consumer Electronics chain. They reported much better-than-expected sales this morning, defying the naysayers who predicted it would be the next Circuit City, a company destroyed by Amazon.
After this excellent quarter, I think it’s all coming together for Best Buy. The quarter showed what’s known as better-than-expected cadence—meaning sales improved towards the end of the period. They even gave a positive guide because August, which was not included in the quarter, was better than July. As CEO Cory Barry confidently stated in a recent conference call, “We delivered strong results in our domestic tablet and computing categories.” These two categories, by the way, contributed 6% to our sales growth, which bodes well for the back-to-school season and the new AI-enabled PCs that will ship in volume this quarter.
Entering the quarter, 6.5% of the float had been sold short because bears believed Best Buy would lower estimates due to its excessive appliance exposure. However, the computing segment of the business outperformed appliances, which had been a drag. Consequently, the stock surged 14%. With this momentum, I believe it can go even higher.”
Best Buy Co. Inc. (NYSE:BBY) is an appealing investment due to its strong financial performance and favorable outlook. For Q2 2025, Best Buy Co. Inc.(NYSE:BBY) reported earnings per share (EPS) of $1.34, beating expectations by $0.18, and revenue of $9.29 billion, which also exceeded forecasts. Although revenue declined from the previous year, Best Buy Co. Inc.(NYSE:BBY) jumped over 17% after the earnings report, signaling positive investor sentiment.
Best Buy Co. Inc.(NYSE:BBY) has raised its annual profit forecast, indicating confidence in future growth. Best Buy Co. Inc.(NYSE:BBY)’s commitment to returning value to shareholders is demonstrated by its quarterly dividend of $0.94 per share, which translates to an annual yield of 3.76%. Best Buy Co. Inc.(NYSE:BBY) has a strong track record of increasing its dividend by an average of 18.7% annually over the past three years. Combined with a high return on equity of 47.56% and a manageable debt-to-equity ratio, Best Buy Co. Inc.(NYSE:BBY)’s solid financial health and shareholder focus make it a promising investment opportunity.
7. The Gap Inc.(NYSE:GAP)
Number of Hedge Fund Investors: 39
Jim Cramer is impressed with the new direction at The Gap Inc.(NYSE:GAP) under its CEO, Richard Dixon. He finds it especially satisfying when companies outperform expectations and surprise their critics.
“I’m hearing about the new Gap under its CEO, and I think he’s doing a good job. Few things in this business are more satisfying than outperforming expectations and surprising short sellers.”
The Gap Inc. (NYSE:GPS) offers a promising investment opportunity due to its strong recent performance, effective leadership, and brand rejuvenation efforts. In Q2 2024, The Gap Inc. (NYSE:GPS) saw a 5% increase in net sales and a 3% rise in comparable store sales, with Old Navy achieving its fourth straight quarter of growth. This performance demonstrates The Gap Inc. (NYSE:GPS) ‘s ability to engage consumers successfully, even in a tough market.
The Gap Inc. (NYSE:GPS) also improved its gross margin by 500 basis points, showing better cost management and operational efficiency. The appointment of Richard Dickson as CEO is another positive development. Known for revitalizing the Barbie brand at Mattel Inc. (NASDAQ:MAT), Dickson is expected to bring similar success to The Gap Inc. (NYSE:GPS), focusing on brand renewal and operational improvements. Analysts also see a favorable risk/reward balance for The Gap Inc. (NYSE:GPS).
6. Ford Motor Company (NYSE:F)
Number of Hedge Fund Investors: 47
Jim Cramer acknowledges the frustration over Ford Motor Company (NYSE:F) not initiating a buyback program. He points out that due to the Ford Motor Company (NYSE:F) family’s unique stock ownership structure, the company might focus on regular and special dividends to return value to shareholders. Cramer reflects on his past advice, where he mentioned “getting paid to wait” and his long-term confidence in Ford Motor Company (NYSE:F) despite short-term challenges.
“Listen, I know you’re frustrated that Ford hasn’t started a buyback program, but I read that due to the Ford family’s unique stock ownership structure, the only way they might return value to shareholders is through regular and special dividends. This reminds me of a phrase you’ve used in the past: “getting paid to wait.”
Now, Ford has an excellent yield, but by closing your position in the travel trust and advising us to stay away, are you suggesting that your philosophy of “getting paid to wait” doesn’t apply this time? If so, do you no longer believe the company has a bright future?”
Ford Motor Company (NYSE:F) is a strong investment opportunity due to its focus on expanding its electric vehicle (EV) lineup, improving cost-efficiency, and delivering solid financial results in 2024. The company’s Ford+ strategy is designed to position Ford as a leader in the EV market by ramping up production and introducing new models to meet growing global demand.
