'Nvidia's Jensen Huang has said you can get four times the money if you buy his chips'
We recently published an article entitled Jim Cramer's Bold Predictions on These 15 AI Stocks.In this article, we'll take a look at where NVIDIA Corporation (NASDAQ:NVDA) stands compared to the other AI stocks Jim Cramer talked about.
As 2024 trading draws to a close, major stock indexes have performed well despite mixed performances across sectors. The main S&P index is up 26% this year, while the broader NASDAQ index is up 33.56%. Moreover, the index of NASDAQ's top 100 stocks is up 29.8%, reinforcing the conclusion that technology stocks will drive stock market returns in 2024. For further evidence, look at the performance of the Dow Jones. The stock index, which tracks sectors across the U.S. economy, is up 14% this year, making it the weakest performing of all the indexes mentioned.
But even within the technology sector, not all stocks have performed equally well. Take the performance of two stocks as an example. Both are semiconductor companies. The first, which is ranked 3rd our list of Jim Cramer's bearish tech calls includes the largest U.S. memory chip maker. The second, which was ranked 1st on the same list is Wall Street's AI darling. The two stocks are up 7.64% and 184.60% respectively this year, so even though they are both technology companies, their stock price returns have differed mainly due to the companies' varying exposure to artificial intelligence.
But while AI may have held up the stock market through 2024, other factors continue to influence stock performance as well. Continuing our example of the GPU designer stocks, shares fell 1.1% on the day the Federal Reserve cut rates, but announced two cuts for 2024 instead of the previous four. Shares fell despite the fact that the company has the widest possible moat in the AI industry. On the same day, the flagship S&P index and the broader NASDAQ index fell 2.9% and 3.6%, respectively. After Friday's year-end sell-off, neither index has fully recovered to levels seen before the Fed's announcement.
For his part, Cramer had predicted that markets would not find it easy to reverse all the losses following the Fed's announcement. Speaking on CNBC's Squawk on the Street the day after the Fed's decision, the host shared that “rampant Bitcoin speculation, after speculation in nuclear energy, after speculation in quantum computing” was baked into the markets before the announcement. Commenting on quantum computing in particular, Cramer mentioned one quantum computing stock and wondered if the industry was all hype and no substance. “How is that [the firm] go to quantum? While we don't even know what quantum is?' Cramer wondered. “They're non-fungible tokens, right? Because you know what a fungible token was? he added.
As AI continues to shape the winners and losers in the stock market, Cramer also shared tips for trading in 2025 in a recent Mad Money episode. He believes that an important fact everyone should keep in mind when trading is that you don't become disillusioned hit by strong gains. According to Cramer, while it is both bulls and bears that “make money” in the stock market, it is the pigs that are “slaughtered.” He elaborated further, saying that in his experience he has seen “moments where stocks rose so much that people were drunk on their profits.” Still, it's “exactly at that point of drunkenness that you have to remind yourself that you don't want to act like a pig,” the television show host believes.
Cramer's second tip for successful investing is to have the strength to hold stocks even when the market is tough. He believes that sticking with it through thick and thin is not only “the hardest part of investing,” but adds that “taking short-term pain so you can make long-term gains” is at its core of the market's performance 'for a century. .”
Finally, an important factor that many people ignore when trading stocks is finding the right entry price. Cramer warns against purchasing in large quantities. “Under no circumstances should you buy your entire position at once,” he emphasizes, adding that “you should also never sell everything at once.” Instead, Cramer recommends “organizing your purchases, fulfilling your orders, trying to get the best price over time.”
Our Methodology
To compile our list of Jim Cramer's bold AI stock predictions, we scanned the stocks he mentioned in Mad Money and Squawk on the Street back in August. We then picked stocks with exposure to AI computing, hardware, and power generation, and ranked them based on the number of hedge funds that bought the stock in the third quarter of 2024.
We also reported the number of hedge fund investors for these stocks. Why are we interested in the stocks that hedge funds invest in? The reason is simple: our research shows that we can outperform the market by imitating the best stock picks from the best hedge funds. Our quarterly newsletter strategy selects 14 small- and large-cap stocks each quarter and has returned 275% since May 2014, beating the benchmark by 150 percentage points. (see more details here).
NVIDIA (NVDA) Analyst: Investors Must Be 'Very Vigilant' Amid Increasing Competition
A close-up of a colorful, high-end graphics card plugging into a gaming console.
Number of hedge fund holders in Q3 2024: 193
Date of Cramer's comment: 8/24/12
Performance since then: 25.75%
NVIDIA Corporation (NASDAQ:NVDA) is the world's leading AI GPU designer whose shares have risen more than 700% since OpenAI publicly unveiled ChatGPT. The company controls the lion's share of the AI GPU market as it enjoys a major competitive advantage through the performance of its chips. But since AI is a relatively nascent industry and NVIDIA Corporation (NASDAQ:NVDA) doesn't have a similar presence in other markets, its stock depends on the fate of AI. The stock has struggled since July as investors await NVIDIA Corporation's (NASDAQ:NVDA) Blackwell products, supply chain strengths and cost control. Here's what Cramer said in August:
“Jensen Huang from Nvidia has mentioned that you can get 4x your money if you buy his chips. That's 4x return. I think Meta could get that eventually. The others actually have to spend them to play catchup. It's not mythical , it's reality How much money have you made betting against Jensen Huang over the years?”
In short, NVDA is in 3rd place on our list of AI stocks that Jim Cramer recently talked about. While we recognize NVDA's potential as an investment, our belief lies in the belief that some AI stocks hold greater promise for delivering higher returns in a shorter time frame. If you're looking for an AI stock that's more promising than NVDA but trades at less than five times earnings, check out our report on the cheapest AI stocks.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now AndThe 30 most important AI stocks according to BlackRock.
Disclosure: None. This article was originally published on Insider Monkey.
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