On Tuesday, during Mad Money’s episode, host Jim Cramer strongly defended his commitment to major technology stocks by highlighting Apple Inc. (NASDAQ:AAPL) and NVIDIA Corporation (NASDAQ:NVDA) as his Charitable Trust’s largest holdings, and emphasized his long-standing rule that investors should own these market leaders for the long haul rather than trade them for short-term gains. Although both stocks have recently lagged behind the recent memory hardware rallies, Cramer views them as unmatched in overall quality and profitability. He further added:
Apple’s stock has advanced. NVIDIA’s stock’s stuck for the moment; some of that is because it doesn’t sell enough in China. I think it’s because NVIDIA’s clients are so anxious to both praise it and work against it, and the media loves to report it whenever a customer tries to design their own chips away from NVIDIA. But it’s really cheap, and arguably, NVIDIA, I think it’s the best-run company in the world. Like I always say, you should own Apple and NVIDIA and not trade them. I think Apple’s brand will allow it to pass the higher cost of memory on to the telco carriers while they also get the benefit of Alphabet’s AI spending.
On the geopolitical front, Cramer clarified his controversial stance regarding NVIDIA Corporation (NASDAQ:NVDA) and the Chinese market:
NVIDIA, my position on this one’s become controversial. I wanted NVIDIA to be the chip of choice for China so that the Chinese would ride on our tech. That was a controversial position. It wouldn’t be used by the Chinese military because they don’t want to be dependent on an American chipmaker anyway. But once NVIDIA started to run against a brick wall in China, I didn’t want more American companies to give away trade secrets to the Chinese in order to be able to get cheaper AI… I respect NVIDIA so much and won’t listen to reason, but not if national security is at stake by allowing China to have secret access to so much data from so many of our different companies. I don’t think that’s smart.
Photo by Christian Wiediger on Unsplash
Custom Silicon Headwinds vs. the CUDA Ecosystem Moat
Cramer’s observation that the stock remains “stuck” despite strong fundamentals mirrors broader market behavior. As detailed in Insider Monkey’s analysis on “Why Nvidia Stock is Flat Since November Despite Tripling Its Net Income,” the gap between fundamental earnings growth and price consolidation has largely been driven by narrative headwinds rather than operational decay.
Regarding Cramer’s point about customers developing silicon internally, equity research from Morgan Stanley indicates that custom application-specific integrated circuits (ASICs) serve primarily as specialized complements for narrow, internal workloads rather than direct replacements for NVIDIA Corporation’s (NASDAQ:NVDA) core architecture. While major cloud providers build custom chips to optimize specific inference costs, complex foundational model training and multi-tenant environments remain heavily reliant on NVIDIA’s CUDA software framework. CUDA’s developer network and deep software integration create significant switching costs, enabling the company to maintain its position as the primary platform for frontier AI workloads.
Furthermore, while broader hardware manufacturers face margin pressure from rising component expenses, Cramer highlighted that Apple’s brand strength enables it to pass elevated memory costs directly to wireless carriers. This broader theme of pricing power is backed by Morgan Stanley’s view on Apple Inc. (NASDAQ:AAPL), which notes that the company’s low price elasticity allows it to raise device prices to offset surging DRAM and NAND costs without eroding demand. On the other hand, NVIDIA’s software ecosystem provides a structural buffer against pricing erosion in frontier AI compute.
The Sovereign AI Expansion
As highlighted in NVIDIA’s earnings disclosures and per Wall Street research, expanding sovereign AI infrastructure projects across Japan, South Korea, Europe, and the Middle East have increasingly absorbed GPU capacity previously designated for Chinese buyers. In its Q1 fiscal disclosures, NVIDIA reported that sovereign governments, enterprise clients, and specialized AI cloud providers accounted for roughly half of its $75.2 billion in Data Center revenue, offsetting lower direct shipments to China.
Strong Institutional Support, Muted Short Interest
According to Insider Monkey’s hedge fund database, NVIDIA Corporation (NASDAQ:NVDA) remains among the most widely held stocks by smart money, with 275 hedge funds holding it at the end of the first quarter, just behind Amazon.com, Inc. (NASDAQ:AMZN) and Microsoft Corporation (NASDAQ:MSFT).
On the other side, data reflects an absence of significant bearish bets against the chipmaker. The company’s short interest sits at 1.28%, which indicates that while export restrictions and custom silicon headlines have kept the stock moving sideways, short sellers are still reluctant to bet against NVIDIA’s earnings power and software ecosystem.
While we acknowledge the risk and potential of NVDA 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 NVDA and that has 10,000% upside potential, check out our report about this cheapest AI stock.
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