Jim Cramer Tries To Predict NVIDIA Corporation (NASDAQ:NVDA) Share Price Movement Following Anthropic CEO’s Remarks

Jim Cramer, a prominent CNBC TV host, shared his perspective on NVIDIA Corporation (NASDAQ:NVDA) following remarks made by Anthropic CEO Dario Amodei regarding the need for a slowdown in AI development. Cramer's tweet indicated that Amodei's comments caused NVIDIA's stock to decline four percent, before it stabilized, and he deemed it a buy.

However, Cramer emphasized that the purchase was insufficient and the stock should continue to fall. This sentiment aligns with Cramer's broader critique of NVIDIA's stock price over the past few months, as he has frequently expressed dissatisfaction with its performance, particularly before market openings. Cramer's latest commentary focused on the influence of Amodei's remarks on the overall perception of NVIDIA, emphasizing the demand for the company's AI GPUs, which are among the most sought-after products.

Jensen Huang, NVIDIA's CEO, had previously stated in March that the firm initially underestimated the demand for its Blackwell GPUs, with the actual demand far exceeding estimates. According to NVIDIA's Q2 report, the order backlog exceeded $2 trillion. Cramer's remarks suggest that despite potential temporary fluctuations in the stock price due to Amodei's comments, the favorable outlook for NVIDIA remains strong.

The AI industry is driving NVIDIA's success, as evidenced by the company's 106% annual revenue growth in the second quarter, with data center revenue contributing $83.7 billion to its total revenue of $96.22 billion. However, this growth is occurring amidst a global memory shortage, which has also affected NVIDIA. The company's gross margins for Q2 were 75%, but the Q3 guidance anticipates a decrease to 74%, with an estimated range of 71% to 72%.

Furthermore, NVIDIA's rapid revenue growth has led to the resetting of its earnings base, a point highlighted by some analysts, such as Seaport Global, who argue that the company's capacity constraints may limit future upside potential. Hedge fund sentiment towards NVIDIA also reflects investor confidence, with 285 out of 1,006 funds covered by Insider Monkey holding a stake in the company as of Q2, up from 275 out of 1,022 in Q1.

Notably, GQG Partners significantly increased its position to $590 million. In terms of valuation, NVIDIA trades at a forward P/E ratio of 24, which is lower than both AMD (33) and Intel (55), and has a lower short interest as a percentage of float compared to these companies.