In this article, we’ll explore Jim Cramer’s Top Stock Picks: 10 Stocks with High Potential.
In a recent episode of Mad Money, Jim Cramer explains the current split between tech stocks and other sectors, noting that they often move in opposite directions. For instance, on a day when the Dow Jones Industrial Average gained 228 points and the S&P 500 rose by 0.13%, the NASDAQ—which is heavily weighted with tech stocks—fell by 0.52%.
“How did we get to this bizarre dichotomy between tech stocks and pretty much everything else, where the two groups now almost always seem to move in opposite directions? Take today: the Dow Jones Industrial Average gained 228 points, the S&P advanced 0.13%, but the NASDAQ—with all that tech in it—dropped a bomb. Yes, it fell 0.52%. How could there be such a schism?”
As a result, large institutions must shift investments between sectors since they can’t invest in both simultaneously. This situation is driven by market mechanics rather than fundamental news. When stocks are already performing well, attracting new investment is challenging, especially when safer investments offer decent returns. Consequently, either tech stocks or other sectors will perform well, but not both at the same time.
“It’s because there’s not enough money coming in from the sidelines, so these big institutions have to swap out of one group if they want to buy stock in another. Yet this action has nothing to do with fundamentals; it’s not about the news, it’s about pure market mechanics. When stocks are already red hot, it’s hard to attract new capital from the sidelines, especially when you can get a cozy 4% return for doing nothing. So, either tech wins or everything else wins, but there’s not enough cash for both of them to win at the same time.”
Market Shuffle: Winners vs. Losers and the Fed’s Big Decision
Cramer points out that this scenario leads to clear winners and losers instead of a spectrum of performance on a positive day. This is happening alongside uncertainty about whether the Federal Reserve will cut interest rates by 25 or 50 basis points in their upcoming meeting.
“What happens? We get winners and losers—not big winners and smaller winners, as you would normally expect on an up day like today. This is all against the backdrop of the big question: will the Fed cut rates by 25 basis points or 50 when it meets on Wednesday?
Now, you know me, I try to refrain from this parlor game of guessing the Fed’s next move based on the strength of the economy. Last week, when *The Wall Street Journal* indicated the Fed may actually be leaning toward 50 basis points, we saw this great migration into cyclicals, especially anything related to housing. Of course, last week, there was just enough good news to propel the entire market, which is why it was the best week of the year.”
Cramer also mentions that despite his tendency to avoid speculating on the Fed’s actions, recent market movements have been influenced by expectations about rate cuts. For instance, when The Wall Street Journal suggested that the Fed might opt for a 50 basis point cut, there was a significant shift toward cyclical stocks, especially those linked to housing. This shift, combined with other positive news, led to the best week of the year for the market.
“This leads me to this newfound great divide between tech and non-tech, because that’s how this market seems to be trading. It’s a big reason why I’m out here in Silicon Valley this week. Today, we saw a market that doesn’t believe in AI, AI, or tech in general, for that matter. It’s a market that believes a 50-basis-point rate cut will shift money from semiconductors to housing and anything housing-related, and people want to get ahead of that.”
“Anything But Tech”
Jim Cramer observed that Monday’s market saw a broadening of winners. Healthcare stocks, retailers, and consumer packaged goods companies all performed well. Even oil stocks, which have been struggling, are making a comeback. This is unusual because typically when cyclical stocks rally, sectors like healthcare and consumer products would decline. However, Cramer attributes this trend to a broader market shift he refers to as “ABT,” which stands for “anything but tech.” In other words, today’s market focus is on sectors outside of technology.
“Today, the winners broadened out. The healthcare stocks got jiggy, retailers worked, and consumer packaged goods companies outperformed. Even the much-maligned oils are rallying. It’s crazy—healthcare and consumer products should be selling off when cyclicals rally, but that’s not what’s happening because it’s *ABT*. No, I’m not talking about the symbol for Abbott Labs. ABT means “anything but tech,” and that’s what today’s market was about.”
