We recently published a list of Jim Cramer Discussed These 10 NASDAQ 100 Stocks Recently. In this article, we are going to take a look at where Microchip Technology Incorporated (NASDAQ:MCHP) stands against other NASDAQ 100 stocks that Jim Cramer discussed recently.
Jim Cramer, the host of Mad Money, recently shared his perspective on the stock market, especially reflecting on the events of 2024. He emphasized that years like 2024 don’t come around often, where everything feels so clear and the winners are so apparent. According to Cramer, if investors tried to get too creative or overcomplicate their strategies, they likely missed out on the obvious winners.
“If you tried to get creative, you tried to get clever, you missed out on some truly idiot-proof winners. The losers on the other hand, well, they were not as easy to spot because in many cases they were the market’s former winners, even if they long ago lost their way.”
READ ALSO: Jim Cramer’s Bold Predictions About These 10 Healthcare Stocks and Jim Cramer’s Bold Predictions About These 10 SaaS Stocks
As part of his annual analysis on Mad Money, Cramer examined the top and bottom performers of the Nasdaq 100 in 2024, offering insights into what worked and what didn’t. He reviewed how, in many instances, investors tend to become frustrated with stocks that are overhyped, knowing deep down that eventually, something better will come along. He likened these overly loved stocks to a “mouse trap,” where the price could only go down from such lofty heights, warning that many investors would regret not jumping off the metaphorical spaceship before the crash.
Cramer shared his thoughts on the five best performers in the NASDAQ 100 for 2024, calling it a “real good collection of winners” and expressing a genuine fondness for these stocks. He also noted that, while the Nasdaq 100 losers may have appeared to have suffered dramatic declines, the reality was more nuanced.
“The Nasdaq 100 losers, though they aren’t so horrible as the declines would make you think, but they got clobbered because they were emblematic of golden calves, worshipped for a long time before being revealed as not so special after all.”
Our Methodology
For this article, we compiled a list of 10 stocks that were discussed by Jim Cramer during the episode of Mad Money on January 2. We listed the stocks in ascending order of their hedge fund sentiment as of the third quarter, which was taken from Insider Monkey’s database of 900 hedge funds.
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).
A semiconductor wafer at various stages of fabrication, showing the company’s range of expertise.
Microchip Technology Incorporated (NASDAQ:MCHP)
Number of Hedge Fund Holders: 37
Cramer said that Microchip Technology Incorporated (NASDAQ:MCHP) would need the Fed to keep cutting rates and highlighted the trouble in the auto industry.
“Finally, there’s Microchip. If you want exhibit A about why the Fed needs to keep cutting interest rates, it’s Microchip. The semiconductor company has the misfortune to make chips for the auto industry, meaning they’ll have a terrible first half without some help from the Fed. Hey, memo to all, the autos seem to be in real trouble here if rates don’t come down. Stay away from that group.”
Microchip (NASDAQ:MCHP) develops and sells smart, connected embedded control solutions, offering a range of microcontrollers, microprocessors, analog products, FPGAs, memory solutions, and related engineering services for applications in automotive, industrial, communications, and other sectors. According to a third-quarter 2024 investor letter by Delaware Ivy Core Equity Fund, the company, along with other analog semiconductor companies, faced challenges following a post-pandemic increase in inventory.
The surplus inventory resulted in lower production rates and earnings as the company worked through the excess supply. Steve Sanghi, former CEO, and chairman acknowledged the ongoing cyclical downturn and revealed that the company plans to close its wafer fabrication Fab2 by September 2025 in a move to downsize less profitable operations.
Management noted that although substantial inventory destocking has been seen across customers, channel partners, and downstream buyers, they remain cautious due to macroeconomic uncertainties, which continue to limit visibility. In its Q2 FY25 conference call, Microchip (NASDAQ:MCHP) highlighted the burden of high inventory levels, which have created working capital challenges.
Management also pointed to significant weaknesses in the industrial sector, especially in Europe, where its business, concentrated in industrial and automotive markets, saw a nearly 22% sequential revenue decline in the second quarter of fiscal 2025.
Overall, MCHP ranks 9th on our list of NASDAQ 100 stocks that Jim Cramer discussed recently. While we acknowledge the potential of MCHP as an investment, our conviction lies in the belief that 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 MCHP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock
Disclosure: None. This article is originally published at Insider Monkey.
