We recently published an article titled Jim Cramer’s Bold Predictions About These 15 AI Stocks. In this article, we are going to take a look at where Powell Industries, Inc. (NASDAQ:POWL) stands against the other AI stocks Jim Cramer talked about.

As trading in 2024 heads towards a close, major stock market indexes have had a good run despite mixed performance across sectors. The flagship S&P index is up 26% year-to-date while the broader NASDAQ index has gained 33.56%. On top of this, the index of the NASDAQ’s top 100 stocks is up 29.8%, which solidifies the conclusion that technology stocks have driven the stock market’s 2024 returns. For further evidence, consider the Dow’s performance. The stock index which tracks industries across the US economy is up 14% YTD, making it the weakest-performing index among all mentioned.

However, even within technology, not all stocks have performed equally well. As an example, consider the performance of two stocks. Both of these are semiconductor companies. The first, which ranked 3rd on our list of Jim Cramer’s bearish tech calls is the largest American manufacturer of memory chips. The second, which ranked 1st on the same list is Wall Street’s AI darling. The two stocks have gained 7.64% and 184.60% year-to-date, so even though both of them are technology companies, their share price returns have differed primarily because of the firms’ varying exposures to artificial intelligence.

Yet even though AI has held up the stock market in 2024, other factors continue to influence stock performance as well. Continuing with our example of the GPU designer’s shares, the stock dropped by 1.1% on the day the Federal Reserve cut interest rates but guided two cuts for 2024 instead of the earlier four. The shares fell despite the fact that the firm enjoys the widest moat possible in the AI industry. On the same day, the flagship S&P and the broader NASDAQ indexes shed 2.9% and 3.6%, respectively. Following the year-end sell-off on Friday, neither index has fully recovered to levels before the Fed’s announcement.

Cramer, for his part, had predicted that the markets might not find it easy to reverse all losses following the Fed’s announcement. Talking on CNBC’s Squawk on the Street on the day after the Fed’s decision, the host shared that “rampant Bitcoin speculation, after speculation in nuclear power, after speculation in quantum computing” was baked into markets ahead of the announcement. Commenting on quantum computing in particular, Cramer mentioned one quantum computing stock and wondered whether the industry was all hype and no substance. “How is that [the firm] going to quantum? When we don’t even know what quantum is?” wondered Cramer.  “It’s a nonfungible tokens, right? Cause you know what a fungible token was?” he added.

As AI continues to shape the winners and losers in the stock market, Cramer also shared tips for trading in 2025 in a recent Mad Money episode. He believes that one key fact that everyone needs to keep in mind when trading is to not get disillusioned by strong gains. According to Cramer, while bulls and bears both “make money” on the stock market, it’s the pigs that “get slaughtered.” He elaborated further and shared that in his experience he’s “seen moments where stocks went up and up and up so much that people were intoxicated with their gains.”  Yet, it’s “precisely at that point of intoxication that you need to remind yourself that you don’t want to act like a pig,” believes the television show host.

Cramer’s second tip for successful investing is to have the fortitude to hold stocks even when the market is tough. He believes that not only is holding through the thick and thin ‘the hardest part of investing,” but adds that “taking short-term pains so you can have long-term gains” lies at the heart of the market’s performance “for a century.”

Finally, one key factor that several people ignore while trading stocks is to hunt for the right entry price. Cramer cautions against buying in bulk. “Do not, under any circumstances, buy your whole position at once,” he stresses and adds that “you should never sell all at once,” either. Instead, Cramer recommends staging “your buys, work your orders, try to get the best price over time.”

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 in August. Then, we picked out stocks with AI computing, hardware, and energy generation exposure, 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).

Powell Industries, Inc. (NASDAQ:POWL)

Number of Hedge Fund Holders In Q3 2024: 26

Date of Cramer’s Comments: 8-19-24

Performance Since Then: 35.10%

Powell Industries, Inc. (NASDAQ:POWL) is an electrical infrastructure company whose products are used in data centers that compute AI workloads. It’s one of the top-performing stocks of 2024 due to strong revenue growth stemming from tailwinds in the data center and utilities markets. Powell Industries, Inc. (NASDAQ:POWL)’s revenue grew by 45% during its fiscal year 2024, and the shares are up by 156% year-to-date. One key factor that has driven investor optimism in the firm’s stock is its backlog. A robust backlog lets investors gain visibility into future orders. As of its fiscal Q4, Powell Industries, Inc. (NASDAQ:POWL)’s backlog remained steady at $1.4 billion. Cramer commented on the backlog and other factors surrounding the firm:

“Lately, the market has fallen in love with a particular kind of industrial stock. These are still smokestack stocks, but they also have powerful secular growth drivers, meaning they can thrive even if the economy doesn’t accelerate. Tonight, I have a smaller company that falls into the same category: Powell Industries. This company has been around since 1947 and went public decades ago. However, the stock has caught my attention over the past couple of years, skyrocketing from $20 in late September 2022 to $171 today—a gain of more than 700%. So, what does this company do, and how did the stock manage to catch fire like this? More importantly, can it keep running once the Fed starts blessing us with rate hikes?

“Let’s start with the basics. Powell makes custom-engineered equipment that distributes, controls, and monitors the flow of electricity while also providing protection to all sorts of electrically powered hardware, like motors and transformers. If you want to know why the stock languished from 2014 through late 2022, it’s because of their exposure to the oil and gas industry. Even now, the fossil fuel industry accounts for 59% of Powell’s sales year-to-date. However, the stock’s spectacular breakout over the past couple of years has been driven by Powell’s success in new markets, namely utilities, transportation like light rail, metals and mining, pulp and paper, and of course, data centers. Everything really came together for Powell Industries last year, with these new businesses generating tremendous growth. After four years of being stuck in the $500 million revenue range, Powell posted 31% revenue growth in 2023, reaching total sales of just under $700 million.

“Meanwhile, their earnings per share nearly quadrupled—from $1.15 in 2022 to $4.50 last year. It’s like hitting the lottery. Essentially, if their equipment can handle the petrochemical business, it can handle utilities, especially those in the Gulf Coast, where many of their petrochemical customers are located. Cope also mentioned data centers, electric vehicles, and semiconductors. When you put it all together, it’s easy to see how Powell’s orders grew by 94% last year, with their backlog increasing by 118% to $1.293 billion—the first time their backlog ever crossed the $1 billion mark.

“These numbers are incredible, yet Wall Street continues to underestimate this company, allowing Powell to repeatedly blow away the estimates. It’s like the old days when companies were smaller, moving from midcap to large cap. When Powell reported at the end of January, they posted 53% revenue growth and earned $1.98 per share. Analysts were only expecting $0.84. Yes, that’s right—they more than doubled the analyst consensus, which is extraordinary.”

“When Powell reported again in early May, they delivered another monster revenue beat with a staggering $0.97 earnings beat, off a $1.78 estimate. That’s an upside surprise of almost comical proportions. Most recently, Powell delivered yet another stunning quarter at the end of July, with much higher-than-expected revenue, earning $3.79 per share. Wall Street had only expected $2.16. No wonder the stock has more than doubled in the past seven months—these beats are extraordinary.”

Overall POWL ranks 15th on our list of the AI stocks Jim Cramer recently talked about. While we acknowledge the potential of POWL 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 timeframe. If you are looking for an AI stock that is more promising than POWL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.

Disclosure: None. This article is originally published at Insider Monkey.