We recently published a list of Jim Cramer on Microsoft and Other Stocks. In this article, we are going to take a look at where Microsoft (NASDAQ:MSFT) stands against other Jim Cramer’s stocks.

Jim Cramer, host of Mad Money, discussed Tuesday’s market action, noting that the rally following President-elect Donald Trump’s victory temporarily slowed down as Wall Street begins to assess the potential effects of broad tax cuts on the bond market. Cramer pointed out that while the stock market typically reacts positively to tax cuts, there’s a catch.

“What if the Treasury doesn’t have the money? Then just like everybody else, the government has to borrow to make up the difference and it borrows by selling bonds, trillions, trillions of dollars worth of bonds.”

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Even though these tax cuts have not yet materialized, Cramer observed that the bond market seems to be sending a warning signal. He asked whether the country could face an interest rate reckoning if it borrows too much, and pointed out that this is a concern on many minds right now. Cramer continued by suggesting that perhaps investors have been too focused on the stock market rally, putting the cart before the horse, with the horse being the bond market.

Cramer acknowledged that stocks have surged since Trump’s election, but the rally has been uneven. While many investors expect tax cuts across the board—on corporate income, individual income, and capital gains—no one is exactly sure what form these cuts will take. However, it’s widely anticipated that overall taxes will be lower. Cramer noted:

“If it’s at all like 2016 when Trump first became president, the wealthy will be the biggest beneficiaries. And when rich people get more money, the theory goes they invest in stocks, create new businesses… It has always worked for the stock market.”

But Cramer warned that there’s another side to the equation: the bond market. On Tuesday, it became clear that investors in bonds were reacting nervously to the possibility of unfunded tax cuts. Interest rates surged across all maturities, signaling a shift in sentiment. Cramer emphasized that when you look at how large and fast the bond market’s move has been, it highlights a critical concern: the federal government is already borrowing trillions of dollars from the bond market, and this is happening before any tax cuts have even taken effect. He explored the possibility that this is why the bond market is responding so negatively, making it more difficult for the stock market to keep climbing at the same pace.

“If you believe we’re about to get big tax cuts, remember that somebody eventually has to pay for the missing tax receipts, as boring as that is, even if that means the government borrows a lot more money, causing bond yields to spike. We can only hope the stock market goes back to ignoring long-term interest rates or that those rates come back down in response to some benign inflation numbers.”

Our Methodology

For this article, we compiled a list of 8 stocks that were discussed by Jim Cramer during the episode of Mad Money on November 12 and listed the stocks in the order that Cramer mentioned them.

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).

Microsoft Corporation (NASDAQ:MSFT)

Cramer pointed out how software stocks such as Microsoft Corporation (NASDAQ:MSFT) took off on Tuesday.

“As is always the case, there are pockets of positivity that seem immune to the tug of the bond market, at least for most of the session. After showing immense love for the semiconductors, disdain for the software companies, for most of the year, the game is reversed. The Adobes and ServiceNows and Microsofts soared today. Doesn’t make a lot of sense and… we’re getting worrisome parabolic moves in many of these stocks.”

Microsoft (NASDAQ:MSFT) is a prominent technology company known for developing and supporting a wide range of software, services, devices, and solutions. The company has positioned itself well to capitalize on the rapidly growing demand for generative AI software, an area that Bloomberg Intelligence forecasts will see a massive increase in spending. By 2032, generative AI software spending is expected to rise by 2,790%, approaching $320 billion and growing at an annual rate of 52%.

The company has been tapping into this opportunity by focusing on generative AI copilots, which have shown promising early results. During the first quarter fiscal 2025 earnings call, CEO Satya Nadella highlighted that the company’s AI business is on track to surpass an annual revenue run rate of $10 billion in the next quarter, making it the fastest-growing business in the company’s history to achieve this milestone.

Microsoft’s (NASDAQ:MSFT) Nadella also pointed out that the use of Azure OpenAI has more than doubled in the past six months, reflecting the increasing adoption of AI-driven solutions. Additionally, AI has played a significant role in driving growth in the company’s cloud services, contributing approximately one-third of the cloud services sales growth in the most recent quarter.

Overall, MSFT ranks 6th on our list of Jim Cramer’s stocks. While we acknowledge the potential of MSFT 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 MSFT 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.