In this article, we will look at Jim Cramer’s 5 Stock Calls Including Cerebras and Cisco, and Caution About Overhyped AI Stocks. Please visit Jim Cramer’s 11 Stock Calls Including Marvell and Trane, and Caution About Overhyped AI Stocks, if you’d like to see the extended list and methodology behind it.
5. Cerebras Systems Inc. (NASDAQ:CBRS)
Cerebras Systems Inc. (NASDAQ:CBRS) was among Jim Cramer’s Mad Money stock calls as he urged investors to exercise caution when it comes to red-hot AI stocks. Cramer discussed the company’s IPO during the episode, as he stated:
Today, as I said at the top of the show, we got the largest IPO of the year, or at least so far, when Cerebras Systems came public with a bang… It is a great company, but man, after this red-hot start for the stock, it’s very hard for me to get comfortable with this valuation at $185, the offer price. Cerebras had a fully diluted valuation of roughly $56.6 billion, where it was trading about 111 times last year’s sales, not earnings, sales, okay, that’s important. Keep that in mind. Up here at $311, it’s more like 187 times last year’s sales… Of course, Cerebras is getting that valuation because it’s growing like a weed.
But you know what? These guys had 76% sales growth last year… That is not that much different from NVIDIA, which was at 65. So really, if you buy the stock up here, you’re betting on the idea that Cerebras will have much better growth in the many years in the future. Honestly, at this valuation, you’re basically expecting revenue to be several multiples of what it is right now in a fairly short period of time. Maybe that’s possible given the company’s impressive technology, but that seems like a real leap of faith to me. I don’t like it. Not their fault… Really, I think that what’s happening here is that Cerebras has a sexy story and a perfectly timed IPO…
The bottom line: While there might be a situation in the future where I can recommend Cerebras, I just can’t even get close to justifying the valuation up here, given how much it’s already run right out of the gate… For now, I say keep your bat on the shoulder and hope this stock gives you a giant pullback because at these levels, no, it’s too rich for me. You’ll have to buy it up here without my blessing. I can’t go back to 1999. You shouldn’t either.
Cerebras Systems Inc. (NASDAQ:CBRS) designs and manufactures an artificial intelligence compute platform featuring a specialized wafer-scale engine designed for high-performance generative AI and inference tasks. The company provides its proprietary systems and software to several clients, including hyperscalers, foundation model labs, and sovereign AI initiatives.
4. The Charles Schwab Corporation (NYSE:SCHW)
The Charles Schwab Corporation (NYSE:SCHW) was among Jim Cramer’s Mad Money stock calls as he urged investors to exercise caution when it comes to red-hot AI stocks. Cramer commented on the stock’s decline after a good run, as he remarked:
Okay, how could the stock of Charles Schwab get its groove back, especially as just a few months ago, this retail brokerage firm seemed unstoppable, with the stock hitting a new all-time high in early February. That seemed right to me. But then it got knocked down during the recent AI displacement sell-off, even though it’s really not an AI victim at all. Then the stock got hit again last month when Schwab reported, even though the numbers were better than expected. It was a very good quarter. Today, the company hosted an institutional investor day where they raised their full-year revenue growth forecast pretty substantially, went from 10% to more like 14 to 15%. Yet the stock actually got hit again, down 1.9% in part because management also predicts higher expense growth. Look, I think the market’s misjudging this one and not valuing this incredible franchise correctly at all.
The Charles Schwab Corporation (NYSE:SCHW) provides wealth management, brokerage, banking, and advisory services, providing trading platforms, investment products, and financial planning solutions.
3. GE Aerospace (NYSE:GE)
GE Aerospace (NYSE:GE) was among Jim Cramer’s Mad Money stock calls as he urged investors to exercise caution when it comes to red-hot AI stocks. Mentioning that they like the company, a caller asked if it is a good time to buy the stock. Cramer replied:
Buy. GE is Larry Culp. I’ve been watching the stock go down, and I’m like, alright, come on, come on. And by the way, I’m going to throw in Boeing… down 11. Why? Because it was up in anticipation of a big order. I mean, you know what? I mean, look, stocks don’t go up and up and up, not real ones at least. And Boeing’s good, and GE’s good.
