We recently compiled a list of the Jim Cramer’s Lightning Round: 7 Stocks to Watch. In this article, we are going to take a look at where International Business Machines Corporation (NYSE:IBM) stands against the other stocks to watch.
Jim Cramer, host of Mad Money, recently shared his thoughts following his interview with President-elect Donald Trump on the floor of the New York Stock Exchange. One of the key takeaways for Cramer was Trump’s comments about China. During the conversation, Trump emphasized his positive relationship with President Xi, which in itself was noteworthy.
However, Trump also remarked that China has not always been a responsible global actor and that this dynamic must change. Cramer highlighted that this is crucial for a number of reasons, particularly the need to protect Taiwan, which he sees as vital to safeguarding Taiwan Semiconductor, a company that plays a critical role in U.S. national security. Cramer also noted that the challenge lies in shifting China’s role from a long-standing adversary to a more balanced trading partner, a task he feels could be difficult given the longstanding trade issues between the two countries.
Cramer further pointed out the complexities of dealing with a country that has exploited U.S. trade policies for years. He said:
“But let me tell you what I think can happen, I believe President Xi needs the U.S. much more than people realize. The Chinese economy is more deeply indebted.”
READ ALSO Jim Cramer’s Game Plan for This Week: 8 Stocks in Focus and Jim Cramer Talked About These 6 Airline Stocks
When it comes to the stock market, Cramer found Trump’s approach to be refreshingly straightforward, without any unnecessary bravado. He also observed that Trump’s openness toward cryptocurrency could have significant implications for the future of the U.S. dollar.
“I also thought the President-Elect had no bluster when it came to the stock market, that was a very good thing… The president-elect’s affinity for crypto will ultimately give the dollar a strange bedfellow. I want our country to be the capital of finance and that means being the capital of crypto too.”
He added that for this relationship to develop positively, Washington would need to address the growing national deficit, which he believes could diminish some of the speculative appeal of cryptocurrency.
“I want to believe that the White House’s attitude toward business is important to the direction of stocks. The current president is often going way out of his way to show his disdain for any business people. But what’s more important is profits so it certainly doesn’t hurt that Trump talked about wanting to cut corporate taxes once again to let more money fall to you, the shareholder. Love him or hate him, you gotta admit that’s good for your portfolio, which by the way, is still the true north of Mad Money.”
Our Methodology
For this article, we compiled a list of 7 stocks that were discussed by Jim Cramer during the recent episode of Mad Money on December 13. We listed the stocks in ascending order of their hedge fund sentiment as of the third quarter, which was taken from Insider Monkey’s database of 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).
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International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 56
Cramer called International Business Machines Corporation (NYSE:IBM) stock episodic and said that he is on board.
“I like IBM. I like IBM. It’s still an inexpensive stock. It’s still got upside. It’s a little more episodic than I like. But you know, had that down trip but at 22 times earnings, I am on board.”
International Business Machines (NYSE:IBM) offers integrated solutions and services, including hybrid cloud and AI platforms and server and storage solutions for hybrid cloud deployments. The third quarter marked the five-year anniversary of its acquisition of Red Hat, its open-source software subsidiary. Since the acquisition, Red Hat’s revenue has grown significantly, reaching around $6.5 billion and doubling in size.
This growth has been driven by a compound annual growth rate in the mid-teens. Additionally, the OpenShift platform, which was valued at approximately $100 million in annual recurring revenue (ARR) at the time of acquisition, has now expanded more than tenfold, reaching $1.3 billion in ARR. Red Hat has also broadened its global presence, entering new markets worldwide, and continues to drive innovation with new offerings like Ansible 2.5, RHEL AI, and OpenShift AI.
In Q3, International Business Machines (NYSE:IBM) reported a strong 10% growth in Software revenue, which includes a 14% increase from Red Hat alone. Another key development for the company came in 2023 with the introduction of the Watsonx generative AI platform. Shortly after its launch, Watsonx secured over $2 billion in contracts, positioning itself as a significant growth driver for IBM in the years ahead.
IBM’s Chief Financial Officer, Jim Kavanaugh, expressed confidence in the company’s growth trajectory heading into 2025. Kavanaugh highlighted the acceleration in Software revenue, opportunities for further growth with Red Hat, the new mainframe cycle, and IBM’s strong position in generative AI, alongside contributions from acquisitions, as key factors driving future success.
Overall IBM ranks 1st on our list of the stocks to watch according to Jim Cramer. While we acknowledge the potential of IBM 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 IBM 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.
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