We recently published a list of Jim Cramer Discussed These 6 Stocks Recently. In this article, we are going to take a look at where Alibaba Group Holding Limited (NYSE:BABA) stands against other stocks that Jim Cramer discussed.
On Tuesday, Jim Cramer, host of Mad Money, defended the growing wave of artificial intelligence investment, drawing a distinct line between this boom and previous capital expenditure surges. He argued that the AI movement stands apart from other booms driven by the private sector, largely because of the immense wealth backing it from Big Tech leaders. Cramer quipped:
“Bubble, bubble, bubble and you know how it just seeps into your consciousness? And that’s why I want to retire that word, instead talk about whether it’s a capital expenditure boom, one that might go bust. But it’s a boom. It’s not a bust.”
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Cramer highlighted that the economy has experienced many significant capital expenditure booms over time, noting that Deutsche Bank had recently published an impressive piece of research focused on these phenomena, examining both booms and busts.
The report from Deutsche Bank takes a look back at several major bubbles throughout history, including the explosive real estate market of the 20th century, as well as the dot-com and telecom booms, each of which culminated in significant losses. Yet, Cramer pointed out that not every capital expenditure boom ends in disaster. He cited various instances of successful themes that, despite their high risks, ultimately proved worthwhile. “These were fantastic themes, and no one ever called them bubbles,” he observed, adding that these movements, while capital-intensive, were largely initiated by government rather than the private sector. He added:
“This might be the boom that doesn’t go bust, because the players are so well capitalized. It simply doesn’t have to end that way…. But the bottom line: If you’re any of the hyper-competitive tech execs involved in the space race, you know what’s going on. You hate to lose and you won’t let it happen. After all, how do you think they got where they are in the first place?”
Our Methodology
For this article, we compiled a list of 6 stocks that were discussed by Jim Cramer during the episode of Mad Money aired on March 25. We listed the stocks in the order that Cramer mentioned them. We also provided hedge fund sentiment for each stock as of the fourth quarter of 2024, which was taken from Insider Monkey’s database of over 1,000 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Alibaba Group Holding Limited (NYSE:BABA)
Number of Hedge Fund Holders: 107
Alibaba Group Holding Limited (NYSE:BABA) was mentioned during the episode, and here’s what Mad Money’s host had to say:
“I worry because of things like what happened last night when Joe Tsai, the chairman of Alibaba and an executive I have tremendous respect for, talked about the ‘astounding levels of spending on technology-related goods’. He went on to say, ‘I start to see the beginning of some sort of bubble.’ This man has great vision. I was sick to my stomach when I read these comments. I knew they’d be picked up all over the place because Joe’s a well-known character, recognized for a savvy nature.
I figured he could throw cold water on the entire data center gang and that’s exactly what he did. The stocks were down long before the get-go as this group trades all early morning. You could just feel it, you could hear it. I was thinking… You know, it’s frightening.”
Alibaba (NYSE:BABA) provides a wide range of technology and marketing services, offering digital retail platforms, logistics, on-demand delivery, and cloud computing, while also offering various media, entertainment, and AI solutions to businesses and consumers globally.
Overall, BABA ranks 1st on our list of stocks that Jim Cramer discussed. While we acknowledge the potential of BABA 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 time frame. If you are looking for an AI stock that is more promising than BABA 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.