We recently compiled a list of the Jim Cramer’s Latest Game Plan: 15 Stocks to Watch. In this article, we are going to take a look at where Arm Holdings plc (NASDAQ:ARM) stands against the other stocks in Jim Cramer’s latest game plan.
Jim Cramer, host of Mad Money, recently weighed in on the factors that will shape market movements this week, pointing to the Federal Reserve’s upcoming meeting and a slew of corporate earnings reports as key developments. However, despite the importance of these earnings, Cramer believes that the presidential election will take center stage and dominate the market’s attention.
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While acknowledging the significance of the election, Cramer emphasized that the Federal Reserve’s next decision is perhaps even more crucial for the markets. He noted that the bond market has been moving in an unfavorable direction, with the situation further complicated by a disappointing non-farm payroll report.
Though this report was skewed by hurricanes and labor strikes, it initially sparked a positive reaction in the bond market, pushing rates lower. Cramer had hoped that this would signal a positive shift, but the optimism was short-lived, as bond sellers quickly drove rates back up to their highest levels since early July.
“In my opinion, the Fed needs to cut rates again. In the last couple weeks, we’ve heard from too many businesses that have made it clear that we have a real slowdown on our hands. Economy’s a little shaky.”
Cramer also reflected on the Fed’s decision to reduce rates in September. He acknowledged that the bond market reacted negatively to the rate cuts at the time despite an economy that appeared relatively strong and a healthy labor market. Cramer discussed the possibility that if the Fed were to cut rates again, the market could see another unfavorable response. However, he remained unconcerned about this potential backlash, arguing that a rate cut could help to generate optimism in certain sectors.
“At this point in my view, if the Fed cuts rates next week, psychologically there’s some hope that we could see a pickup, particularly in housing and autos, two industries that seem to be losing strength by the day.”
Cramer highlighted that both presidential candidates appear willing to expand the federal budget. His main concern, however, was whether either candidate would be able to push their proposed agendas through Congress, a process he described as extremely difficult. Cramer noted that, in his opinion, presidential candidate Trump would likely be a bigger proponent of increasing the budget deficit than presidential candidate Harris, particularly due to the tax cuts Trump favors, which tend to result in larger deficits.
Stating his bottom line, Cramer said:
“… At the end of the day, the market’s still going to be hostage to the election, and perhaps more important, to the Fed meeting.”
Our Methodology
For this article, we compiled a list of 15 stocks that were discussed by Jim Cramer during the episode of Mad Money on November 1. 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).
Arm Holdings plc (NASDAQ:ARM)
Number of Hedge Fund Holders: 38
Discussing Arm Holdings plc (NASDAQ:ARM), Cramer highlighted how the semiconductor industry is presently “mood dependent”. It is set to report its second quarter earnings report of fiscal year 2025 on November 6.
“After the close, Arm Holdings reports. Now, this chip architecture play is tightly linked with Apple, but Arm’s IP is everywhere. I think it prints an excellent number, but you know what? That might not matter to this particular stock market if it’s in a bad mood day because the semis has suddenly become mood-dependent, not earnings-dependent. We also wanna know about Arm’s lawsuit with Qualcomm. Seems very nasty.”
Arm Holdings (NASDAQ:ARM) is a prominent player in the semiconductor industry, known for designing and licensing central processing unit (CPU) products and related technologies. Although the company does not manufacture chips itself, its designs serve as the foundation for semiconductor companies and original equipment manufacturers (OEMs), who then customize these designs to meet specific needs.
Its business model revolves around licensing its CPU architectures and collecting royalties on every product sold that incorporates its designs. According to the company, approximately 280 billion products incorporating its technologies have been shipped. The company’s influence extends beyond traditional markets, as it is gaining traction in the personal computer (PC) and data center sectors.
The company’s flexible business model allows its clients to optimize chips for specific applications, contributing to its growing footprint in these areas. CEO Rene Haas has expressed confidence that the company could capture 50% of the Windows PC market within the next five years.
As reported by Bloomberg, Arm Holdings (NASDAQ:ARM) has issued a 60-day notice to Qualcomm, signaling its intent to cancel its architectural license agreement, which allows Qualcomm to create its own chips based on Arm’s standards. This move is part of a broader dispute that began in 2022, when the company sued Qualcomm for breach of contract and trademark infringement.
The disagreement centers around Qualcomm’s 2021 acquisition of Nuvia, another Arm licensee, and Arm’s contention that Qualcomm failed to renegotiate contract terms following the acquisition. Qualcomm, on the other hand, argues that its existing agreement still covers Nuvia’s activities. Both companies are set to face off in court to resolve the matter.
Overall ARM ranks 12th on our list of the stocks in Jim Cramer’s latest game plan. While we acknowledge the potential of ARM 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 ARM 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.