We recently published a list of Jim Cramer’s Bold Predictions About These 12 AI Stocks. In this article, we are going to take a look at where Dell Technologies Inc. (NYSE:DELL) stands against other AI stocks that Jim Cramer has made predictions about.
Given that AI has dominated stock market headlines for more than a year now, it’s no surprise that Jim Cramer of CNBC’s Mad Money and Squawk on the Street has also devoted quite a bit of airtime discussing the technology. He is extremely bullish on AI and has gone as far as to suggest that the world’s largest AI GPU company, the one run by Jensen Huang, is ushering in a new industrial revolution.
Don’t believe us? Well, take a look at his own words. In a recent Squawk on the Street appearance, Cramer said the following about Huang and his company:
“Industrial revolution, why can’t we believe? Do you remember, did you read that, book about John Garfield, where they talked about the telephone, and Alexander Graham Bell tries to get it into the centennial in Philadelphia, and only because the Brazilian guy there doesn’t get to represent it. And Alexander Graham Bell says you know this could revolutionize all of how we do things. And the American judges were like who is this clown?”
“I find over and over again that when you have the industrial revolutions no one really believes in them. And here’s Jensen Huang.”
One major AI announcement in January that has created quite a bit of a splash is President Trump’s $500 billion Stargate project. Trump announced the project joined by executives from several big tech companies. Cramer believes that Stargate might end up underpinning industrial growth in the US. Stargate might also require the US to build the energy infrastructure necessary to support massive data centers. According to Cramer:
“Crisis comes down to the fact that we had no real industrial growth in this country for decades so we haven’t had to build much energy infrastructure. Now all of a sudden these data centers start coming online like the ones that will be part of Stargate, the Oracle, SoftBank, OpenAI project… And these data centers consume insane amounts of electricity. It’s a level of demand that nobody saw coming. So after years where we spent more time decommissioning power plants and building new ones, we suddenly gotta go back into growth mode.”
These aren’t his only comments about Stargate. Cramer believes that the announcement might underlie a new paradigm shift in the US ecosystem. This ecosystem blossomed through the partnership between Bill Gates’ software company and OpenAI. However, Cramer believes that the shares of one of the world’s largest enterprise resource planning companies soared after the announcement because “maybe because there’s a reshuffling of the alliance. And the alliance could be in play.” He believes that “the fluid nature of things here is rather extraordinary” and that the firm might have replaced the software company:
“[the ERP provider] might have replaced Microsoft in an OpenAI joint venture. This would be extraordinary. And you know Carl, I don’t know whether Ellison [Larry Ellison] was doing a dance yesterday because he was so happy about this announcement. Or because he may have a real coup here. And betting against Ellison has been one of the biggest fools game in history. Man he was on his game yesterday.”
The booming demand for energy from AI data centers has injected fresh life into nuclear power companies. Some of these firms are up by a whopping 186% year-to-date. While Cramer is skeptical about the near-term returns offered by nuclear power stocks, one energy source that he believes might become popular again is coal. Here’s what he said in a recent Mad Money episode:
“Under this president, coal could have… a renaissance. Sure, coal’s time has come and gone, but it will come again because the data center inspired energy crisis really is so pressing that there’s not really a choice anymore. Yes, the demand is that great, [and] we so foolishly mothballed good nuke plants that it wouldn’t surprise me if coal’s long decline may have finally run its course.”
Our Methodology
To compile our list of Jim Cramer’s bold predictions about AI stocks, we scanned the stocks he mentioned in Mad Money and Squawk on the Street as far back as September 2024. Then, we picked out AI stocks and ranked them by the number of hedge funds that had bought the shares in Q3 2024.
For these stocks, we also mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds invest in? 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 team of IT experts discussing the latest network security trends over a laptop screen.
Dell Technologies Inc. (NYSE:DELL)
Number of Hedge Fund Holders In Q3 2024: 60
Date of Cramer’s Comments: 09-04-24
Performance Since Then: 4.28%
Dell Technologies Inc. (NYSE:DELL) is a computer hardware company that provides products to the consumer and enterprise industries. The only notable share price movement since Cramer’s quoted remarks has been a 12.3% share price drop in November following the firm’s third-quarter earnings. The results saw Dell Technologies Inc. (NYSE:DELL) forecast midpoint Q4 revenue at $24.5 billion which was lower than analyst estimates of $25.6 billion. Its PC revenue of $12.13 billion also missed analyst estimates of $12.43 billion. Another notable price movement was in October, and it stemmed from rival Super Micro’s woes. Here’s what Cramer said in September:
“This story is all about Dell making servers for the data centers that power artificial intelligence, along with new lines of AI-infused PCs. Unfortunately, the numbers were somewhat confusing, but I think that Wall Street got this one right—at least initially—as the stock timely rallied more than 4% last Friday before giving back all those gains today. Yep, Dell’s still worth owning here, and I’m going to tell you why. Let’s start with the numbers: Dell delivered a meaningful revenue beat driven by 38% growth from its Infrastructure Solutions division. Much better than expected, mostly thanks to heavy investment in AI infrastructure by corporate clients. In fact, their server and networking sales were up 80% year-over-year.
Dell’s other business, the Client Solutions Group, which includes the PC business, came in a little light, but not light enough to offset the strength in the infrastructure side. In the earnings release, Dell Vice Chairman and COO Jeff Clarke, an old hand, explained that “our AI momentum accelerated in Q2, and we’ve seen an increase in the number of enterprise customers buying AI solutions each quarter.” Notice the word “solutions”—I think that’s really important. It’s more than just a box. He added that AI-optimized server demand jumped by 23% compared to the previous quarter.
Now, last time Dell reported, some investors didn’t like the margins from Dell’s infrastructure business. Long story short, their earlier AI hardware sales mainly came from selling servers to large hyperscalers—here we’re thinking about Alphabet, Amazon, Meta—and those companies can drive a hard bargain. Dell was confident that the margins would improve later on as they sold more networking and storage equipment along with services, but hardly anyone was willing to give them the benefit of the doubt. Except me, maybe. That’s because I saw that Jeff was with Jensen—of course, Jensen Huang, CEO of Nvidia—at the GTC conference I attended.”
Overall, DELL ranks 10th on our list of AI stocks that Jim Cramer has made predictions about. While we acknowledge the potential of DELL as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than DELL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.