GE Aerospace (NYSE:GE) manufactures commercial and defense aircraft engines, power systems, and related components. In addition, the company provides maintenance, repair, and overhaul services along with spare parts for aviation and military applications. A caller asked for Cramer’s thoughts on the stock during the April 29 episode, and he responded:
I think you should buy it right here. Enough is enough. It’s been going down because people are worried about air travel. I think this is a maintenance stock now. There’s not as much travel, so there’s not as much maintenance as needed off the planes. That’s when you buy GE Aerospace, because otherwise it doesn’t come down. This is a good moment to buy GE. Actually, it was a really good quarter, by the way.
2. NVIDIA Corporation (NASDAQ:NVDA)
NVIDIA Corporation (NASDAQ:NVDA) was among Jim Cramer’s Mad Money stock calls as he urged investors to exercise caution when it comes to red-hot AI stocks. Cramer commented on the company’s valuation, as he said:
How about NVIDIA? Look, it’s finally moving, up… 4.4% today. Good reason. There’s a very good chance that, based on forward earnings estimates, NVIDIA’s stock is now cheaper than the average stock in the S&P 500… Now that’s absurd. The company’s growing at a much faster pace than almost any large-cap enterprise, and it sells below… S&P market multiple. Now that’s crazy… There would be no AI revolution without Jensen Huang and NVIDIA. The company practically invented artificial intelligence as we know it and married it with accelerated computing to give us trillions of dollars’ worth of gains. Now, we’re faced with the real test, which is whether the biggest market outside the United States, China, will be reopened to them.
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.
1. Cisco Systems, Inc. (NASDAQ:CSCO)
Cisco Systems, Inc. (NASDAQ:CSCO) was among Jim Cramer’s Mad Money stock calls as he urged investors to exercise caution when it comes to red-hot AI stocks. Discussing Cerebras’s IPO, Cramer said:
It took away from the extraordinary performance of Chuck Robbins at Cisco, showed an incredible acceleration, both sales and earnings. Cisco was the largest company in the world at the peak of 2000. It was selling to all the big customers at the time, the companies that were building out the internet with massive amounts of fiber. A lot of it never got lit. A lot of the customers didn’t have enough money to pay. Again, investors lost fortunes with Cisco back then. This time, Cisco deserved the run. Today’s 13% rally was completely justified and then some. It wasn’t a mania. It wasn’t fanciful.
Cisco Systems, Inc. (NASDAQ:CSCO) creates networking, security, and collaboration tools that help organizations stay connected and protected. During the May 11 episode, Cramer noted that he regretted trimming the stock, as he stated:
Next is one that I regretfully sold, and I wish I hadn’t. It’s called Cisco Systems, which is more networking than cybersecurity, but it’s in the business, and it’s a top-five holding of the CIBR ETF… Now, more importantly, Lang notes that Cisco’s been chugging ahead like a freight train. Look at this freight train, man, this thing is just incredible, with a rapid series of higher highs and higher lows, and it’s been rallying on very strong volume…
Now, when you look at the relative strength index, the RSI… this is an important momentum indicator too, it’s flirting with overbought levels… meaning Cisco may have come up too far, too fast, but Lang points out that stocks can stay overbought for a long time. At the same time, we’ve seen a huge surge in the Chaikin Money Flow…
…Right now, Cisco trades in the high $90s, and Lang sees it clearing $100 real soon, likely on the way to $110. Keep in mind, though… Cisco reports on Wednesday, just made a new all-time high today. You might want to wait for a better entry point. I’m hoping it posts a quality set of numbers and sells off anyway. Wouldn’t be the first time for Cisco. That might be a good chance to jump on.
While we acknowledge the potential of CSCO to grow, 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 CSCO and that has 100x upside potential, check out our report about the cheapest AI stock.
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