Our Methodology
This article provides a summary of Jim Cramer’s latest Morning Thoughts, where he reviewed several stocks. We’ve chosen the ten most noteworthy companies he mentioned and ranked them according to how much they are owned by hedge funds, starting with the least owned and moving 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 Top Stock Picks: 10 Stocks with High Potential
10. Stanley Black & Decker Inc. (NYSE:SWK)
Number of Hedge Fund Investors: 24
In a recent post of Morning Thoughts, Jim Cramer focused on the Federal Reserve’s upcoming decision, wondering whether they’ll cut rates by the usual 25 basis points or go for a bigger 50 basis point reduction. This decision, expected on Wednesday afternoon, is crucial for the market. Regardless of the size of the cut, mortgage rates are already heading lower, which should benefit companies tied to the housing market. One of those companies, according to Cramer, is Stanley Black & Decker Inc. (NYSE:SWK), which stands to gain from increased business as a result.
“Will the Federal Reserve cut rates by the traditional 25 basis points or opt for a larger 50-basis-point reduction? That’s a key question looming over the market ahead of the central bank’s decision, which we’ll get Wednesday afternoon. Either way, mortgage rates are trending lower, and that should lead to more business for companies levered to the housing market, including Club name Stanley Black & Decker.”
Stanley Black & Decker, Inc. (NYSE:SWK) presents a strong investment opportunity for the rest of 2024, thanks to its successful strategies in improving operations, reducing costs, and maintaining strong brand performance. Even with a tough consumer market, Stanley Black & Decker, Inc. (NYSE:SWK) has shown resilience through its Global Cost Reduction Program and supply chain upgrades, which are expected to save $1.5 billion in pre-tax costs by the end of 2024 and $2 billion by 2025. These efforts have already boosted gross margins significantly, up by 600 basis points year-over-year in Q2 2024.
Moreover, Stanley Black & Decker, Inc. (NYSE:SWK) has increased its free cash flow guidance for the year to between $650 and $850 million, having already generated $486 million in Q2 2024. This cash flow has helped reduce debt by $1.2 billion and is likely to support further debt reduction and dividends. Stanley Black & Decker, Inc. (NYSE:SWK)’s core segments, including DEWALT, outdoor products, and aerospace fasteners, contributed to a 1% rise in organic revenue, despite slight declines in overall sales due to divestitures and currency fluctuations.
With strong earnings performance, including an adjusted EPS of $1.09 for Q2 2024 that exceeded expectations, and a raised 2024 EPS guidance to between $3.70 and $4.50 per share, Stanley Black & Decker, Inc. (NYSE:SWK)’s focus on improving margins, generating cash flow, and driving innovation supports a positive outlook for future growth, making its stock a compelling investment.
9. Colgate-Palmolive Company (NYSE:CL)
Number of Hedge Fund Investors: 52
Jim Cramer pointed out that Wells Fargo has unexpectedly downgraded Colgate-Palmolive Company (NYSE:CL)’s stock rating from equal weight to a sell-equivalent underweight. Despite being a popular stock that has risen nearly 33% this year, Wells Fargo is concerned that Colgate-Palmolive Company (NYSE:CL)’s organic sales growth is returning to more typical levels.
“A surprising downgrade at Wells Fargo: Analysts moved their rating on Colgate-Palmolive to a sell-equivalent underweight from equal weight. This has been a much-loved stock, up almost 33% this year. However, Wells Fargo is worried that organic sales growth is normalizing.”
Colgate-Palmolive Company (NYSE:CL) shows a strong case for growth, backed by solid financial results and positive market conditions. In the second quarter of 2024, Colgate-Palmolive Company (NYSE:CL) exceeded expectations with net sales of $5.06 billion, a 5% increase from the previous year. Its earnings per share (EPS) came in at $0.89, beating the forecast of $0.87. Colgate-Palmolive Company (NYSE:CL) raised its full-year organic sales growth forecast to 6-8%, indicating confidence in its strategy of balancing price increases with volume growth across different sectors.
