We recently compiled a list of the Jim Cramer is Talking About These 12 Stocks. In this article, we are going to take a look at where Meta Platforms, Inc. (NASDAQ:META) stands against the other stocks Jim Cramer is currently talking about.
On Tuesday, Jim Cramer, the host of Mad Money, analyzed the day’s market activity, shedding light on why some Big Tech stocks gained traction while others struggled. He pointed out that investors are increasingly concerned about the broader economic effects of rising bond yields. Cramer began by questioning how a day could unfold where recent market leaders lose their momentum, prompting money managers to shift back to established favorites like Big Tech.
Cramer acknowledged his growing worry about the bond market, noting that since the Federal Reserve cut rates last month, bond prices have plummeted.
“… Ever since the Fed cut rates last month, right, bond prices have plunged. Bond yields, meaning longer-term interest rates, have soared. Not supposed to happen. But when it does happen, money managers reach for the companies that simply aren’t impacted by the change in the 10-year, the 20-year, or the 30-year US Treasurys.”
Cramer likened Wall Street to Chinatown, suggesting that sometimes, it defies easy understanding. He remarked that people seem to abandon the market’s recent winners in a snap as if discarding hot fries. He then explained that the day’s disappointing earnings reports created confusion, as they didn’t align with the prevailing narrative of strong employment alongside rate cuts.
“See, this morning we got a series of earnings reports that just didn’t add up. They didn’t fit the thesis. They were disappointing. They don’t jive with a rather benign moment when we have the Fed cutting rates, yet employment remains strong. When we get these problematic quarters, several in one day, I might add, money managers default back to the tried and true growth stories that we all know and love. Yes, Titans of Tech. You know what? These managers can’t help themselves. They feel they have to rotate out of what was hot at one point and into something else that’s not that impacted by the big rate-cut cycle.”
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He addressed the “alleged earnings disappointment,” clarifying that he chose the term “alleged” because he holds these companies in high regard and does not want to undermine their reputations. Cramer stated that when the 10-year Treasury yields rise, money flows back to these tech giants. He noted that on days like Tuesday, large investors often become apprehensive about cyclical stocks, with concerns about various sectors like aerospace, home building, and even auto parts.
He reassured viewers that this phenomenon is familiar; it has been a recurring theme for over a decade. Cramer suggested that money could just as easily rotate back to previous favorites, but it might take a day or two for that to happen, which shows the volatility of the current market environment.
Concluding, Cramer noted that Big Tech experienced a significant resurgence. He remarked:
“But the bottom line, Big Tech made a big comeback today because of the bond market, not anything to do with the stocks themselves. So, keep in mind that the pause in the rally is temporary, even as you should still own some of the Magnificent Seven for diversification.”
Our Methodology
For this article, we compiled a list of 12 stocks that were discussed by Jim Cramer during his episode of Mad Money on October 22. 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 team of developers working in unison to create the company’s messaging application.
Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 219
Discussing Meta Platforms, Inc. (NASDAQ:META), Cramer remarked on its products and advertising business. Here’s what he said:
“Rates don’t matter all that much to Microsoft or Meta or Google. Neither they nor their clients need to borrow large sums of money so the bond markets are irrelevant to them… You go to Meta, which also has an amazing balance sheet and extraordinary demand for its products. Their AI Ray-Bans are a huge hit, but that’s barely a drop in the ocean because they can make so much money from the targeted advertising business and they will.”
Meta (NASDAQ:META) is a prominent technology company dedicated to creating products that enable users to connect and share across various devices. The company’s financial performance has been strong, largely fueled by the ongoing transition to digital advertising. As the global digital advertising market is projected to grow from $366 billion in 2022 to over $1 trillion by 2030, the company is well-positioned to take advantage of this significant expansion.
User growth has played a crucial role in its success. In the second quarter, the number of individuals engaging with Meta’s suite of social media platforms increased by 7%, reaching 3.27 billion and the ad revenue reached a whopping $38.3 billion.
Additionally, Meta (NASDAQ:META) is advancing its AI initiatives, currently with the development of Llama 4. CEO Mark Zuckerberg has indicated that this upcoming model could set a new standard for the industry when it launches next year. The company is also working to deploy 600,000 GPUs by the end of 2024, which shows a commitment to its long-term AI goals. The company has a strong balance sheet as it reported cash, cash equivalents, and marketable securities totaling $58.08 billion, alongside a free cash flow of $10.90 billion, as of June 30.
Overall META ranks 3rd on our list of the stocks Jim Cramer is currently talking about. While we acknowledge the potential of META 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 META but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.