How Jim Cramer would respond to Nvidia’s earnings sell-off
Key Points
- CNBC’s Jim Cramer said Thursday that Nvidia’s stock was swept up in a wave of institutional selling.
- “Don’t take today as a referendum on anything,” the “Mad Money” host said.
CNBC’s Jim Cramer on Thursday downplayed Nvidia’s post-earnings stock slide, suggesting it was caught up in a vortex of institutional selling that actually created entry points for opportunistic investors. “I’d use the [wave of selling] to buy the stocks you like at discounted prices,” Cramer said on “Mad Money.” On Wednesday night, Nvidia delivered what Cramer labeled a “tour de force” fourth quarter , with a revenue beat and guidance well ahead of expectations. And yet, the chipmaker’s stock fell 5.46% on Thursday despite trading higher in the premarket. Among the reasons cited for the selling pressure include concerns that Nvidia’s customers may be burning through their cash flows, its continued lack of revenue from China, and lingering competition concerns. But for Cramer, these are nothing but excuses. He said the way that Nvidia and other AI hardware names were seemingly hit across the board — on the same day that hard-hit software stocks rose —indicates some deep-pocketed investors wanted to rotate their portfolios, regardless of how stellar Nvidia’s earnings were. “Most people don’t understand how these kinds of [trading] programs work. They are not based on the specific fundamentals of individual companies. They are based on intuition, a belief that the market is paying too much for one kind of company and and let’s say not enough for another,” Cramer said. For example, he pointed to the 4.5% rise in shares of Workday, which as recently as a few days ago was seemingly written off as dead. Salesforce is another example of a company that’s on the winning end of this rotation. The software giant’s stock had been punished lately on fears that AI is threating its business model. And while its stock initially fell in after-hours trading Wednesday night after issuing light guidance , Salesforce closed up 4% Thursday. “The program I saw today was gigantic and unforgiving and took advantage of the moment to change from winners to losers,” Cramer said. But Cramer said investors should take days like this with a grain of salt. “Don’t take today as a referendum on anything,” he said. “Someone with a lot of money — and I’m talking about tens of billions — wanted out of one group and into another.” Sign up now for the CNBC Investing Club to follow Jim Cramer’s every move in the market. Disclaimer Questions for Cramer? Call Cramer: 1-800-743-CNBC Want to take a deep dive into Cramer’s world? Hit him up! Mad Money Twitter – Jim Cramer Twitter – Facebook – Instagram Questions, comments, suggestions for the “Mad Money” website? madcap@cnbc.com
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