We recently compiled a list of the Jim Cramer is Talking About These 12 Stocks.In this article, we are going to take a look at where NVIDIA Corporation (NASDAQ:NVDA) stands against the other stocks Jim Cramer is currently talking about.
On Tuesday, Jim Cramer, the host of Mad Money, analyzed the day's market activity, shedding light on why some Big Tech stocks gained traction while others struggled. He pointed out that investors are increasingly concerned about the broader economic effects of rising bond yields. Cramer began by questioning how a day could unfold where recent market leaders lose their momentum, prompting money managers to shift back to established favorites like Big Tech.
Cramer acknowledged his growing worry about the bond market, noting that since the Federal Reserve cut rates last month, bond prices have plummeted.
“... Ever since the Fed cut rates last month, right, bond prices have plunged. Bond yields, meaning longer-term interest rates, have soared. Not supposed to happen. But when it does happen, money managers reach for the companies that simply aren't impacted by the change in the 10-year, the 20-year, or the 30-year US Treasurys.”
Cramer likened Wall Street to Chinatown, suggesting that sometimes, it defies easy understanding. He remarked that people seem to abandon the market's recent winners in a snap as if discarding hot fries. He then explained that the day’s disappointing earnings reports created confusion, as they didn’t align with the prevailing narrative of strong employment alongside rate cuts.
“See, this morning we got a series of earnings reports that just didn't add up. They didn't fit the thesis. They were disappointing. They don't jive with a rather benign moment when we have the Fed cutting rates, yet employment remains strong. When we get these problematic quarters, several in one day, I might add, money managers default back to the tried and true growth stories that we all know and love. Yes, Titans of Tech. You know what? These managers can't help themselves. They feel they have to rotate out of what was hot at one point and into something else that's not that impacted by the big rate-cut cycle.”
He addressed the “alleged earnings disappointment,” clarifying that he chose the term “alleged” because he holds these companies in high regard and does not want to undermine their reputations. Cramer stated that when the 10-year Treasury yields rise, money flows back to these tech giants. He noted that on days like Tuesday, large investors often become apprehensive about cyclical stocks, with concerns about various sectors like aerospace, home building, and even auto parts.
He reassured viewers that this phenomenon is familiar; it has been a recurring theme for over a decade. Cramer suggested that money could just as easily rotate back to previous favorites, but it might take a day or two for that to happen, which shows the volatility of the current market environment.
Concluding, Cramer noted that Big Tech experienced a significant resurgence. He remarked:
“But the bottom line, Big Tech made a big comeback today because of the bond market, not anything to do with the stocks themselves. So, keep in mind that the pause in the rally is temporary, even as you should still own some of the Magnificent Seven for diversification.”
Our Methodology
For this article, we compiled a list of 12 stocks that were discussed by Jim Cramer during his episode of Mad Money on October 22. We listed the stocks in ascending order of their hedge fund sentiment as of the second quarter, which was taken from Insider Monkey’s database of more than 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 close-up of a colorful high-end graphics card being plugged in to a gaming computer.
Cramer mentioned that NVIDIA Corporation (NASDAQ:NVDA) stock did not see the same gains as some of its Mag 7 peers on Tuesday and went on to talk about Huang’s “sovereign AI” idea.
“NVIDIA didn't get much love either, but CEO Jensen Huang is headed to India for a fireside chat at an AI conference. Hey, maybe he'll announce a giant sovereign state contract, something he's been hinting at. I would own, not trade… Nvidia.”
NVIDIA (NASDAQ:NVDA) has established a commanding presence in the graphics processing unit (GPU) market, significantly driven by its A100 and H100 chipsets. These products have been key contributors to the company's remarkable revenue and profit growth in recent years. With the introduction of the new Blackwell series GPUs, the company is positioned to strengthen its product lineup even further. CEO Jensen Huang has expressed enthusiasm regarding the overwhelming demand for Blackwell, highlighting the eagerness among many to engage with this innovative technology.
Sovereign AI refers to a nation's ability to develop artificial intelligence utilizing its own infrastructure, data, workforce, and business networks. It highlights a country's control over its data and the AI it generates.
During a speech at the World Government Summit in Dubai in June, Huang emphasized the necessity for countries to develop their own artificial intelligence infrastructure to fully harness economic potential while preserving cultural identity. He remarked that NVIDIA (NASDAQ:NVDA) is working to democratize access to AI, enabling rapid advancements in AI computing. Huang stated, “The rest of it is really up to you to take initiative, activate your industry, build the infrastructure, as fast as you can.”
In October, Huang joined the King of Denmark to unveil the nation’s largest sovereign AI supercomputer, aimed at facilitating advancements in areas such as quantum computing, clean energy, and biotechnology. Named Gefion, after a figure from Danish mythology, this supercomputer is powered by 1,528 NVIDIA H100 Tensor Core GPUs and employs NVIDIA Quantum-2 InfiniBand networking for connectivity.
At a recent NVIDIA AI Summit, Huang also commended India's progress in artificial intelligence. He noted that over 2,000 AI companies in India are currently part of NVIDIA's incubation program, alongside more than 100,000 developers trained in AI.
Overall NVDA ranks 6th on our list of the stocks Jim Cramer is currently talking about. While we acknowledge the potential of NVDA 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 timeframe. If you are looking for an AI stock that is more promising than NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
