Important points
CNBC’s Jim Cramer said Tuesday that Nvidia has become so important to the artificial intelligence boom that its profits could ripple throughout the market. “NVIDIA is really out of the ordinary now. It’s very important and it’s the ultimate battleground,” the “Mad Money” host said. Cramer’s comments on Tuesday came shortly after Nvidia ended a seven-session losing streak, marking its longest slump since September 2022. That was months before the launch of ChatGPT sparked a generative AI boom that would ultimately help turn Nvidia into the world’s most valuable company. The stock ended Tuesday less than 10% below its all-time closing high of nearly $236 per share in mid-May. Nvidia is scheduled to report earnings after the bell on Wednesday. Cramer said the results could have implications far beyond the chipmaker’s stock price because Nvidia is at the center of building AI infrastructure, touching everything from data centers and memory chips to the spending plans of the world’s biggest technology companies. Cramer’s Charitable Trust, a portfolio managed by CNBC’s investment club, owns NVIDIA stock. “Never before has a company had so many tentacles in so many areas of the economy,” Kramer said. Cramer remains confident in Nvidia’s competitiveness. He argued that while rivals and some of its biggest customers, such as ChatGPT creator OpenAI, are developing alternative AI chips, Nvidia will remain the standard. “I say if you want to be part of the AI revolution, choose the best,” Kramer said. But Kramer said Wednesday’s results will not be judged solely on profits. He said NVIDIA has been the focus of nearly all concerns surrounding the AI boom, and these broader questions can overwhelm even a strong quarter. “If the bears are right, this stock will fall regardless of tomorrow’s report,” he said. According to Cramer, one of the main reasons for the scrutiny is the growth of Nvidia’s investment portfolio across the AI ecosystem. He said critics have questioned the cyclical nature of some of the deals, arguing that NVIDIA is putting money into companies that could ultimately use that capital to buy their own products. Cramer pushed back against that criticism, arguing that the investment will help Nvidia maintain its leadership while also strengthening the broader AI ecosystem. “Why shouldn’t Nvidia use its profits to maintain its top position?” Cramer said. He said other risks are far beyond Nvidia’s control, including political opposition that could slow data center construction, a lack of high-bandwidth memory that is impacting the company’s sales, and U.S. government regulations that limit its ability to sell advanced chips to China. All of these reasons mean that even in a strong quarter, the debate may not be resolved, he said. Kramer said that beyond Nvidia’s headline performance, investors are looking for evidence that its advantages and the broader AI infrastructure boom can continue. “There’s no such thing as a blank burger on the world’s biggest stocks. It’s always going to be bold and challenging… worthy of the greatest businessman of our time, Jensen Huang,” he said. Subscribe to CNBC Investing Club today to follow Jim Cramer’s every move in the markets. Questions about Cramer’s disclaimer? Call Cramer: 1-800-743-CNBC Want a deeper look into Cramer’s world? Punch him! Mad Money Twitter – Jim Cramer Twitter – Facebook – Instagram Have questions, comments, or suggestions about the Mad Money website? madcap@cnbc.com