In Q2 2024, Ford Motor Company (NYSE:F) achieved strong revenue and earnings, driven by its successful EV and hybrid vehicles. Ford Motor Company (NYSE:F) has also made notable improvements in vehicle quality and operational efficiency, which are expected to enhance profitability. Currently, Ford Motor Company (NYSE:F)’s stock is performing well, trading above key moving averages with positive technical indicators. Analysts are optimistic, with price targets suggesting a potential upside from current levels.
5. NIKE Inc. (NYSE:NKE)
Number of Hedge Fund Investors: 66
Jim Cramer, after reviewing NIKE Inc. (NYSE:NKE)’s fourth-quarter earnings call, identifies a significant issue beyond just consumer concerns—it’s quality control. As a long-time NIKE Inc. (NYSE:NKE) customer and former runner, Cramer has noticed a decline in product durability, particularly with Nike shorts falling apart. He believes that until NIKE Inc. (NYSE:NKE) addresses these quality issues, they will continue to weigh down the stock.
“After listening to Nike’s fourth-quarter earnings call, I have to say we’ve got a bigger issue than just the consumer problems I mentioned—it’s quality control. I’ve been buying Nike my whole life; I’m a runner and ran in college. What I’ve noticed recently is that the shorts are falling apart. Until they address this issue, I think it’s going to act as an overhang on the stock. Nike needs to understand that product quality matters to us consumers.”
NIKE Inc. (NYSE:NKE) is an attractive investment due to its strong financial performance and strategic efforts, even though it faces some short-term challenges. In the first quarter of fiscal 2024, NIKE Inc. (NYSE:NKE) generated $12.94 billion in revenue, a 2% increase from the previous year, driven by strong demand in key regions like Europe, the Middle East, and Africa. Footwear sales in these areas rose by 12%, highlighting NIKE Inc. (NYSE:NKE)’s success in capitalizing on global opportunities.
NIKE Inc. (NYSE:NKE) also improved its gross margin by 110 basis points in the fourth quarter of fiscal 2024, thanks to effective pricing strategies and lower logistics costs. This margin improvement, along with a 5% increase in wholesale revenues, reflects strong demand and efficient operations. NIKE Inc. (NYSE:NKE) is addressing its North American challenges by focusing on a balanced product portfolio and investing in innovation. These strategies set NIKE Inc. (NYSE:NKE) up for long-term growth, strengthening its position and supporting a positive outlook for its stock.
Mar Vista Focus strategy stated the following regarding NIKE, Inc. (NYSE:NKE) in its Q2 2024 investor letter:
“NIKE, Inc.’s (NYSE:NKE) stock declined following management’s revised forecast for fiscal year 2025, projecting negative mid-single-digit revenue growth instead of the previously anticipated positive growth. The company has observed a marked slowdown in lifestyle product sales since April, a trend that persisted into June. Our current projections indicate that both sales and earnings will fall 15-20% below the conservative estimates set by management just a quarter ago. This substantial downward revision in sales and earnings is attributed to insufficient product innovation, wholesale channel shift, and intentional reduction of supply in lifestyle franchises. While the negative adjustments to guidance could potentially act as a clearing event for the stock, the degree of conservatism in the new projections remains uncertain.
Nike maintains its position as the global leader in sportswear. However, its revenue growth has been hampered by a lack of innovation, and its recovery is further complicated by deteriorating macroeconomic conditions in the US and China. The company’s renewed focus on innovation and efforts to re-engage with wholesale channels may eventually help restore growth, but we believe increased skepticism regarding management’s ability to execute is justified.”
4. CrowdStrike Holdings Inc.(NASDAQ:CRWD)
Number of Hedge Fund Investors: 69
Jim Cramer, reflecting on CrowdStrike Holdings Inc.(NASDAQ:CRWD)’s recent performance, acknowledges the company’s tumultuous period following a significant tech issue on July 19th, which led to global disruptions. Despite concerns that this incident might negatively impact their business, CrowdStrike Holdings Inc.(NASDAQ:CRWD) has recently reported strong sales, impressive earnings, and high customer retention.
“It’s been a crazy couple of months for Cramer favorite CrowdStrike, the cybersecurity company that made headlines for all the wrong reasons back on July 19th when a botched update caused widespread tech issues, shutting down millions of systems globally. There was a lot of speculation that these problems could hurt their business, but last night, CrowdStrike reported strong sales, excellent earnings, and terrific customer retention.
