We recently published an article titled, 11 Stocks on Jim Cramer’s Radar Right Now. In this article, we are going to take a look at where Advanced Micro Devices, Inc. (NASDAQ:AMD) stands against other stocks on Jim Cramer’s radar right now.
In his recent episode of Mad Money, host Jim Cramer focused on the upcoming market events, emphasizing the importance of new consumer price index data alongside a series of reports as the earnings season kicks off.
Cramer pointed out that the Labor Department’s nonfarm payroll report revealed significant job growth in September, surpassing expectations. He highlighted the significant rally in stocks on Friday, a response to better-than-expected job creation figures. The U.S. economy added 254,000 jobs in September, significantly exceeding Wall Street’s estimate of 150,000. Additionally, there were upward revisions for the previous two months, with 72,000 more jobs reported for July and August combined.
Despite his initial expectation that stocks would decline as bond yields surged, Cramer noted the resilience in the market. He observed that people seemed to feel relief, thinking that a major economic downturn was not on the horizon, which prompted a flurry of buying activity in the stock market. He added, “Maybe we aren’t headed toward a landing at all.” He described the situation as quite unusual and, in his view, “quite exciting”.
He mentioned that on Wednesday, the Federal Open Market Committee will publish notes from its last month’s meeting, which could clarify the central bank’s bold choice to cut interest rates by 50 basis points. According to Cramer, Wall Street is rife with speculation about the Federal Reserve’s future actions, especially following strong labor statistics released last Friday. As speculation swirls around whether the next cut will be 25 or 50 basis points, Cramer leaned towards the belief that it would likely be 25 or nothing at all. He added:
“Then again, what really matters is the overall direction for rates, and that direction is most definitely lower, which is bullish for stocks.”
He also mentioned that Friday would bring the producer price index report, which, like the consumer price index, will serve as a critical indicator for the Fed’s upcoming decisions. Cramer commented:
“Here’s the bottom line: a market that appreciates good news, like a robust job creation number, is a market that can handle, well, let’s just say, the historically tough month of October. After today’s performance, all I can say is so far so good.”
Our Methodology
For this article, we compiled a list of 11 stocks that were mentioned by Jim Cramer during his episode of Mad Money on October 4. We listed the stocks in ascending order of their hedge fund sentiment as of the second quarter, which was taken from Insider Monkey’s database of more than 900 hedge funds.
Why 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).
Cramer Thinks Advanced Micro Devices, Inc. (NASDAQ:AMD) Is A Buy Ahead Of Its Analyst Day
Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 108
Advanced Micro Devices, Inc. (NASDAQ:AMD) is a semiconductor company. It operates through four segments, Data Center, Client, Gaming, and Embedded. The company offers a diverse range of products that include x86 microprocessors, graphics processing units (GPUs), chipsets, and various data center solutions.
Its well-known product lines include the Ryzen and Ryzen Threadripper processors, AMD Radeon graphics cards, and EPYC server microprocessors. The company also produces low-power solutions and field-programmable gate arrays (FPGAs), along with adaptive system-on-chip (SoC) products, marketed under names such as Virtex, Kintex, and Versal.
Ahead of the company’s analyst day, Cramer said:
“Not to be outdone, Lisa Su, the CEO of AMD, will hold an analyst day and it’s entitled Advancing AI 2024. It starts at noon. Today, when the stock was plummeting, I told investing club members at my 10:20 morning meeting that Su’s presentation could show this charitable trust holding in a whole new light, even as they’ve been raising their AI sales forecast quarter after quarter after quarter. I think it’s a buy ahead of the meeting, although the stock did run eight points after we talked about it at the morning meeting.”
On October 10, Advanced Micro Devices (NASDAQ:AMD) is set to host its “Advancing AI 2024” event, which is expected to show the next generation of AMD Instinct accelerators and the fifth-generation AMD EPYC server processors.
It is a highly anticipated event within the industry, especially as Chief Executive Officer Lisa Su has projected over $4.5 billion in sales from its artificial intelligence chips for the current year.
On October 5, BofA made a note of the fact that last year’s AI event on December 6 led to stock returns of 19% after one month and 80% after three months. The firm also highlighted that the stock reached its peak in early March, just before Nvidia’s GTC tradeshow.
The firm suggested that updates to the AI roadmap and server CPU developments, along with positive feedback from cloud customers, may revitalize Advanced Micro Devices (NASDAQ:AMD) stock, which has only seen a 9% increase year-to-date.
Despite this, the competitive landscape is becoming increasingly crowded, and expectations among investors are high, as they expect the company to raise calendar year 2024 AI sales by another 10% to over $5 billion. The analyst maintained a Buy rating on the company stock with a price target of $180.
Columbia Threadneedle Global Technology Growth Strategy stated the following regarding Advanced Micro Devices, Inc. (NASDAQ:AMD) in its Q2 2024 investor letter:
“Shares of Advanced Micro Devices, Inc. (NASDAQ:AMD) lagged the market after the company reported earnings results that, while generally strong, left the market wanting more. The company reported AI revenue of ~$600 million and increased its forward-looking outlook for AI revenue growth, but shares took a breather, as results missed elevated expectations after the stock’s strong performance. Despite the stock’s underperformance during the quarter, the company’s AI story remains very much intact. The growth outlook for the company is supported by better cloud demand, enterprise recovery and continued share gains ahead of the company’s new AI product launch.”
Overall, AMD ranks 3rd on our list of stocks on Jim Cramer’s radar right now. While we acknowledge the potential of AMD 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 timeframe. If you are looking for an AI stock that is more promising than AMD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
Read Next: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. This article is originally published at Insider Monkey.