Nvidia Corp. NVDA was the stock of the year in 2023, and the upward momentum continued in 2024, as the first wave of the artificial intelligence revolution gained ground. CNBC’s Mad Money host Jim Cramer is among the ardent backers of the company and its CEO Jensen Huang.
But did you know, sometime in late 2022, Cramer recommended selling the stock?
The Sell Call: In a “Mad Money” episode on Sept. 19, 2022, Cramer said he was concerned about Nvidia, citing the Ethereum merger.
“Ethereum’s new merger means that you do not need graphics cards that has been an unintended consequence for Nvidia,” he said.
Those using Nvidia’s graphics card for mining would not need them anymore, the stock picker added back then, arguing that the company hadn’t yet transitioned to AI, virtual reality and machine learning.
“So, we got the high-tech stuff, not there yet … and we have the lower stuff being hurt by this Ethereum transfer,” Cramer said.
Still, Cramer has been a longtime backer of Nvidia, even naming his dog after the stock in 2017. Following Nvidia’s blowout quarter this month, the CNBC host went onto say that Huang was a bigger visionary than Tesla’s Elon Musk.
See Also: Best Artificial Intelligence Stocks
Nvidia’s Gravity-defying Rally: Nvidia’s revenue growth remained subdued and steady until the middle of 2015. The Bitcoin mining craze that gained ground at that time triggered strong demand for the company’s GPUs, which in turn boosted its sales. In 2018, when Bitcoin crashed, Nvidia’s fortunes suffered. The COVID-19 pandemic helped the company rebound strongly, as GPU sales spiked due to remote work, COVID-19 research and gaming demand.
In 2022, the company had to navigate through an inclement economy and geopolitical tensions, and, consequently, its stock pulled back.
The following year, the AI revolution set in motion by OpenAI’s ChatGPT proved healthy for Nvidia, significantly increasing the demand for the latter’s high-performance chips used to train AI applications. Recently, the company reported fourth-quarter earnings and revenue that beat estimates by a wide margin and issued upbeat guidance for the fiscal 2025 first quarter.
Returns from Nvidia Investment: A $1,000 investment in Nvidia on Sept. 19, 2022 would have fetched 7.5 shares of the company. The same 7.5 shares are worth $5,894 now (based on Nvidia’s closing price of $788.17 on Friday). This would mean a return of about 490% in about a 17-month period.
Source: Benzinga Pro
On Friday, Nvidia hit a $2 trillion market cap, although it ended the session just shy of the mark. With the AI frenzy currently in a nascent stage, it may be a matter of time before Nvidia rises up in the ranks to become the most valued company. Wedbush's Daniel Ives said in a note Monday, "Jensen and Nvidia have essentially cracked the code and sparked a generational tech transformation that investors are trying to get their arms around."
Yet, doubters point to a potential AI bubble burst and competition as headwinds for the company. Deepwater Asset Management's Gene Munster said in a post on X he expects the AI wave to remain alive and kicking at least for the next three to five years.
Photo: Shutterstock
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
