Is Nvidia (NVDA) Overvalued? Cramer Explains Why the AI Leader’s Stock is Still a Buy

Insider Monkey12-22 23:24

We recently compiled a list of the 7 Stocks that Jim Cramer Recently Discussed. In this article, we are going to take a look at where NVIDIA Corporation (NASDAQ:NVDA) stands against the other stocks ...

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Cramer Explains Why the AI Leader’s Stock is Still a Buy\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-12-22 23:24 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://finance.yahoo.com/news/nvidia-nvda-overvalued-cramer-explains-152452029.html><strong>Insider Monkey</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>We recently compiled a list of the 7 Stocks that Jim Cramer Recently Discussed. In this article, we are going to take a look at where NVIDIA Corporation (NASDAQ:NVDA) stands against the other stocks ...</p>\n\n<a href=\"https://finance.yahoo.com/news/nvidia-nvda-overvalued-cramer-explains-152452029.html\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"LU2360032135.SGD","symbol_name":"ALLSPRING GLOBAL EQUITY ENHANCED INCOME \"A\" (SGDHDG) INC","start_time":0,"source_url":"https://finance.yahoo.com/news/nvidia-nvda-overvalued-cramer-explains-152452029.html","article_id":"2493240247","we_media_id":null,"thumbnails":["https://s.yimg.com/uu/api/res/1.2/NCDdAKonVcpkJWfY.FcH8Q--~B/aD02MDA7dz00NTA7YXBwaWQ9eXRhY2h5b24-/https://media.zenfs.com/en/insidermonkey.com/a6c6a869a7c2c92171425bdb9b9fb0f6"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2493240247","pubTimestamp":1734881092,"columns":[],"sourceInfo":{"source_id":"yahoofinance","name":"雅虎金融"},"weMediaInfo":null,"summary":"We recently compiled a list of the 7 Stocks that Jim Cramer Recently Discussed. 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In this article, we are going to take a look at where NVIDIA Corporation (NASDAQ:NVDA) stands against the other stocks that Jim Cramer has recently discussed.\nJim Cramer, host of Mad Money, recently addressed how investors can sometimes lose sight of the broader market perspective. He reminded his audience that the key to successful investing is simple: buy good stocks at reasonable prices and sell poor-performing stocks, even at a loss.\n\n“Sometimes we forget what we are trying to do around here. We’re looking to find good stocks at good prices and buy them. We want to sell bad stocks at any price and kick them out of our portfolio.”\n\nCramer also touched on the current market environment, noting that we're nearing the beginning of a rate-cutting cycle. While some may argue it’s not yet a cutting cycle, Cramer believes it is, regardless of whether it proceeds gradually. He pointed out that there’s another important factor to consider, an environment that is heavily oversold.\n\n“We know that there are inflationary tariffs in the wind, but we don't know their size, their breadth or their impact, but that's why we're already oversold. People saw this coming, they were worried and they took action ahead. They dumped stocks so they wouldn't be long or own as much when the meeting (Fed meeting) occurred.”\n\nREAD ALSO: 6 Stocks Jim Cramer Talked About This Week and Jim Cramer’s Lightning Round: 7 Stocks to Watch.\nAs Cramer looked at the market, he expressed his focus on identifying high-quality stocks that have seen significant declines. He noted that, in a market that has already experienced substantial gains, the only place to find true value is among the laggards. Specifically, he pointed to the healthcare sector, where 62 healthcare stocks in the S&P 500 are currently down by an average of 19.7% from their peaks. Cramer acknowledged that some of this decline is tied to real risks within the sector, such as President-elect Trump's focus on addressing middlemen in the drug industry, including pharmacy benefit managers and drug distributors. However, he believes much of the risk has already been priced into these stocks, making them potentially attractive investments at this point.\nCramer also drew attention to the medical device and technology sector, where stocks are on average down 17.6% from their highs.\n\n“Now the goal is to build a position that starts somewhere well below where it was, simply because it has gone out of style in the current version of the Wall Street fashion show and is being hit with heavy end-of-the-year tax selling… You know why you do this? Because of the overarching principle behind good investing, buying low so that one day you can sell high, or maybe not sell at all.”\n\n\nOur Methodology\nFor this article, we compiled a list of 7 stocks that were discussed by Jim Cramer during the recent episode of Mad Money on December 17. We listed the stocks in ascending order of their hedge fund sentiment as of the third quarter, which was taken from Insider Monkey’s database of 900 hedge funds.\nWhy are we interested in the stocks that hedge funds pile into? 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).