Jim Cramer on NVIDIA: “The King Has Indeed Begun to Underperform When It Reports”

NVIDIA Corporation (NASDAQ:NVDA) was among the stocks Jim Cramer discussed on Mad Money, highlighting several companies with market caps over a trillion dollars. Cramer highlighted the company’s dividend and stock buyback plans, as he stated:

Look, it’s not easy breaking into this trillion-dollar club. Why don’t we do this? Let’s look at the other 10 members, so you know. Let’s start with the world’s largest company, and that is, yes, NVIDIA. It reported a fabulous quarter last week, yet its stock went down anyway. The king has indeed begun to underperform when it reports; it’s traded lower on earnings the last four quarters. Imagine. But then it performs strongly intra-quarter. Although in a red-hot semiconductor market, NVIDIA’s only up 15% for the year. It’s got the best AI technology. That’s no longer enough.

I believe the company needs to pivot its cash management strategy more toward Apple under previous CFO Luca Maestri, where it bought back a huge amount of stock while boosting its dividend consistently. Back then, Apple shrank its share count by a third. Now, NVIDIA may be on that path already. They announced a 25-cent dividend, that’s 25 times their previous one, and that’s a quarterly dividend, and they added $80 billion to its buyback authorization. I think they may need to say that this is the new normal. Otherwise, they might not be able to attract enough new buyers. It should also trim some of the biggest winners in its stock portfolio for additional firepower. Worst-case scenario, if all the major accounts already own NVIDIA stock, that’s what I keep hearing, then the company ends up buying it by itself. I think that is a fabulous use of capital.

Photo by Christian Wiediger on Unsplash

NVIDIA Corporation (NASDAQ:NVDA) develops accelerated computing and AI platforms, GPUs for gaming and professional use, cloud services, robotics and embedded systems, and automotive technologies.

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