We recently published a list of Jim Cramer thinks these 10 stocks deserve your attention. In this article, we look at how NVIDIA Corporation (NASDAQ:NVDA) ranks against other stocks that Jim Cramer thinks deserve attention.
On a recent episode of Mad Money, Jim Cramer advised investors to wait to sell stocks, expecting a rebound once the market decline was over. This strategy proved effective, as the average investor saw a gain, with the Dow Jones rising 484 points, or 1.16%, and the NASDAQ also rising 1.16%. This performance suggests that selling during Friday's decline was not the best move.
“Last week I advised you to hold off on selling everything, as I believed we would see a recovery once the pain was over. The average investor saw a gain, with the Dow up 484 points, or 1.16%, and the NASDAQ also up 1.16%. While it may not be a full recovery, it does show that selling during Friday’s downturn was not the best strategy.”
Last week was challenging for economically sensitive stocks and technology stocks, despite the August jobs report showing modest growth and a downward revision for July. The recent report seemed favorable to those hoping for rate cuts from the Federal Reserve, as it presented a balanced scenario of neither too strong nor too weak. Nevertheless, Wall Street reacted negatively, with investors turning away from cyclical stocks in favor of recession-proof sectors such as consumer staples and pharmaceuticals. Industrials and semiconductors were particularly affected.
Jim Cramer noted that recession-proof stocks such as pharmaceuticals, drug wholesalers and medical devices were still doing well on Monday. However, this trend is concerning as these stocks have risen significantly and may be due for a correction.
“Recession-proof stocks such as pharmaceuticals, drug wholesalers and medical devices continued to outperform, which is dangerous because these stocks have posted parabolic gains and may be due for a correction.”
According to Cramer, historically, when the Federal Reserve is poised to cut rates, it’s a signal to change investment strategies. With the Fed moving toward easing and a rate cut expected next week, Cramer suggests it’s time to reconsider holding recession-proof stocks. Instead, investors should look to more cyclical companies that could benefit from economic stimulus. While investing in cyclical stocks during a recession can be challenging, anticipating a positive impact from the Fed’s rate cuts could make these stocks attractive.
“Historically, we know that when the Fed is about to cut rates, it’s time to shift focus. With the Fed leaning toward easing and an expected rate cut next week, it’s time to consider shifting out of recession-proof stocks and into more cyclical companies. While it’s difficult to buy cyclical stocks during a slowdown, the expectation that the Fed will kick-start the economy can make them strong investment opportunities. It’s important to maintain diversification, but be prepared to make adjustments as needed.”
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A close-up of a colorful, high-end graphics card being inserted into a gaming computer.
NVIDIA Corporation (NASDAQ:NVDA)
Number of hedge fund investors: 179
Jim Cramer wondered whether artificial intelligence is still a hot topic, given recent trading patterns. He pointed out that AI-related stocks, including NVIDIA Corporation (NASDAQ:NVDA), a major player in the AI space and a name in his investment club, have fallen nearly 14% over the past five sessions. This decline raises questions about investors’ current appetite for AI-related investments.
“Does anyone care about artificial intelligence anymore? Seems a fair question to ask, given recent trading in stocks included in the AI trade, including key enabler and fellow club name Nvidia, which is down nearly 14% over the past five sessions.”
A positive outlook for NVIDIA Corporation (NASDAQ:NVDA) is supported by its impressive financial performance and leadership in key areas such as artificial intelligence (AI) and data centers. In Q2 FY2025, NVIDIA Corporation (NASDAQ:NVDA) revenue increased 122% year-over-year to $30 billion, with net income increasing 168% to $16.6 billion. This growth was primarily driven by a 154% increase in data center revenue to $26.3 billion, due to strong demand for NVIDIA Corporation’s (NASDAQ:NVDA) advanced Hopper GPUs used in AI applications.
NVIDIA Corporation’s (NASDAQ:NVDA) leadership in AI is further underscored by its upcoming Blackwell architecture, which is expected to drive revenue even further. The gaming segment also performed well, with revenue increasing 16% to $2.9 billion, thanks to the versatility of its RTX GPUs, which are used for both gaming and AI workloads. NVIDIA Corporation’s (NASDAQ:NVDA) commitment to returning value to shareholders is evident with its $50 billion share buyback program, demonstrating strong confidence in future growth.
Ithaka US Growth Strategy stated the following about NVIDIA Corporation (NASDAQ:NVDA) in its Q2 2024 investor letter:
“NVIDIA Corporation NVIDIA, Inc. (NASDAQ:NVDA) is a leader in visual computing, manufacturing high-performance graphics processing units (GPUs). The company focuses on four large and growing markets: Gaming, Professional Visualization, Data Center, and Automotive. NVIDIA’s products have the potential to lead and disrupt some of the most exciting areas of computing, including: data center acceleration, artificial intelligence (AI), machine learning, and autonomous driving.
The reason for the stock's rise in value in the quarter was twofold: First, the stock benefited from the enormous excitement surrounding the further development of generative AI and the likelihood that this would necessitate the purchase of a large number of Nvidia products well into the future; second, Nvidia once again posted strong improvement[1]and-raise quarter, where the company raised its F2Q25 revenue guidance above Street estimates, demonstrating its dominant position in the buildout of today's accelerated computing infrastructure.”
In general, NVDA is in 2nd place On our list, Jim Cramer thinks these 10 stocks deserve your attention. While we recognize NVDA's potential, our conviction is based on the belief that under-the-radar AI stocks hold more promise for delivering higher returns, and in a shorter time frame. If you're looking for an AI stock that shows more promise than the stocks on our list but trades at less than 5x earnings, check out our report on the cheapest AI stocks.
READ ALSO: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy, According to Morgan Stanley And Jim Cramer says NVIDIA 'has become a wasteland'.
Disclosure: None. This article was originally published on Insider monkey.