Colgate-Palmolive Company (NYSE:CL)’s strong performance in emerging markets such as Latin America and India, driven by successful pricing strategies and gains in market share for its oral care products, contributes to higher-than-average growth. Colgate-Palmolive Company (NYSE:CL)’s foray into new areas like CBD-infused dental care highlights its focus on innovation and exploring new market opportunities.
Colgate-Palmolive Company (NYSE:CL)’s stock has surged by over 25% this year, nearing record highs and reflecting investor confidence. Analysts have increased price targets, expecting continued strong results. With its diverse revenue streams, growth in key regions, product innovation, and strong financial performance, Colgate-Palmolive Company (NYSE:CL)is well-positioned for future success.
ClearBridge Sustainability Leaders Strategy stated the following regarding Colgate-Palmolive Company (NYSE:CL) in its Q2 2024 investor letter:
“Colgate-Palmolive Company (NYSE:CL), added to the portfolio in 2023, started outperforming materially toward the tail end of last year as growth, margin and market share momentum began to turn favorably, and that momentum has continued year to date as the stock has nicely outperformed the large cap staples group. The fundamental upside has been driven by a combination of healthy organic growth (with positive volumes), good gross margin progression, and strong re-investment spending supporting market share gains and future growth.”
8. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Investors: 68
Jim Cramer highlighted that, according to Wells Fargo, The Coca-Cola Company (NYSE:KO) is shaping up to be one of the most promising stories among major consumer staples companies. Wells Fargo has increased its price target for The Coca-Cola Company (NYSE:KO)’s stock from $73 to $78 per share. The firm believes The Coca-Cola Company (NYSE:KO) will likely continue to rise due to strong sales drivers, clear profit margins, and a valuation that remains reasonable.
“Coca-Cola is emerging as perhaps the “cleanest” story among the big consumer staples companies, according to Wells Fargo. The firm raised its price target on the stock to $78 a share from $73, saying it should be able to grind higher thanks to sales catalysts, margin visibility and a still reasonable valuation.”
The Coca-Cola Company (NYSE:KO) is positioned for strong growth, driven by its ability to increase revenue, raise prices, and handle economic challenges. In Q2 2024, The Coca-Cola Company (NYSE:KO) achieved 11% organic revenue growth compared to last year, thanks to effective pricing and solid sales volumes in key regions like Latin America and the Asia Pacific. Operating income also rose by 10%, showing The Coca-Cola Company (NYSE:KO)’s strong profitability despite tough economic conditions.
The Coca-Cola Company (NYSE:KO) has successfully implemented price increases, such as a 19% rise in Latin America, which has helped cushion the impact of inflation. At the same time, innovations like offering affordable packaging in emerging markets have boosted sales and expanded its market reach. Analysts are optimistic, raising their forecasts for The Coca-Cola Company (NYSE:KO)’s 2024 revenue and earnings per share, reflecting confidence in the company’s future performance.
The Coca-Cola Company (NYSE:KO)’s diverse product range, global footprint, and growing demand for products like Coke Zero Sugar give it the resilience to thrive, even in uncertain economic times. Overall, The Coca-Cola Company (NYSE:KO)’s strong earnings, smart pricing strategies, and ability to adapt to market challenges make it a solid long-term investment.
7. The Home Depot Inc. (NYSE:HD)
Number of Hedge Fund Investors: 86
Jim Cramer highlighted that with mortgage rates decreasing, companies connected to the housing market, such as The Home Depot Inc. (NYSE:HD), are likely to see increased business.
“Mortgage rates are trending lower, and that should lead to more business for companies levered to the housing market, including Club name Home Depot Inc.”
The Home Depot, Inc. (NYSE:HD) stands out as a strong investment opportunity due to its solid financial performance and strategic approach, even in the face of economic challenges like high interest rates and uncertainty. In Q2 2024, The Home Depot, Inc. (NYSE:HD) exceeded revenue expectations with $42.57 billion and reported an earnings per share (EPS) of $4.67, slightly above what analysts had predicted.
