We recently compiled a list of the Jim Cramer on the Magnificent Seven Stocks Plus Netflix.In this article, we are going to take a look at where Tesla, Inc. (NASDAQ:TSLA) stands against the other magnificent stocks in Jim Cramer's list.
On Monday, Jim Cramer, host of Mad Money, discussed the ongoing success of major technology stocks, particularly the Magnificent Seven. He noted that these companies are proving their resilience in the market, no matter the circumstances, likening their performance to having a unique "Poltergeist 2 magic."
Cramer pointed out that this latest rally for the Magnificent Seven differs from previous ones, as it is not merely a zero-sum game where gains for one group come at the expense of another. Instead, other sectors are also thriving, likely due to the influx of capital into the market.
“Unlike previous Mag 7 rallies, this one’s definitely not a zero-sum equation where the rest of the market does nothing. Other groups can roar, too, in this market, perhaps because there’s just a lot of money going around.”
He noted that the Federal Reserve's rate cuts mean that cash is losing value, creating an environment ripe for growth. He mentioned that the staying power of the Magnificent Seven is truly unbelievable.
“We know these stocks will once again be hit by endless worries, giving you more opportunities to buy and more weakness before they snap right back and start climbing all over again.”
Cramer highlighted that this week marks the beginning of a crucial four-week earnings season, emphasizing that these quarterly reports hold significant weight for investors and the broader stock market. He acknowledged the current climate of anxiety, especially following the market's impressive rally. He added:
“Why stress about how quickly the Fed will cut rates, Oh? God, I'm sick of that. What matters is they're giving vast swaths of the economy a big boost and I doubt they'll stop anytime soon.”
Cramer also observed that investors often gravitate toward underdogs in the market, suggesting that banks could be the next promising sector. In addition to banks, Cramer also mentioned the potential in pharmaceutical stocks, suggesting that investors might want to consider major players in that sector as well.
Our Methodology
For this article, we compiled a list of stocks that were discussed by Cramer during his episode of Mad Money on October 14. 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).
While Cramer mentioned that Tesla, Inc.’s (NASDAQ:TSLA) performance has fallen short recently, he said he would not bet against Elon Musk.
“Finally, there's Tesla… I know, Tesla… disappointing self-driving car event last week while the robotaxi shindig was definitely short on facts. At the end of the day, do you really wanna bet against Elon Musk? I don't. I think the odds are good he’ll figure this out. So even if you don't want to own it, you're taking your life in your hands if you try to short it.”
Despite Tesla’s (NASDAQ:TSLA) strong presence, it is currently navigating a challenging landscape in the electric vehicle market, where demand appears to be softening. Many consumers are opting for more affordable gas-powered vehicles in response to difficult economic conditions, including elevated interest rates. Additionally, the company faces increasing competition from both established automakers and emerging low-cost electric vehicle manufacturers, particularly from China.
In the third quarter, Tesla (NASDAQ:TSLA) reported nearly 463,000 vehicle deliveries, a 6.4% increase compared to the same period last year. However, the company may yet struggle to surpass its total electric vehicle sales for 2024. CEO Elon Musk has previously indicated expectations of achieving an average annual growth rate of about 50% for several more years, though delivery figures do not seem to reflect an alignment with the goal. In a bid to stimulate sales growth, the company plans to introduce a low-cost electric vehicle model in the upcoming year, with a target price of around $25,000. It could attract a wider customer base and reinvigorate demand for its offerings.
Recently, during the "We, Robot" event, Tesla (NASDAQ:TSLA) unveiled the eagerly awaited Cybercab robotaxi, which will operate on its full self-driving (FSD) software. It is considering making these Cybercabs available to the public at an estimated price of around $30,000 each, enabling individuals to purchase fleets and potentially start their own ride-hailing services. It is worth noting that the presentation on the Cybercab was somewhat light on specifics. Lastly, the company has previously announced plans to invest $10 billion in data center infrastructure this year to support the training of its FSD models.
Overall TSLA ranks 8th on Jim Cramer's list of magnificent stocks. While we acknowledge the potential of TSLA 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 TSLA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
