In this piece, we will look at Jim Cramer’s bold predictions about technology stocks.
The DeepSeek selloff which occurred earlier this week gave Jim Cramer plenty to talk about. It saw one of his most frequently mentioned stocks, the GPU firm responsible for making AI chips, lose nearly $600 billion in value during a single day of trading. Other stocks exposed to data center spending didn’t fare well either, and cumulatively, these stocks lost a trillion dollars of market value.
As investors pondered whether the billions of dollars in AI spending would actually materialize, Cramer discussed the potential offered by the firm’s latest Blackwell AI GPUs. The debate surrounding low AI costs primarily centers around large language models (LLMs), and Cramer believes that the firm’s CEO is focused on the bigger picture.
According to him:
“Remember, Blackwell, which is the current iteration, Blackwell’s about video. It’s just about video. And video is incredibly important. Because video is the ability to make it so that the robots work. Robots do not work on the current one. And I think robots are the next frontier. So I don’t think necessarily that uh . . . . Elon Musk, who may be focused on many different things, that Elon Musk says I don’t wanna buy [the AI GPUs]”
As DeepSeek wreaked havoc on the stock market, Cramer also shared his thoughts about the model. The CNBC TV show host shared that he “tried to do a couple of, I tried to get it to give me Netflix’s performance from 2010. And it says I can’t do that. Well I mean, honestly? I can do that.” Cramer remained skeptical about the authenticity of the data that DeepSeek had shared. According to him “The difference here I think is that, if we really think that they are playing by American rules and they’re telling us everything, then maybe that’s why we keep seeing such a great number, a growth number from the Chinese economy.”
One particular DeepSeek feature that he was quick to note was censorship. Chinese social media and technology platforms cannot provide users with information critical of the government or the state narrative. When Cramer asked DeepSeek “What famous picture has a man with grocery bags in front of a tank?” the model initially replied by stating “the famous picture you are referring to, Tank Man, unknown rebel, June 5, 1989,” he shared. While this was all good, he added the model then “takes that back and says sorry, can’t help you with that. And then secondarily it says sorry that’s beyond my current scope.”
On the topic of AI and technology, the AI PC cycle has also left Cramer disappointed. Cramer shared that while business uses for AI had materialized, on the consumer side, demand hasn’t materialized. “The PC, I thought we were all gonna upgrade. And now we’re all in wait-and-see mode,” he shared in a recent appearance.
One particular business AI use case that has impressed Cramer is healthcare. According to him:
“I think that what we’re not thinking about, like when I went to Jensen Huang’s panel on healthcare. It’s so much bigger than anything involving AI PC. I mean they’re really just talking about having the data to really attack every single disease and changing it from fatal to maintenance. You have tremendous number of people involved in trying to do that. Then you have Stripe there working with [the GPU company] to be able to do something revolutionary in finance. And then you have the banks working doing some revolutionary things trying to get people who’re doing S1s. . . .”
Our Methodology
To compile our list of Jim Cramer’s bold predictions about tech stocks, we scanned the stocks he mentioned in Mad Money and Squawk on the Street in September 2024. Then, we picked out stocks with tech 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).
10. MongoDB, Inc. (NASDAQ:MDB)
Number of Hedge Fund Holders In Q3 2024: 49
Date of Cramer’s Comments: 09-03-24
Performance Since Then: -4.2%
MongoDB, Inc. (NASDAQ:MDB) is a SaaS company that provides database services to businesses. The firm allows customers to store high-volume data, run queries, and conduct other operations. Since Cramer’s remarks in September, MongoDB, Inc. (NASDAQ:MDB)’s shares have lost 4.2%. These losses have come on the back of a major selloff in December when the stock bled 16.9% when investors panicked about the firm’s CEO and COO departing. Year-to-date, MongoDB, Inc. (NASDAQ:MDB)’s shares are up by 10.8% as they actually rose by 7.3% the day after the DeepSeek selloff. The move was part of a broader rotation into software with the hopes of benefits from lower AI development costs. Here’s what Cramer had said about MongoDB, Inc. (NASDAQ:MDB) in September:
“Crisis averted at MongoDB. Citi lifted its price target on the database software maker’s stock to $400 a share from $350 after it boosted its guidance late Thursday. Analysts argue the earnings report showed its first-quarter challenges, which sent the stock cratering in late May, were just a blip.”
9. Dell Technologies (NYSE:DELL)
Number of Hedge Fund Holders In Q3 2024: 60
Date of Cramer’s Comments: 09-04-24
Performance Since Then: -3.4%
Dell Technologies (NYSE:DELL) is a personal computing and information technology hardware products provider that sells products such as laptops and servers. Its shares have fluctuated in response to the firm’s ability to cater to AI data center demand. Since Cramer’s remarks, Dell Technologies (NYSE:DELL)’s stock has lost 3.4%. The shares dipped by 12.2% in November when the firm’s third-quarter revenue of $12.1 billion missed analyst estimates of $12.4 billion. Dell Technologies (NYSE:DELL)’s shares also dropped by 8.7% in January amidst the DeepSeek selloff due to its exposure to AI data centers. Here’s what Cramer had said in September:
“This story is all about Dell making servers for the data centers that power artificial intelligence, along with new lines of AI-infused PCs. Unfortunately, the numbers were somewhat confusing, but I think that Wall Street got this one right—at least initially—as the stock timely rallied more than 4% last Friday before giving back all those gains today. Yep, Dell’s still worth owning here, and I’m going to tell you why. Let’s start with the numbers: Dell delivered a meaningful revenue beat driven by 38% growth from its Infrastructure Solutions division. Much better than expected, mostly thanks to heavy investment in AI infrastructure by corporate clients. In fact, their server and networking sales were up 80% year-over-year.”
“Dell’s other business, the Client Solutions Group, which includes the PC business, came in a little light, but not light enough to offset the strength in the infrastructure side. In the earnings release, Dell Vice Chairman and COO Jeff Clarke, an old hand, explained that “our AI momentum accelerated in Q2, and we’ve seen an increase in the number of enterprise customers buying AI solutions each quarter.” Notice the word “solutions”—I think that’s really important. It’s more than just a box. He added that AI-optimized server demand jumped by 23% compared to the previous quarter.”
“Now, last time Dell reported, some investors didn’t like the margins from Dell’s infrastructure business. Long story short, their earlier AI hardware sales mainly came from selling servers to large hyperscalers—here we’re thinking about Alphabet, Amazon, Meta—and those companies can drive a hard bargain. Dell was confident that the margins would improve later on as they sold more networking and storage equipment along with services, but hardly anyone was willing to give them the benefit of the doubt. Except me, maybe. That’s because I saw that Jeff was with Jensen—of course, Jensen Huang, CEO of Nvidia—at the GTC conference I attended.”
Hedge Fund Resource Center