Important points
CNBC’s Jim Cramer on Thursday downplayed Nvidia’s post-earnings share price decline, suggesting the company was caught in a vortex of institutional selling that actually created an entry point for opportunistic investors. “You’re going to take advantage of[the selling wave]and buy stocks you like at a discount,” Kramer said on “Mad Money.” On Wednesday night, NVIDIA delivered what Cramer called a “strong” fourth quarter with revenue and guidance that far exceeded expectations. Still, despite pre-market gains, the chipmaker’s stock fell 5.46% on Thursday. Reasons for the selling pressure include concerns that Nvidia’s customers are running out of cash flow, a continued lack of revenue from China and lingering competition concerns. But for Cramer, these are just excuses. He said the fact that Nvidia and other AI hardware stocks appear to have hit across the board on the same day that hard-hit software stocks rose suggests that no matter how good Nvidia’s returns are, some deep-pocketed investors want to rotate their portfolios. “Most people don’t understand how these kinds of (trading) programs work. They’re not based on the specific fundamentals of individual companies. They’re based on intuition, the belief that the market is paying too much for one type of company and not enough for another,” Cramer said. For example, he pointed to a 4.5% rise in Workday stock, which seemed to be considered dead a few days ago. Salesforce is another example of a winner of this rotation. The software giant’s stock has recently come under fire over concerns that AI threatens its business model. And after Salesforce issued light guidance, its stock initially fell in after-hours trading Wednesday night, but ended Thursday up 4%. “The program we saw today was huge and unforgiving and took advantage of moments where winners turned losers,” Kramer 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. “People with a lot of money, tens of billions, are trying to move from one group to another.” Subscribe to CNBC Investing Club today to follow Jim Cramer’s every move in the markets. Questions about Cramer’s disclaimer? Call Cramer: 1-800-743-CNBC Want a deeper look into Cramer’s world? Punch him! Mad Money Twitter – Jim Cramer Twitter – Facebook – Instagram Have questions, comments, or suggestions about the Mad Money website? madcap@cnbc.com
