Jim Cramer Says “If you trade NVIDIA Corporation (NVDA), you probably won’t be able to sell it high and then come back in low”

On December 19, 2024By Littum

We have recently compiled a list of Jim Cramer’s bold predictions about these 15 tech stocks. In this article, we’ll take a look at where NVIDIA Corporation (NASDAQ:NVDA) stacks up against the other tech stocks that Jim Cramer recently talked about.

Like the rest of us, Jim Cramer is always wondering what’s next for the stock market. So far, the year has seen AI continue to dominate the market, accompanied by the Federal Reserve and the 2024 US presidential election. Now, with the election over and investors considering the incoming administration’s tariff policies, like us, Cramer is also focused on the Federal Reserve.

The reason the Fed and tariffs are linked is that the latter can cause inflation to force the former to keep interest rates higher for longer. As it tries to decipher what lies ahead for AI, Wall Street is also wondering about the pace, scope and frequency of the Federal Reserve’s 2025 rate-cutting cycle. That nervousness is reflected in bond yields at 4.38% on Friday, with asset manager Apollo Global warning that four key inflation indicators appear to be accelerating again. As per ApolloCore CPI, Core PCE, Supercore CPI and Supercore CPE have all started to rise again.

In Mad Money, which aired last week, Cramer also had the Fed on his mind. Cramer commented on the nervousness in the market on his show. The TV show host wondered why the stock market didn’t react to semiconductor stocks doing well. He began by sharing that “I hate the endless focus on the Fed. Of all people. Because it pulls you away from taking advantage of long-term performance for your stock portfolio.” This is because Cramer believes that “every little signal from the Federal Reserve brings out predictions, which causes a lot of people to sell good stocks when they get freaked out.”

He added that the economic data shows that there will be disagreement in the Federal Reserve when it comes to further lowering interest rates at the upcoming meeting in December. Cramer shared that “while I don’t think the data is cool enough to be bullish on the prospect of more cuts for now, I also don’t want you to make decisions solely on what the Fed is doing. Contrary to what people believe there is more to investing than monetary policy And I wish everyone knew that.

On rates, Cramer had plenty to share in November. He started by analyzing the performance of the benchmark S&P index between mid-2017 and the start of 2020. Cramer pointed out that “this is where we start to get the real tariff effort from the first Trump administration.” He shared that “Trump imposed tariffs on steel, aluminum, solar panels and washing machines, among other items.” While “all of these helped the industries in question … the broader market didn’t like us triggering a global trade war.”

Cramer pointed to the index’s performance between January 22 and December 24, 2018, to reinforce the view that the tariffs were not good for the stock market. But before you write them off, consider his remarks. According to Cramer, during this period, “the S&P 500 lost 18% of its value. Of course, some of that is because the Fed became much more aggressive in raising interest rates throughout this period. Taking them up. 100 basis points that year But it certainly wasn’t just the Fed. You can see on the chart that almost every time we got more tariffs the S&P would roll over, every time China would retaliate.”

Still, according to Cramer, “once the Fed decided to stop tightening at the end of 2018, the S&P was finally able to find a floor.” After this, the market “turned like crazy” as part of a “bullish trade cycle, one that continued until Covid hit in 2020. Long story short, the market couldn’t handle the trade war as the Fed tightened. But as soon as the Fed started to ease, all those losses evaporated.”

Using charts from Jessica Inskip, Cramer compared the latest intersection between the Fed and Trump’s tariffs to today’s environment. He outlined that “Fed is now our friend.” Why is that so? Well, according to Cramer, once the Fed stopped tightening, “the market stopped reacting so aggressively to the trade war.” He shared that Inskip believes that “something like a trade war could definitely hurt us when the market is already going bearish. But if we have a bullish trade cycle like we’re having right now, she’s not worried as long as we can perpetuate this cycle.”

So, as Cramer remains cautiously optimistic about the future of the stock market, we decided to see how his views on stocks have stood the test of time.

Our method

To create our list of the 15 stocks Jim Cramer has made bold predictions about, we compiled his opinions on top tech stocks and ranked them by the date the opinions were made.

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 mimicking the best stock picks of the best hedge funds. Our quarterly newsletter strategy selects 14 small-cap and large-cap stocks each quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).

A close-up of a colorful high-end graphics card being plugged into a gaming computer.

Number of hedge fund holders in Q3 2024: 193

Date of Cramer’s comments: 10-14-24

NVIDIA Corporation (NASDAQ:NVDA) is the world’s leading AI GPU designer. It is also the prime beneficiary of the current AI wave due to its product strengths. Cramer simply gave up when discussing getting the timing right for NVIDIA Corporation (NASDAQ:NVDA) stock. He stated:

“Now initially, NVIDIA got hammered along with the entire market when the yen carry trade imploded. Then it came right back because it was only a temporary problem. Then NVIDIA got hammered after its quarter, although it didn’t take the beating the previous sale.It has worked its way back since we learned that the demand for its next-gen superchip is ‘insane’, which is a technical term that Jensen invented know, the stock is coming back, but back with very few people who sold the stock, well, I mean they’re long gone and gone at much lower levels, because they traded it, they sold it , take this as a reminder that if you trade with NVIDIA, you probably won’t be able to sell it high and then come back low. It’s too hard, folks is just too difficult.”

NVIDIA Corporation (NASDAQ:NVDA) stock is down 2.8% since Cramer’s remarks, so perhaps selling would have been the right decision. Not only have supply issues with its Blackwell GPUs worried investors, but shares have lost 7.50% in December following Broadcom’s stunning announcement to work with three hyperscalers to develop AI GPUs. Check out our coverage of Broadcom on this list for more details, but it looks like Wall Street may be opening up to the idea that there are alternatives to NVIDIA Corporation’s (NASDAQ:NVDA) products.

Total NVDA ranks 4 on our list of the tech stocks Jim Cramer recently talked about. While we recognize the potential of NVDA as an investment, our conviction lies in the belief that AI stocks hold greater promise to deliver higher returns and do so in a shorter time frame. If you’re looking for an AI stock that’s more promising than NVDA but trades at less than 5 times its earnings, check out our report on cheapest AI stock.

Disclosure: None. This article was originally published on Insider monkey.