We recently compiled a list of the Jim Cramer’s Latest Lightning Round: 11 Stocks to Watch. In this article, we are going to take a look at where QUALCOMM Incorporated (NASDAQ:QCOM) stands against the other stocks in Jim Cramer’s watchlist.
Jim Cramer, the host of Mad Money, urged investors to refrain from making any investments in high-value stocks, particularly in the Big Tech sector, ahead of upcoming earnings reports, which will attract considerable scrutiny. Cramer expressed concern over significant price movements in various stocks leading into earnings, stating, “you can’t make up these moves.”
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He emphasized that these surges create heightened risks for those looking to purchase stocks before a company’s earnings announcement. He pointed out that there is underlying volatility affecting nearly every major company. He noted that the stocks that he mentioned on Friday were trading erratically high on October 28. You can read which stocks Cramer discussed on Friday in our article, Jim Cramer’s Latest Game Plan: 20 Stocks to Watch.
He went on to highlight that:
“First you need to understand that no one knows these earnings numbers ahead of time except the CEO, the CFO, and a very small group of very important people at each company, and they are tight-lipped.”
Cramer criticized analysts for their attempts to predict earnings, stating, “We’ve seen how wrong they can be over and over again.” According to Cramer, when a stock spikes before earnings, it does not indicate insider knowledge but rather excessive enthusiasm. He further cautioned that these price increases are occurring without any solid basis, making it perilous for investors. He said, “In other words, these stocks are going up on nothing and that I think makes it very dangerous.”
Cramer reiterated his advice and said:
“I am indeed trying to discourage you from trading these stocks ahead of the quarters. It’s just a roulette game based on nothing. Often the game feels rigged, you just don’t know which way it’s rigged because companies really and truly do not let this stuff drip out.”
Concluding his remarks, he said:
“Bottom line, no one on Wall Street knows what any of the quarters will look like, except for the principals. So don’t bother to follow the money that you see trading right now in anticipation. You know why? It’s a fool’s errand.”
Our Methodology
For this article, we compiled a list of 11 stocks that were discussed by Jim Cramer during the lightning round of his episodes of Mad Money on October 25 and 28. 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 technician testing the latest 5G device, demonstrating the company’s commitment to innovation.
QUALCOMM Incorporated (NASDAQ:QCOM)
Number of Hedge Fund Holders: 100
Acknowledging investors’ love for QUALCOMM Incorporated (NASDAQ:QCOM), Cramer said that he is not a fan.
“Well, People love QUALCOMM… I mean, I can tell you that I think that they’re overreaching, talking about buying Intel. I also think that they’re on the wrong side of the trade in that lawsuit with Arm. I’m not a fan.”
QUALCOMM (NASDAQ:QCOM) develops and commercializes foundational technologies for the wireless industry, including integrated circuits, software, and licensing of intellectual property, while also investing in early-stage companies across various sectors. Arm Holdings initiated a lawsuit against Qualcomm in 2022, following Qualcomm’s acquisition of Nuvia.
The dispute centers on Qualcomm’s failure to negotiate a new licensing agreement, which has significant implications for the future of its chip designs. Arm claims that the technology intended for Microsoft’s Copilot+ laptops is directly derived from Nuvia’s chip architecture. Additionally, Bloomberg News recently reported that Arm is planning to cancel an architectural license agreement that permits Qualcomm to utilize Arm’s intellectual property for chip design.
On September 5, Reuters reported that QUALCOMM (NASDAQ:QCOM) has been exploring the potential acquisition of parts of Intel’s design business. As per the report, the company is interested in enhancing its product portfolio by acquiring various segments of Intel, which is currently facing challenges in generating cash and is looking to divest certain business units. Sources familiar with the situation indicate that Qualcomm executives are particularly interested in Intel’s client PC design business, although they are considering other design units as well. However, the feasibility and specifics of such acquisitions have not been confirmed by either company.
Overall QCOM ranks 2nd on Jim Cramer’s stock watchlist. While we acknowledge the potential of QCOM 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 QCOM 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.