We recently compiled a list of the Jim Cramer’s Game Plan: 23 Stocks to Watch. In this article, we are going to take a look at where Texas Instruments Incorporated (NASDAQ:TXN) stands against the other stocks to watch according to Jim Cramer.
As Wall Street dives into the heart of earnings season, Jim Cramer has provided insights into market trends and earnings reports to watch in the upcoming week. Cramer remarked,
“It’s hard to believe, but this market’s now been up for six straight weeks. That’s right, despite interest rates running higher since mid-September, despite being on the verge of an election where both candidates want to pile on trillions of dollars of debt to an already unfathomable amount of borrowing, this market seems like it can’t help itself from going higher.”
Cramer highlighted the influence of the Federal Reserve, noting that ever since the rate cut on September 18, the market has largely trended upward. He emphasized that it is not solely the Fed driving this bullish sentiment, the earnings season has brought some remarkable quarterly results. With strong performance from banks kicking off the earnings cycle, Cramer posed the question of whether the rally could extend into a seventh consecutive week, suggesting following his game plan to assess this possibility.
On a separate note, addressing economic indicators, Cramer warned that if the economy continues to produce solid numbers, the likelihood of substantial rate cuts will diminish. While he believes that rates will eventually decline, he cautioned those shorting Treasurys, suggesting that they may be making a mistake.
Cramer noted a significant caveat, which is the upcoming election, and pointed out that both candidates are advocating potentially inflationary policies.
“Both candidates have pushed potentially inflationary policies. As I said at the top, if Trump can win enough of a majority to pass his huge tariffs, or Harris expands housing tax credits and de facto subsidy, they could push home prices higher. Then inflation might stage a comeback. But I’m not betting on that. I think both parties are terrified of being blamed for inflation, which almost single-handedly sunk Joe Biden’s presidency. No matter what the candidates campaign on, I don’t see their allies in Congress taking any chances with inflation beyond the usual unwillingness to balance the budget.”
He concluded that those betting against Treasurys have overreached, suggesting that their efforts to counter the Fed’s policies are unlikely to end well. Cramer observed that when a large number of investors align on one side of a trade, as seen currently, that group often ends up being incorrect.
Our Methodology
For this article, we compiled a list of 23 stocks that were discussed by Jim Cramer during his episode of Mad Money on October 18. 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).
A robotic arm in the process of assembling a complex circuit board – showing the industrial scale the company operates at.
Texas Instruments Incorporated (NASDAQ:TXN)
Number of Hedge Fund Holders: 50
While Cramer mentioned that Texas Instruments Incorporated (NASDAQ:TXN) has shown cyclicality, he still likes it ahead of the company reporting its third-quarter earnings on October 22.
“After the close, we hear from Texas Instruments. We’ve been hearing a lot about how semiconductor companies are in the doldrums, the ones without AI, that is. Tex Instruments falls into that category but this company’s become much more focused. I like it ahead of the quarter, even though it has a little more cyclicality than most chip makers.”
Texas Instruments (NASDAQ:TXN) is engaged in the design and sale of semiconductors. The company provides a range of products focused on power management, signal processing, and embedded computing, which are utilized across various sectors, including automotive, industrial, personal electronics, and communications. On October 21, TipRanks reported that Susquehanna lowered the price target on the stock to $240 from $250 and maintained a Positive rating.
In previewing the upcoming third-quarter results, the firm noted that the semiconductor industry is facing broad-based challenges, particularly in the automotive and industrial segments, where momentum has started to decline. For the personal computer market, there is an expectation for notebook production to rise in 2024, although the pace may slow toward the year’s end, largely due to AI-related devices not driving demand as anticipated.
In the handset market, forecasts indicate an increase in smartphone shipments for 2024. Additionally, in the data center segment, recent server evaluations suggest a slightly stronger performance in the latter half of 2024, partly driven by AMD’s market share gains.
Texas Instruments (NASDAQ:TXN) management has indicated an awareness that market conditions may not be as favorable as previously thought. In its midyear update to its long-term planning, which is typically conducted once a year, the company maintained its spending plans for 2024 and 2025. However, it revised the outlook for 2026 expenditures, lowering the anticipated range from $5 billion to between $2 billion and $5 billion, contingent on revenue performance at that time.
Overall TXN ranks 13th on Jim Cramer’s list of stocks to watch. While we acknowledge the potential of TXN 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 TXN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article is originally published at Insider Monkey.