\nNVIDIA Corporation (NASDAQ:NVDA)\nNumber of Hedge Fund Holders: 193\nCramer discussed that NVIDIA Corporation (NASDAQ:NVDA) has recently been unjustifiably torn apart. He explained:\n\n“Now, we got some leadership stocks that are being torn apart. The heaviest of which of course is Nvidia. Up 163% for the year, but down 22 points from its recent highest… What exactly is the matter with Nvidia, down eight out of the last nine days? I think nothing. It remains the leader in the most important space of the entire market. It's riding a wave accurately depicted by a seasoned warrior, Matt Murphy, the CEO of Marvell Technology who said something amazing on this show about the size of the AI opportunity just last night, listen, ‘We are in an unprecedented AI supercycle for AI as a service, but also for the silicon TAM underneath it. This is unbelievable. I've been doing this for 30 years. I've been through every major one of these cycles, PCs, smartphones, digital cameras, cloud computing, you name it. This one's bigger than all of them.’\nNvidia's not being dethroned by any competitor. Even the companies that are trying to compete against it are faithful customers who have no choice but to try to develop something because Nvidia can't supply, they can't supply enough chips to meet the demand for most customers. I think it's just profit-taking after a monster run. It has been a monster run, hasn't it?\nBut I understand on January 6th, 2025, Nvidia founder and CEO Jensen Huang will be presenting a keynote at CES, the largest tech expo in the world and he's used that podium before to introduce many of the innovations that made Nvidia one of the most valuable companies on earth. When will the stock bottom? I always let a stock tell me what to do. Nvidia bottoms when the stock rolls over at the open then hits the level on big volume where it stops before working its way back up to well above where it opened. That, people, is called a crescendo bottom when everyone of size who wants to get out has done so.\nNo need to jump the gun, but keep in mind that if you don't own any, you might want to wait to get right ahead of CES. Oh, and another thing, please, if the stock opens up, please do not buy it. It rarely works.”\n\nCramer, highlighting the success of companies with custom silicon businesses, added:\n\n“… Investors begin to wonder if these custom silicon companies are going to be such big winners, who are the relative losers? Now, one incredibly knee jerk and wrong answer, as I mentioned at the top of the show, is that Nvidia might be getting displaced. I think that's one reason why the stock's down nearly 15% from its November highs, including a big pullback today. Although it's also because Amazon's making chips that matter too, and Microsoft's making its noises that it won't be so hard to get chips, that there are no shortages. I don't know, every long knife is coming against the stock that, you know, I like the most, which is Nvidia. I think these concerns are totally misplaced. First, as Marvell CEO, Matt Murphy, told us last night, this market's gonna be big enough for a number of winners. Second, while the hyperscalers clearly like the custom chips they're getting from Marvell and Broadcom, these solutions still aren't as powerful as NVIDIA's industry-leading graphics processors units or GPUs, which they can't live without.\nDon't forget that Nvidia also has an enormous moat in the form of a software ecosystem to go with this hardware. Never, ever sell. Nvidia reports that the hyperscalers will spend ridiculous amounts of money on AI. Customers buy Marvell or Broadcom and they buy Nvidia too. It is so not a zero-sum game, and I've done so much research on this, people. It just isn't. It's a win for everybody… We're standing pat on Nvidia, of course.”\n\nNVIDIA (NASDAQ:NVDA) provides solutions for graphics, compute, and networking. Its GPUs, combined with the power of its proprietary CUDA software platform, have become essential to the infrastructure supporting AI applications. This combination has fueled significant growth for the company as major technology companies race to build increasingly sophisticated AI models.\nThe company's revenue surged by 135% during the first nine months of its fiscal year 2025, reaching $91.2 billion. The growth trajectory of the company has been driven by the continued demand for its cutting-edge technologies, particularly its Hopper architecture, which is gaining traction in the AI space. Additionally, the launch of its Blackwell products is expected to further boost revenue.\nFor the fourth quarter of fiscal 2025, NVIDIA (NASDAQ:NVDA) anticipates total revenue of approximately $37.5 billion. This projection reflects both the sustained demand for the Hopper architecture and the ramp-up of Blackwell products. Despite strong demand outpacing supply, its management has expressed confidence in surpassing its previous Blackwell revenue estimate, with visibility into supply chains improving steadily.\nAs the Blackwell architecture continues to ramp up, the company expects its gross margins to moderate to the low 70s. However, when Blackwell is fully scaled, NVIDIA anticipates margins will stabilize in the mid-70s.\nOverall, NVDA ranks 1st on our list of stocks that Jim Cramer has recently discussed. While we acknowledge the potential of NVDA as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.\nREAD NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.\nDisclosure: None. This article is originally published at Insider Monkey.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2493240247"}