Jim Cramer Reacts to the Surprise Market Surge and Highlights 8 Key Stocks

6. NVIDIA Corporation (NASDAQ:NVDA)

Number of Hedge Fund Holders: 223

Jim Cramer and his co-host revisited the AI and semiconductor trade and NVIDIA Corporation (NASDAQ:NVDA) was brought up. Cramer talked about a major transition in data center demand from hyperscalers to smaller, specialized buyers. Here’s his analysis:

“Okay, here’s my theory. And so far, okayed by the powers that be. There is a shift from hyperscaler to others who need the latest and greatest. What does that mean? And by the way, Grace Blackwell sold out, which is the current ship, sold out. […] And I will tell you that if you’re a robot maker, you need all the ones that you can possibly get. Self-drive, you need all these. These are not hyperscale. […] I think what you find is that people who have felt that NVIDIA was an easy short, maybe not so easy.”

Jim Cramer recently broke down all of the Magnificent 7 stocks and categorized them into tiers, based on their strengths and weaknesses. He categorized NVIDIA Corporation (NASDAQ:NVDA) in the “second tier”, but defended the company’s long-term value and financial strength, saying:

“NVIDIA is down 36% from its highs. Just 3 weeks ago for instance, that Nvidia GTC event occurred where there was no sign at all that this AI theme was slowing but investors want to throw in the towel so there’s just been a freight train of selling in anything AI. Maybe you just have to step back and let the selling play out for Nvidia. Let me give you some good news, it sells for just 21 times this year’s earnings. This is the highest quality company in the world. It’s also less than half its average valuation over the past 5 years; that’s cold comfort. I think the stock will fly.”