Jim Cramer Explained What Turned The Tide For NVIDIA Corporation (NASDAQ:NVDA)’s Stock

Jim Cramer, a prominent investor on CNBC's Mad Money, played a pivotal role in turning the tide for NVIDIA Corporation's (NASDAQ:NVDA) stock. Following the company's mixed earnings report on August 26th, Cramer invited NVIDIA's CEO, Jensen Huang, for an interview. After the interview, Cramer revealed that Huang highlighted NVIDIA's upgradable software, which contributed to the stock's positive reaction in premarket trading the following day.

Despite the initial market reaction of the stock closing 4.6% lower on Friday, Cramer attributed the turnaround to Huang's remarks. During the conference call, despite a flat earnings report, the stock jumped to $519 as Cramer noted the significant increase in revenue growth. The company's data center revenue surged by 117% to $89 billion, and its AI Clouds, Industrial, and Enterprise segment grew by 138% to $40.3 billion.

Moreover, NVIDIA beat analyst estimates with $96 billion in revenue and $2.46 in earnings per share. Despite these positive indicators, concerns arose about the company's free cash flow, which dropped by 38 points to 22%, and potential challenges from custom AI chips and higher memory costs. As of the latest data, over 280 hedge funds held NVIDIA's stock, and its forward P/E ratio of 25.97 is lower than that of Intel (INTC) and AMD, indicating a potentially attractive investment opportunity. Short interest in NVIDIA is also minimal at 1.2%.