The Pro segment, which serves professional contractors, is thriving compared to the DIY segment, thanks to factors like high employment, wage growth, and rising home prices. This success positions The Home Depot, Inc. (NYSE:HD) for growth, especially since home improvement spending is expected to rise through 2024. The Home Depot, Inc. (NYSE:HD) is also expanding with new stores, smart home products, and its “Complex Pro” initiative, which aims to increase its market share among professionals.
Although The Home Depot, Inc. (NYSE:HD)’s revised fiscal 2024 guidance suggests a slight decline in comparable sales, the company is still optimistic, with a total sales growth forecast of up to 3.5%, aided by an extra week in the fiscal year. Overall, The Home Depot, Inc. (NYSE:HD)’s strong earnings, strategic plans, and expansion efforts indicate a positive long-term growth outlook, making it a promising investment.
Polen Focus Growth Strategy stated the following regarding The Home Depot, Inc. (NYSE:HD) in its Q2 2024 investor letter:
“In the second quarter, the top relative contributors to the Portfolio’s performance were all names we do not hold: The Home Depot, Inc. (NYSE:HD), Meta Platforms, and AbbVie. With Home Depot, much of the quarter’s weakness came in April, as a higher-than-expected inflation reading caused investors to question the likelihood of imminent rate cuts in 2024. Given Home Depot’s sensitivity to interest rates, as it relates to home improvement projects, the stock sold off in the period.”
6. Spotify Technology S.A. (NYSE:SPOT)
Number of Hedge Fund Investors: 88
Jim Cramer noted that KeyBanc has increased its price target for Spotify Technology S.A. (NYSE:SPOT) from $420 to $440 per share and maintained a buy-equivalent overweight rating. Despite the stock already rising about 80% this year, KeyBanc believes that Spotify Technology S.A. (NYSE:SPOT)’s potential earnings are still underestimated.
“KeyBanc upped its price target on Spotify to $440 a share from $420 and kept its buy-equivalent overweight rating on the stock, which is up about 80% year to date. This is an anointed stock in the “can-do-no-wrong” pantheon. KeyBanc argued the music streaming giant’s earnings power is underrated.”
Spotify Technology S.A. (NYSE:SPOT) is showing strong potential for growth, thanks to its impressive financial performance, rising subscriber numbers, and smart business moves. In Q2 2024, Spotify Technology S.A. (NYSE:SPOT)’s revenue jumped 20% from the previous year to €3.8 billion, while its gross margin improved to 29.2%. Spotify Technology S.A. (NYSE:SPOT) also posted an operating income of €266 million, a significant shift from earlier losses.
During the same period, Spotify Technology S.A. (NYSE:SPOT) gained 7 million new premium subscribers, bringing the total to 246 million. Its overall monthly active users (MAUs) grew 14% to 626 million, though this slightly missed expectations. However, the significant increase in premium subscribers has been the key driver of profitability. Spotify Technology S.A. (NYSE:SPOT)’s efforts to adjust prices and improve how it makes money from users have raised revenue per user. Spotify Technology S.A. (NYSE:SPOT) expects its gross margins to surpass 30% by 2025.
Analysts are optimistic as well, with Macquarie raising Spotify Technology S.A. (NYSE:SPOT)’s price target to $395, showing confidence in the company’s growth prospects. Spotify Technology S.A. (NYSE:SPOT) has more than doubled in value this year, reflecting strong investor confidence. With solid financial results, continuous subscriber growth, and a positive market outlook, Spotify Technology S.A. (NYSE:SPOT) is well-positioned for continued success.
Baron Focused Growth Fund stated the following regarding Spotify Technology S.A. (NYSE:SPOT) in its Q2 2024 investor letter:
“Spotify Technology S.A. (NYSE:SPOT) is a leading global digital music service, offering on-demand audio streaming through paid premium subscriptions and an ad-supported model. Shares of Spotify were up, largely attributable to impressive beats in gross margin and operating margin as well as the announcement of subscription price hikes.