As a result, the stock jumped nearly 3% today and was up even more at one point. While it’s still down over 30% from last month’s all-time high, it has rebounded 35% off its recent lows, where I said it had bottomed out. Could this have more room to run?”
CrowdStrike Holdings Inc. (NASDAQ:CRWD) is a strong investment opportunity due to its impressive financial performance and leading position in the cybersecurity market. For fiscal Q2 2025, CrowdStrike Holdings Inc. (NASDAQ:CRWD) reported revenue of $964 million, exceeding expectations, and achieved a 32% year-over-year increase in annual recurring revenue (ARR), reaching $3.86 billion.
This growth highlights CrowdStrike Holdings Inc.(NASDAQ:CRWD)’s resilience and effective management, particularly given the temporary impact of the “Channel File 291 Incident” on its reputation, which has not disrupted its long-term growth. CrowdStrike Holdings Inc.(NASDAQ:CRWD)’s positive outlook is driven by its leadership in AI-powered cybersecurity solutions through the Falcon platform, which continues to see significant adoption. CrowdStrike Holdings Inc.(NASDAQ:CRWD)’s emphasis on cloud security, identity protection, and next-generation SIEM technologies positions it well for continued success in the expanding cybersecurity sector.
With a projected 25% revenue growth for Q3 2025 and a target to reach $10 billion in ARR by the end of fiscal year 2031, CrowdStrike Holdings Inc. (NASDAQ:CRWD)’s future growth prospects are strong. Customer loyalty remains high, and the Falcon Flex procurement vehicle has been notably successful, generating $700 million in deal value within a year. Despite challenges like longer sales cycles and rising operating expenses, CrowdStrike Holdings Inc. (NASDAQ:CRWD)’s ability to manage these issues while remaining profitable and growing its market presence supports a bullish investment outlook for its stock.
Carillon Eagle Mid Cap Growth Fund stated the following regarding CrowdStrike Holdings, Inc. (NASDAQ:CRWD) in its Q2 2024 investor letter:
“CrowdStrike Holdings, Inc. (NASDAQ:CRWD), a security software provider, reported strong earnings results, which stood in contrast to some competitors. Strength in endpoint security, cloud security, vulnerability management, and identity protection drove revenue growth and profitability ahead of expectations for the quarter and outlook. The cyber threat environment remains elevated, and it is likely that the rise of artificial intelligence (AI) will make it easier for criminals and threat actors to design and launch sophisticated attacks, increasing the need for CrowdStrike.”
3. Advanced Micro Devices Inc. (NASDAQ:AMD)
Number of Hedge Fund Investors: 108
Jim Cramer highlights Advanced Micro Devices Inc. (NASDAQ:AMD) as a notable player in the chip industry, particularly in the artificial intelligence space. Although Advanced Micro Devices Inc. (NASDAQ:AMD)’s chips are not as advanced as NVIDIA Corporation (NASDAQ:NVDA)’s, they remain highly competitive. Cramer points out that Advanced Micro Devices Inc. (NASDAQ:AMD)’s stock is relatively inexpensive based on its 2026 earnings forecasts compared to other companies in the S&P 500.
“For example, how about AMD, which also makes chips, including chips for artificial intelligence? While not quite as useful as Nvidia’s, they’re still in the same league. Plus, AMD makes chips for traditional computing and servers that compete against a hobbled Intel. AMD’s stock is actually very cheap based on its 2026 earnings estimates compared to others in the S&P 500. And by the way, what happened to Nvidia was actually good for AMD. They’re a competitor, for heaven’s sake.”
Advanced Micro Devices Inc. (NASDAQ:AMD) stands out as a promising investment due to its strong performance in the semiconductor sector, especially in data centers and AI technologies. In Q2 2024, Advanced Micro Devices Inc. (NASDAQ:AMD) surpassed revenue expectations, fueled by a notable 115% year-over-year growth in its data center business. This impressive increase underscores Advanced Micro Devices Inc. (NASDAQ:AMD)’s effective expansion into AI-driven markets and its competitive edge over rivals.
Additionally, Advanced Micro Devices Inc. (NASDAQ:AMD)’s recent $4.9 billion acquisition of ZT Systems is set to boost its capabilities in AI chips, enhancing its position in the growing AI sector. Despite some recent stock volatility, Advanced Micro Devices Inc. (NASDAQ:AMD)’s shares have rebounded, indicating confidence in its long-term potential. With its ongoing innovation in AI and continued success in data centers, Advanced Micro Devices Inc. (NASDAQ:AMD) is well-positioned for future growth.
