Despite a 200% Surge, "Still Undervalued"... Which Stock Did the Top US Investor Pick?

Jim Cramer: “Stock Is Undervalued Relative to AI Dominance”
“Another Upward Trend Expected This Year”

Jim Cramer, one of Wall Street’s leading investment advisors, has issued a strong buy recommendation for NVIDIA, stating that the stock remains “insanely cheap” despite the recent market correction. He believes the current share price is excessively suppressed, considering NVIDIA’s unrivaled position in the artificial intelligence (AI) semiconductor market and its future earnings growth potential.

NVIDIA Headquarters. Photo by EPA Yonhap News

On January 11 (local time), Jim Cramer appeared on CNBC’s “Mad Money” and identified NVIDIA and Google’s parent company Alphabet as the key stocks that will lead the market this year. He said, “NVIDIA’s stock price is far too restrained compared to market expectations,” and added, “There is a high probability that we’ll see another strong upward trend this year.”

As of the close on January 9, NVIDIA shares ended trading at $184 per share. Although the stock has experienced a correction over the past few weeks, Cramer interpreted this as a temporary pause for investors to adjust their expectations, rather than a structural decline.

Forward P/E Ratio of 25... “Valuation Pressure Is Not Significant”

Cramer particularly stressed that NVIDIA’s valuation is not excessive. NVIDIA’s forward price-to-earnings ratio (P/E), reflecting its projected earnings for the next 12 months, stands at about 25 times-lower than the Nasdaq market average of roughly 26 times. With net profit increasing rapidly due to rising demand for AI semiconductors, he argued that the current share price does not fully reflect the company’s earnings growth potential.

“Recent Stock Correction Is Merely Temporary”

NVIDIA’s stock price has already recorded a steep upward trend over the past several years. After soaring by about 200% in 2023 and nearly 100% in 2024, it also posted a gain of more than 30% last year, ranking among the top performers within the “Magnificent Seven” (NVIDIA, Meta, Tesla, Apple, Microsoft, Amazon, and Alphabet). Cramer described the recent correction following this sharp rise as a natural process resulting from profit-taking and heightened investor expectations.

He emphasized that NVIDIA’s growth momentum remains intact. This year, NVIDIA’s earnings growth rate is expected to exceed 40%, and with the next-generation AI-dedicated chip “Rubin” set to begin full-scale shipments this year, the pace of earnings improvement could accelerate even further. Cramer concluded, “NVIDIA and Alphabet are the biggest beneficiaries of this year’s AI investment trend,” adding, “The recent stock correction could actually present a buying opportunity.”