Given the strong value proposition of the product, Spotify is beginning to exercise its pricing power following last year’s initial price increases that saw minimal churn. Users continue to grow at a healthy pace despite the pricing impact. Spotify also continues to innovate on the product side, with early trials of generative AI features and the addition of new verticals like audiobooks, which have seen solid early adoption.
On the cost side, Spotify is on a path to structurally increase gross margins, aided by its high-margin artist promotions marketplace, increasing contribution by its podcast division, and growth of the margin-accretive advertising business. We still view Spotify as a long[1]term winner in music streaming with the potential to reach more than one billion monthly active users.”
5. Ge Vernova Inc. (NYSE:GEV)
Number of Hedge Fund Investors: 92
Jim Cramer reported that Barclays has initiated coverage of Ge Vernova Inc. (NYSE:GEV), an energy company, with a buy rating. Ge Vernova Inc. (NYSE:GEV) recently jumped nearly 14%, partly due to the presidential debate being viewed as favorable for renewable energy. Ge Vernova Inc. (NYSE:GEV), known for its connections to Kamala Harris, is seen as a strong investment because it provides wind and natural gas energy. Ge Vernova Inc. (NYSE:GEV)’s exposure to natural gas is particularly valuable as data centers require more power from this source.
“Barclays started energy company GE Vernova with a buy rating. The stock is coming off a nearly 14% surge last week, with some of the move being tied to the presidential debate being seen as positive for renewable energy. GE Vernova is the Kamala Harris stock and that’s the main reason why you would buy a windmill and natural gas company that really has under-appreciated exposure to natural gas. Data centers need more power from nat gas.”
Ge Vernova Inc. (NYSE:GEV) offers an attractive investment opportunity due to its strong position in the global energy transition, focus on renewable energy, and improved financial performance. In Q2 2024, Ge Vernova Inc. (NYSE:GEV) achieved profitability with a net income of $1.28 billion, a significant turnaround from a $149 million loss the previous year. Revenue grew 1% year-over-year to $8.2 billion, driven by strength in its Electrification and Power segments.
Ge Vernova Inc. (NYSE:GEV) has also raised its 2024 financial guidance, expecting revenue between $34-35 billion and EBITDA margins of 5% to 7%. Ge Vernova Inc. (NYSE:GEV)’s leadership in clean energy is highlighted by strong demand for its grid and electrification equipment. Its backlog is projected to triple by year-end, and the company is expanding capacity for heavy gas turbines to meet rising global needs.
Analysts are optimistic about Ge Vernova Inc. (NYSE:GEV)’s progress, with price target upgrades from firms like HSBC and Evercore ISI, reflecting confidence in its role in the clean energy sector. Overall, Ge Vernova Inc. (NYSE:GEV)’s focus on decarbonization, improved profitability, and strategic investments in energy infrastructure supports a strong bullish outlook.
Carillon Eagle Mid Cap Growth Fund stated the following regarding GE Vernova Inc. (NYSE:GEV) in its Q2 2024 investor letter:
“GE Vernova Inc. (NYSE:GEV) is a global electric power company that was recently spun out of a much larger industrial conglomerate. The company’s shares performed well in their first quarter as a standalone company, primarily as a result of the increasing outlook for power demand growth, both domestically and abroad. We believe GE Vernova is well positioned to capitalize on this growing trend across its various products and services, but most notably within its large-scale gas turbine equipment and related services, as well as in its high-voltage electrical transmission products.”
4. Eaton Corporation plc (NYSE:ETN)
Number of Hedge Fund Investors: 93
Jim Cramer shared that Citi has started covering Eaton Corporation plc (NYSE:ETN), a Club holding, with a buy rating and a price target of $348 per share, suggesting about a 14% potential increase from Friday’s closing price. Citi analysts believe Eaton Corporation plc (NYSE:ETN) is set for significant earnings growth due to rising demand for data centers and other large projects. They also noted that internal improvements have boosted Eaton Corporation plc (NYSE:ETN)’s profitability.