2. Salesforce Inc.(NYSE:CRM)
Number of Hedge Fund Investors: 117
Jim Cramer recently covered updates from Salesforce Inc.(NYSE:CRM) CEO Marc Benioff regarding the company’s new Agentforce AI platform. Cramer notes that Salesforce Inc.(NYSE:CRM)’s AI initiative is expected to significantly boost margins since AI bots are more cost-effective than human employees. Despite this promising development, Cramer was surprised that Salesforce Inc.(NYSE:CRM) didn’t rise, as the use cases for Agentforce are compelling. To Cramer, Salesforce Inc.(NYSE:CRM)’s current decline seems like an error, given the potential value of the technology.
“Last night, we heard from Salesforce CEO Marc Benioff, who discussed how his Agentforce AI platform is starting to gain traction. Agentforce helps companies create fully autonomous AI sales and service agents. Benioff shared some exciting developments, mentioning companies that have already deployed Agentforce and seen meaningful results.
Salesforce’s new AI initiative will lead to a massive expansion of gross margins, as bots are much cheaper than people. We’ll learn more at the company’s annual Dreamforce Festival in three weeks. Again, it’s not a barn burner, but that’s the point of artificial intelligence: it doesn’t burn barns; it simply imitates us, which can be very valuable for businesses. That stock should have been up, not down today, because the use cases were so compelling. I don’t know what happened; it was a mistake, to me.”
Salesforce Inc.(NYSE:CRM) presents a compelling investment opportunity due to its strong financial performance, attractive valuation, and focus on profitability, even amid recent revenue challenges. Although Salesforce Inc.(NYSE:CRM) missed revenue expectations for the first time in 18 years in Q1 2024, leading to a decline in its stock price, Salesforce has made notable progress in other areas. Its adjusted operating margins grew to 32.1%, and operating cash flow increased by 39% to $6.25 billion.
Furthermore, free cash flow surged by 43% to $6.1 billion, showcasing effective cost management and a capital-light business model. Salesforce Inc. (NYSE:CRM)’s valuation is particularly appealing in the context of high-tech sector valuations. Salesforce Inc.(NYSE:CRM) is trading at a forward P/E ratio of 24.2x and a price-to-free-cash-flow multiple of 20x, making it one of the most attractively priced in its history. Analysts are optimistic, with a consensus price target of about $297, indicating a 23.3% potential upside from current levels.
Mar Vista Focus strategy stated the following regarding Salesforce, Inc. (NYSE:CRM) in its Q2 2024 investor letter:
“Salesforce, Inc.’s (NYSE:CRM) stock came under pressure in Q2 as the company modestly missed Street expectations for software bookings and reduced its FY2025 subscription revenue guidance to “around 10%” year-to-year growth from “greater than 10%.” We believe Salesforce is experiencing cyclical pressures as software demand across the industry is pressured at the margin. This has led to longer sales cycles; smaller deal sizes and budgets being allocated away from enterprise software to emerging areas like generative AI. We continue to believe that Salesforce will see a tailwind to demand from its generative AI offerings as many AI use cases are found in front office software like customer relationship management. This, coupled with Salesforce’s treasure trove of customer data, positions it well to exploit the evolution of next-generation AI offerings.”
1. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Investors: 184
Jim Cramer recently discussed Apple Inc. (NASDAQ:AAPL), which is on the verge of launching a new phone featuring advanced artificial intelligence. Historically, Apple Inc. (NASDAQ:AAPL)’s stock has been expensive, but the company has now developed a steady stream of service revenue, providing more stable earnings.
“How about a company like Apple, which is about to issue a new phone offering the latest in artificial intelligence for consumers? The stock’s historically pricey, but Apple didn’t have a sticky and predictable service revenue stream until now, creating a whole new level of stable earnings. Plus, Apple will be using ChatGPT, which cost OpenAI and Microsoft billions to build, yet Apple gets it for free due to its huge, highly valued installed base.”
Apple Inc. (NASDAQ:AAPL) offers a compelling investment opportunity despite recent challenges. Apple Inc. (NASDAQ:AAPL)’s Q3 2024 earnings report showed strong financial performance, with revenue reaching $81.8 billion, slightly above expectations but marking a minor year-over-year decline. Notably, Apple Inc. (NASDAQ:AAPL)’s services segment achieved a record $21.2 billion in revenue, underscoring the success of its shift towards a more services-oriented model.
The upcoming CFO transition, with Kevan Parekh set to replace Luca Maestri in January 2025, introduces some short-term uncertainty. However, the launch of the iPhone 16 with AI capabilities in September is expected to kickstart a new upgrade cycle and potentially push Apple Inc. (NASDAQ:AAPL)’s valuation beyond $4 trillion.
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.
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