We recently published a list of Jim Cramer’s Bold Predictions About These 9 Semiconductor Stocks. In this article, we are going to take a look at where Lam Research Corporation (NASDAQ:LRCX) stands against other semiconductor stocks that Jim Cramer has made bold predictions about.
Semiconductor stocks were once again at the forefront of media and investor attention this week during the stock market selloff triggered by investor apprehensions about lower AI development costs courtesy of China’s DeepSeek AI models. Because AI has dominated headlines for more than a year now, most of Cramer’s attention during his morning appearances focused on the technology whether it was before or after the selloff.
Before the selloff, on Friday, the CNBC TV show host started out by discussing the applications of AI. While most of the public’s attention is focused on chatbots, AI’s business use cases are quite diverse. One such use case is in the healthcare industry and another comes through the financial services sector. Cramer commented on both of these:
“I think that what we’re not thinking about, like when I went to Jensen Huang’s panel on healthcare. It’s so much bigger than anything involving AI PC. I mean they’re really just talking about having the data to really attack every single disease and changing it from fatal to maintenance. You have tremendous number of people involved in trying to do that. Then you have Stripe there working with [the GPU company] to be able to do something revolutionary in finance. And then you have the banks working doing some revolutionary things trying to get people who’re doing S1s. . . .”
The DeepSeek AI selloff was notable particularly because of the impact on the shares of Wall Street’s favorite AI GPU company. The firm, which was the world’s most valuable company ahead of the selloff, bled close to $600 billion in market value and lost its top spot to the company behind the iPhone. For Cramer, while the lower AI development costs were commendable, the use cases for the AI GPU firm’s products were beyond large language models:
“Well, look, there’s no doubt about the cost is great for this. But if you’re gonna go forward and you’re gonna do what Jensen was talking about, which is anything physical, anything physical with Blackwell. It’s going to be better than what we do. I’m just saying that Jensen’s on a plane of his own. And that, if you have low commodity, Jensen’s got the three thousand dollar chip that can handle that. Was I shocked by this? No it was nice that they came up with such a low price.”
For semiconductor stocks, one AI-generate catalyst that did not materialize is the AI PC. These PCs use a special chip called a neural processing unit (NPU) along with CPUs and GPUs to run AI tasks. In an appearance before the DeepSeek selloff, Cramer mentioned a Morgan Stanley report that shared that 60% of people surveyed had accidentally bought an AI PC and more than 60% were uncomfortable paying extra for AI products. The report, which added that just 15% of the respondents had bought a new product because of AI was “perhaps the most damming piece” that Cramer had read.
He shared that “There’s absolutely no evidence of a super cycle whatsoever,” and cycled back to enterprise AI use cases by stating “I mean I think AI is very good when you listen to what Jamie Dimon [inaudible] to say, that AI is very good when you listen to what Marc Benioff has to say.”
Cramer added that not only was he wrong about the AI PC cycle as the PC he “thought we were all gonna upgrade. And now we’re all in wait-and-see mode,” but those who he knew had bought such a PC “haven’t used it or there’s a button there and it doesn’t work.”
Our Methodology
To compile our list of Jim Cramer’s bold predictions about stocks, we scanned the stocks he mentioned in Mad Money and Squawk on the Street after September 2024. Then, we picked out semiconductor stocks and ranked them by the number of hedge funds that had bought the shares in Q3 2024.
For these stocks, we also mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds invest in? 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).
Lam Research Corporation (NASDAQ:LRCX)
Number of Hedge Fund Holders In Q3 2024: 58
Date of Cramer’s Comments: 10-18-24
Performance Since Then: 15.4%
Lam Research Corporation (NASDAQ:LRCX) is an American firm that makes machines used in chip fabrication. The shares have gained 15.4% since Cramer’s remarks on the back of TSMC raising capital spending, analyst coverage, and a strong earnings report. The gains are despite the fact that Lam Research Corporation (NASDAQ:LRCX)’s shares dipped by 5.8% during the DeepSeek selloff. After its fiscal third quarter revenue forecast of $4.65 billion beat analyst estimates of $4.34 billion, the shares jumped by 7.4%. Here’s what Cramer had said about Lam Research Corporation (NASDAQ:LRCX) in October:
“… Now, Lam Research is a much better company than ASML. I think it’ll tell a good story. I think it’s got a healthy buyback. Very risky, though. If it’s just only because expectations have been lowered here, it might work. But the problem with Lam is, is that what happens if ASML is at all right, then Lam won’t pop. But that’s not that big a risk.”
Overall, LRCX ranks 7th on our list of semiconductor stocks that Jim Cramer has made bold predictions about. While we acknowledge the potential of LRCX as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than LRCX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