“Industrial analysts at Citi initiated coverage of Club holding Eaton with a buy rating and price target of $348 a share, implying about 14% upside from Friday’s close. Analysts said the electrical equipment supplier is well-positioned for outsized earnings growth in the years ahead due to booming data center demand and other megaprojects. Internal actions have improved profitability as well, Citi said.”
Eaton Corporation plc (NYSE:ETN) is a strong investment choice due to its impressive financial performance, raised guidance, and growth potential in electrification, energy transition, and industrialization. In Q2 2024, Eaton Corporation plc (NYSE:ETN) reported a record-setting 33% year-over-year increase in earnings per share (EPS) to $2.48, with adjusted EPS rising 24% to $2.73. Eaton Corporation plc (NYSE:ETN) also saw a 9% rise in organic sales and achieved a record $946 million in operating cash flow.
Eaton Corporation plc (NYSE:ETN) has upgraded its full-year 2024 guidance, forecasting 8-9% organic growth, segment margins of 23.3%-23.7%, and EPS between $9.38 and $9.48, reflecting an 18% increase from the previous year. Its focus on power management and energy-efficient technologies positions it well to benefit from the global shift towards energy transition and electrification.
Additionally, strong growth in its Electrical and Aerospace segments supports a positive outlook. Analysts generally recommend Eaton Corporation plc (NYSE:ETN) as a “Buy,” making it an appealing investment in the industrial sector.
Ave Maria World Equity Fund stated the following regarding Eaton Corporation plc (NYSE:ETN) in its first quarter 2024 investor letter:
“Eaton Corporation plc (NYSE:ETN) is an intelligent power management company. The company is a long-term beneficiary in the trend towards electrification, energy transition and digitalization. Eaton is also benefiting from unprecedented global stimuli such as the Inflation Reduction Act, Infrastructure Investment and Jobs Act, the Chips and Science Act and the EU recovery plan known as the NextGenerationEU.”
3. Oracle Corporation (NASDAQ:ORCL)
Number of Hedge Fund Investors: 93
Jim Cramer reported that Melius Research has upgraded Oracle Corporation (NASDAQ:ORCL) to a buy rating from hold, following a strong earnings report driven by AI and an increase in long-term guidance. Although Oracle Corporation (NASDAQ:ORCL)’s stock has already risen 54% this year and 14% just last week, analysts believe the stock could still have more room to grow. They emphasized that Oracle Corporation (NASDAQ:ORCL) is essential for hyperscalers, and this might be just the beginning of its upward move.
“Melius Research upgraded Oracle to buy from hold after last week’s strong AI-fueled earnings report and long-range guidance hike. Analysts acknowledged some might think it’s a late call for a stock up 54% year to date and 14% last week alone, but they countered by writing that “we could be just in the middle of a move.” The hyperscalers need Oracle.
Oracle Corporation (NASDAQ:ORCL) is a strong investment choice due to its significant growth in cloud infrastructure and database services, driven by strategic investments in AI and partnerships with major players like AWS, Microsoft, and Google. In Q1 FY2025, Oracle Corporation (NASDAQ:ORCL) reported a 6.9% year-over-year increase in revenue to $13.31 billion, exceeding analyst expectations.
Cloud infrastructure revenue surged by 45%, reflecting Oracle Corporation (NASDAQ:ORCL)’s successful transition of legacy database customers to cloud-based solutions. Oracle Corporation (NASDAQ:ORCL)’s expansion in cloud services, particularly Infrastructure as a Service (IaaS), which grew 42% year-over-year, and its $12 billion in AI-related contracts highlight its strong position in these markets. Oracle Corporation (NASDAQ:ORCL) also projects annual revenue of at least $104 billion by FY2029, indicating robust future growth.
With a high gross margin of 77% in its cloud segment and improved operating margins, Oracle Corporation (NASDAQ:ORCL) is expected to achieve double-digit EPS growth in FY2025. This makes the stock an attractive investment, with a forward valuation of 21x earnings. Overall, Oracle Corporation (NASDAQ:ORCL)’s strategic focus, financial performance, and growth potential make it a compelling long-term investment.
