Nvidia Corp. NVDA emerged as the stock of the year in 2023, riding the wave of the artificial intelligence revolution. CNBC’s Mad Money host Jim Cramer stands as a vocal supporter of the company and its visionary CEO Jensen Huang.
However, a twist of fate occurred in late 2022 when Cramer made a controversial recommendation to sell Nvidia.
The Sell Call: In a “Mad Money” episode on September 19, 2022, Cramer expressed concerns about Nvidia, attributing them to the Ethereum merger.
Discussing the Ethereum merger, Cramer stated, “Ethereum’s new merger eliminates the need for graphics cards, posing an unintended consequence for Nvidia.”
He further elaborated that users leveraging Nvidia’s graphics cards for mining would no longer require them, indicating a potential hit to the company’s revenue streams. Cramer pointed out the lag in Nvidia’s transition to AI, virtual reality, and machine learning.
Despite this cautionary stance, Cramer’s affinity for Nvidia dates back to 2017 when he named his dog after the tech giant. Following Nvidia’s stellar performance in recent quarters, Cramer hailed Jensen Huang as a more innovative leader than Tesla’s Elon Musk.
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Nvidia’s Gravity-defying Rally: Historically, Nvidia’s revenue growth maintained a steady trajectory until mid-2015. The rise of Bitcoin mining increased demand for Nvidia GPUs, propelling sales. However, the company faced adversity in 2018 post the Bitcoin crash. During the COVID-19 pandemic, Nvidia rebounded strongly due to escalated GPU sales driven by remote work, healthcare research, and gaming demands.
Navigating a challenging economic and geopolitical landscape in 2022, Nvidia’s stock faced a downturn. Yet, the ensuing AI revolution fueled by OpenAI’s ChatGPT proved a boon for Nvidia, driving heightened demand for the company’s high-performance chips used in AI training applications.
Returns from Nvidia Investment: A $1,000 investment in Nvidia on September 19, 2022, would have translated to 7.5 shares of the company. Fast forward to the present, those same 7.5 shares are valued at $5,894, marking an impressive 490% return over a span of approximately 17 months.
Source: Benzinga Pro
On a recent trading day, Nvidia nearly reached a $2 trillion market cap, a symbolic achievement that underlines its ascension in the tech landscape. With the burgeoning AI industry in its infancy, Nvidia’s trajectory towards becoming a leader in the field seems inevitable. Wedbush’s Daniel Ives remarked that Jensen and Nvidia have catalyzed a significant tech transformation, captivating investors worldwide.
Nevertheless, skeptics warn of potential setbacks such as an AI bubble burst and increased competition. Deepwater Asset Management’s Gene Munster opined that the AI wave shows no signs of ebbing in the coming years.
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