Starbucks Corporation (NASDAQ:SBUX)’s turnaround has seen Cramer discuss the firm on several occasions. On most of these, he has been optimistic about the firm and its prospects. The shares are up by 16% over the past year and by 26% year-to-date. On July 29th, Starbucks Corporation (NASDAQ:SBUX) reported its fiscal third-quarter earnings, and on the 30th, the shares closed 1.64% higher. The results saw the firm post $9.32 billion in revenue and $0.85 in adjusted earnings per share to beat analyst estimates of $9.16 billion and $0.66. As the results indicated that the turnaround was potentially working, Cramer asserted in a series of tweets that Starbucks Corporation (NASDAQ:SBUX) was making progress:
“Yes, SBUX is real…
“Awesome q from SBUX… Just when people were giving up on it”
For Starbucks Corporation (NASDAQ:SBUX), the key debate for the firm is its turnaround. The defenders of the turnaround’s success, i.e. the bulls, point towards the third-quarter earnings as evidence that the strategy led by CEO Brian Niccol is working. During the quarter, key metrics such as North America same-store sales, absolute transaction traffic and global same-store sales grew by 8.1%, 4.2% and 7.9%, annually. Additionally, during the quarter, Starbucks Corporation (NASDAQ:SBUX)’s operating margin also grew by 430 basis points to sit at 14.4%. The bulls use all of these metrics to point out that the firm’s turnaround strategy is executing well.
However, Starbucks Corporation (NASDAQ:SBUX)’s bears use the valuation (a forward P/E of 35.34 versus McDonald’s 20.70) to outline that the shares might have priced in a successful execution. Additionally, they add that the Q3 margins were also driven by factors such as tariff refunds which will not be a part of future financials. Finally, while Starbucks Corporation (NASDAQ:SBUX)’s decision to sell a majority stake of its China business is praised, worries remain about brand dilution in one of the firm’s largest markets.
Looking at the hedge fund sentiment, more hedge funds had a stake in Starbucks Corporation (NASDAQ:SBUX) in Q1 2026 compared to Q4 2025. During Q4, 59 out of the 1,041 funds part of Insider Monkey’s database had held a stake, while the figure jumped to 65 out of 1,022 in Q1. While Fisher Asset Management was the largest stakeholder, courtesy of its $1 billion stake, Citadel Investment Group‘s $75 million stake marked a 187% growth.
While Insider Monkey acknowledges the risk and potential of SBUX as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than SBUX that has 100x upside potential, check out our report about the cheapest AI stock.
READ NEXT: Jim Cramer Draws the Line on NVIDIA in China: Why National Security Comes First and Jim Cramer Defends His Dell Stance as Investors Complain About Missing Out.
Disclosure: None.