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.”
2. Salesforce.com Inc. (NYSE:CRM)
Number of Hedge Fund Investors: 117
Jim Cramer mentioned that Salesforce.com Inc. (NYSE:CRM)’s Dreamforce conference this week will focus on practical uses of artificial intelligence. He is taking the opportunity to meet with key figures in the tech industry while attending the event in San Francisco.
“Salesforce’s annual Dreamforce conference this week will shine a light on useful artificial intelligence applications. I’m using my time in San Francisco for the event to catch up with a number of notable players in the tech world.”
In Q2 2024, Salesforce.com, Inc. (NYSE:CRM) achieved impressive results, with revenue rising 8.4% year-over-year to $9.3 billion and earnings per share (EPS) up 20.8% to $2.56. As a result, Salesforce.com, Inc. (NYSE:CRM) has increased its full-year EPS forecast to between $10.03 and $10.11, highlighting its effective execution in cloud and AI solutions.
Salesforce.com, Inc. (NYSE:CRM)’s focus on AI, especially with its new “AgentForce” platform, is expected to drive growth in its core Sales and Service Clouds, reinforcing its position as a leader in AI enterprise software. Salesforce.com, Inc. (NYSE:CRM) also showed strong operational efficiency with a non-GAAP operating margin of 30% in Q2 2024, demonstrating its ability to increase profitability as revenue grows.
Even with recent challenges, such as the resignation of CFO Amy Weaver, Salesforce.com, Inc. (NYSE:CRM)’s strong business fundamentals and strategic AI investments support a positive outlook. Analysts have set a target price of $308.22 for the stock. Overall, Salesforce.com, Inc. (NYSE:CRM)’s financial health, advancements in AI, and improved margins make it an appealing investment opportunity.
Ithaka US Growth Strategy stated the following regarding Salesforce, Inc. (NYSE:CRM) in its Q2 2024 investor letter:
“Salesforce, Inc. (NYSE:CRM) is the largest pure-play cloud software company, holding a leading market share in customer relationship management applications and a top-five market share position in the company’s other clouds (Marketing, Service, Platform, Analytics, Integration, and Commerce). The company’s software subscription term-license model differs from the traditional perpetual-license software model in two respects:
(1) the software is hosted on centralized servers and delivered over the internet, as opposed to traditional enterprise software that is loaded directly onto customers’ hard drives or servers; and (2) the revenue model is subscription-based, typically charging monthly fees per user as opposed to charging one-time licensing fees. The stock’s weak relative performance followed its fiscal first quarter earnings announcement, where the company missed top-line and cRPO (current remaining performance obligations) estimates while also issuing weak forward guidance.”
1. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Investors: 179
Jim Cramer noted that NVIDIA Corporation (NASDAQ:NVDA) shares are down on Monday, but this appears to be just profit-taking after the AI chipmaker’s stock surged nearly 16% last week.
“Nvidia shares are lower Monday. It looks like nothing more than profit-taking after the leading AI chipmaker surged nearly 16% last week.”
NVIDIA Corporation (NASDAQ:NVDA) presents a strong investment opportunity due to its leading role in the growing AI and data center markets. In Q2 2024, NVIDIA Corporation (NASDAQ:NVDA) reported record revenue of $30 billion, a 122% increase from the previous year, driven by a 154% surge in its data center segment. NVIDIA Corporation (NASDAQ:NVDA)’s GPUs are essential for AI applications, positioning Nvidia to capitalize on the AI boom.
Its advancements in both hardware and software reinforce its dominance in the tech industry. NVIDIA Corporation (NASDAQ:NVDA)’s key presence in high-demand areas like data centers and autonomous systems, combined with its leadership in AI and machine learning, suggests strong potential for ongoing revenue growth and high profit margins. This makes NVIDIA Corporation (NASDAQ:NVDA) an attractive long-term investment.
While we acknowledge the potential of NVIDIA Corporation (NASDAQ:NVDA), 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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