The Super Micro Computer share, previously hardly noticed, has now matured into one of the absolute stars of the stock market. The price rally is now well underway – is there still further upside potential? Stock market expert Jim Cramer is skeptical and recommends other stocks.
• Cramer on Super Micro-Rally: “That’s too much”
• Stock market expert recommends other AI stocks
• One of Cramer’s favorite stocks: Cadence Design Systems stock
US stock market expert Jim Cramer is known for not holding back with his opinions. In his “CNBC” show “Mad Money” he recently commented on the much-noticed bull run of Super Micro Computer shares, which are rushing from record high to record high thanks to the company’s AI boom. The manufacturer of servers for artificial intelligence is benefiting from an enormous increase in demand. Super Micro’s earnings have also increased enormously accordingly.
Investors are reacting euphorically to the new prospects: the stock has multiplied since the beginning of the year and recently even broke the $1,000 mark. For comparison: a year ago, Super Micro shares were still hovering around $100. As a reward for the enormous price increases of the past few weeks, the Super Micro shares are now included in the prestigious US stock market index S&P 500.
Cramer is critical of Super Micro hype
However, Cramer does not agree with the general enthusiasm surrounding the share and advises against buying the Super Micro shares at the current prices. He commented on the rally in his “CNBC” broadcast. “That’s too much,” says Cramer, commenting on the hype surrounding the AI server manufacturer’s papers. The numbers are inevitably good, but the share price has now gone far too far, says the 69-year-old. The price potential has now been exhausted.
Cramer recommends these stocks instead
Cramer believes other AI papers are more promising. Given his repeatedly emphasized preference for NVIDIA shares, he only sees these tips as an “additional investment” in the AI sector. It should be noted that Cramer’s charitable fund “Cramer’s Charitable Trust” holds NVIDIA shares. “If you really need to buy something that’s an add-on investment to the leading AI chip maker, NVIDIA, then remember that it’s Dell and AMD as competitors, or Cadence Design Systems, which I like, by the way,” Cramer said. “I like all of these companies more than Super Micro.” The expert names the electronic chip manufacturer Arm Holding, which has only been listed on the NASDAQ since September 14, 2023, as a fourth AI winner that Cramer considers to be more promising than Super Micro.
Cramer excited about Cadence shares
Cadence Design Systems is certainly the company of the four Cramer picks that is probably the least known to stock market investors, as AMD, Arm and Dell are repeatedly listed in the frequently encountered lists of AI beneficiaries. However, the Californian company Cadence is by no means a small number; in fact, Cadence has a market capitalization worth billions and is one of the largest EDA software providers in the world. Cadence also delivers generative AI applications for semiconductor development and is therefore a serious beneficiary of the ongoing tech boom.
Even in challenging economic times, the company benefits from long-term trends such as electromobility, hyperscale computing, 5G and the Internet of Things (IoT). CEO Anirudh Devgan highlights that the dawn of the AI era is a key driving force for the company. Cadence relies on software-driven generative AI technologies that help realize efficiencies at both the chip and system levels. These technologies make it possible to automate manual tasks and thus contribute to the progressive development in the industry, as Traderfox magazine writes. The company’s outlook is correspondingly positive; Cadence recently raised its annual forecast.
AI stocks on the rise
However, Cramer is not the only investor who is convinced of Cadence’s growth prospects: Cadence shares have been on the rise for months on the NASDAQ technology exchange and are reaching new record highs almost every week. In this point, Cadence has great similarities with Cramer’s other three AI favorites: the papers from Arm, AMD and Dell have also had a mega rally in the past few months. Investors are reacting to the companies’ impressive profit figures. However, they are now also handing out a good portion of advance praise, which the AI stocks will have to back up with steadily increasing earnings in the coming months. A growing number of experts are becoming increasingly skeptical; some, like former stock portfolio manager Cam Hui, are even talking about bubble-forming tendencies. Not so Cramer: He still sees a lot of room for improvement, at least for the AI titles NVIDIA, AMD, Arm, Dell and Cadence.
Editorial team finanzen.net
This text is for informational purposes only and does not constitute an investment recommendation. finanzen.net GmbH excludes any claims for recourse.
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