We recently published a list of Jim Cramer’s top picks: 10 stocks to buy and sell. With NVIDIA Corp (NASDAQ:NVDA) at number 1 on the list, the company deserves a closer look.
In his recent broadcast on CNBC, Jim Cramer commented on the Federal Reserve’s aggressive rate cut, saying that the “double” rate cut was necessary for the economy and would help the housing market, industry and companies that serve “less affluent” households.
“There really are two economies in this country. One needs lower interest rates because the economy is weakening and it’s getting harder to find a job. And the other says we don’t care how high the stinking interest rates are. We can get a double rate cut today and still keep going down.”
Cramer said he is currently in Silicon Valley and after speaking with many companies, he feels that technology companies don’t care about interest rates because they sell to companies. Cramer said these technology companies are focused on innovation.
For this article, we selected 10 stocks that Jim Cramer recently talked about on his last shows on CNBC. For each company, we mentioned the number of hedge fund investors. Why do we care about the stocks that hedge funds invest in? The reason is simple: Our research has shown that we can outperform the market by mimicking the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks each quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (Further details can be found here).
NVIDIA Corp (NASDAQ: NVDA)
Number of hedge fund investors: 179
Jim Cramer spoke on a recent CNBC show about what he sees as “problems” in understanding NVIDIA Corp’s (NASDAQ: NVDA) technologies and plans.
Cramer said some people believed Nvidia was experiencing a “slowdown,” but he dismissed that notion.
“That’s just not true. There is no slowdown. What there is is a complication,” Cramer said.
To explain the complication, Cramer specifically read a sentence from a recent Oracle press release about the company’s partnership with NVIDIA Corp (NASDAQ:NVDA):
“The new AI supercomputer, the largest in the cloud, will deploy up to 131,072 NVIDIA GPUs to enable customers to build, train, and infer AI at scale.”
Cramer said the sentence had “gone over his head” and he was trying to understand what it meant.
“We’re in a situation right now where NVIDIA Corp (NASDAQ: NVDA) is too hard for people to understand and we need Jensen to explain it… So I would say we’re in a situation of confusion with Nvidia, not a situation of slowdown,” Cramer added.
Nvidia’s declines following its latest quarterly results were more or less expected, as reports of Blackwell delays were confirmed by management. However, the delays were mainly due to a change in the Blackwell GPU mask. This does not affect the chip’s main functional logic or design, according to analysts. Although Blackwell has been delayed by a few months, this does not change the core growth thesis for Nvidia.
Nvidia is expected to see tremendous growth due to the data center boom in the wake of the AI wave.
At Nvidia’s GPU Technology Conference in March 2024, CEO Jensen Huang estimated annual spending on data center infrastructure at about $250 billion. Over the next decade, that spending could reach $1-2 trillion, depending on how long those investments continue. During the same Q&A session, Bank of America’s Vivek Arya echoed that estimate, saying the total addressable market would be in the $1-2 trillion range, especially if countries invest in their own AI infrastructure. By the end of the decade, spending could be at the high end of that range.
Of course, Nvidia won’t command the entire $2 trillion potential, as it faces competition from companies like AMD and internally developed AI accelerators from Google, Amazon, and even Apple. Some analysts predict that Nvidia’s data center market share will exceed $950 billion between 2025 and 2029 – less than half the total market – but still enough to make the company the leader in the sector.
Ithaka US Growth Strategy made the following statement on NVIDIA Corporation (NASDAQ:NVDA) in its Investor letter Q2 2024:
“NVIDIA Corporation “Nvidia Corp. (NASDAQ:NVDA) is a market leader in visual computing by manufacturing high-performance graphics processing units (GPUs). The company targets four large and growing markets: gaming, professional visualization, data centers, and automotive. NVIDIA’s products have the potential to lead and revolutionize some of the most exciting areas of computing, including: data center acceleration, artificial intelligence (AI), machine learning, and autonomous driving. The reason the stock rose in value during the quarter was twofold: first, the stock benefited from the tremendous excitement surrounding the continued development of generative AI and the likelihood that this would require the purchase of a large number of Nvidia products far into the future; second, Nvidia posted another strong quarter in which the company raised its second quarter 2025 revenue forecast above Wall Street estimates, demonstrating its dominance in building out today’s accelerated computing infrastructure.”
Overall, NVIDIA Corp (NASDAQ: NVDA) ranks first on Insider Monkey’s list with the title Jim Cramer’s top picks: 10 stocks to buy and sell. While we recognize the potential of NVIDIA Corp (NASDAQ: NVDA), we believe AI stocks promise higher returns and do so in a shorter period of time. If you are looking for an AI stock that is more promising than NVDA but is worth less than five times its earnings, read our report on the cheapest AI stock.
READ MORE: Analyst sees a new $25 billion “opportunity” for NVIDIA And Jim Cramer recommends these stocks.
Disclosure: None. This article was originally published at Insider monkey.
