Jim Cramer is waiting for the bottom of Nvidia stocks

Yesterday, Jim Cramer, on his official X profile, wrote that he is waiting for the bottom of Nvidia stocks. 

In the world of finance, the terms “bull” and “bear” are often used to describe market trends. A “bull” market is characterized by rising prices, while a “bear” market is marked by falling prices. Investors need to understand these concepts to make informed decisions.

Although in reality his tweet seems like a meme, many are interpreting it as a bear prediction. 

The tweet portrays what is probably his dog while observing something from the house window. Obviously, the image has nothing to do with the stock market, and that is why Cramer’s comment on the image, totally irrelevant, should be taken as a real declaration about it. 

The boom of Nvidia stocks and Jim Cramer’s hypotheses

During the course of 2024, the stock price of Nvidia rose from $49 to $140, with a remarkable +190% in less than six months.

In fact, the peak was recorded on June 20, and it constitutes the current all-time high. 

Furthermore, even in 2023 it had risen, so much so that the rise in total lasted for more than a year and a half, having started at the end of 2022 after the end of the last great bear-market. Since then it has gained more than 800%. 

But then why do we talk about bottom? 

The point is that many suspect that that +800% is actually the result of a speculative bubble, which has inflated over the months on the stocks related to intelligenza artificiale, such as Nvidia.

The burst of the Nvidia stock bubble: Jim Cramer waiting for the bottom

It should therefore not be surprising that there are several analysts who fear that the bull bubble could burst. 

In fact, the price of Nvidia shares has already fallen by 24% compared to the June peak, even if a -24% in two and a half months would not exactly suggest the burst of a speculative bubble. 

The analysts are divided into two groups. 

On one side, there are those who are waiting for the bubble to burst completely, and therefore for the decline that started in July to continue. Among these is indeed Jim Cramer, who is waiting for the decline to continue until it eventually reaches a bottom. 

On the other hand, there are those who believe that it is just a temporary correction destined to run out soon. 

There are also those who prefer not to express themselves on the matter, effectively accepting the uncertainty that seems to reign in this field currently. 

It is not even clear what the bottom Cramer is referring to should be, also because the current price level of around $106 is still, for example, significantly higher than both the $49 at the beginning of the year and the bottom of the last bear-market, reached in November 2022 around $11.

Jim Cramer and the forecasts in the world of investments

To all this, however, a significant detail must be added. 

In fact, Cramer is known more for his incorrect predictions than for those that turned out to be correct. 

In fact, there are even index funds whose strategy is to do the exact opposite of what Cramer claims. 

Jim Cramer in the past was a trader and analyst, but for many years he has been famous mainly as a television personality. 

He started working in TV in 2002, and in 2005 he became the host of his well-known show Mad Money. So he has been famous primarily as a TV host of a show that talks about investments for almost 20 years. 

Since 2009, the idea that using options to bet against Cramer’s predictions could be profitable has started to spread. 

His most famous wrong prediction is probably the one from February of last year, when he advised buying shares of Silicon Valley Bank, a month before its sensational collapse. 

The future of Nvidia

There is, however, also something else. 

In fact, at the end of August, the publication of the quarterly report of Nvidia was expected. 

That publication revealed record economic performance, even exceeding the expectations of some analysts. 

However, the next day the stock lost 6%, probably because the markets expected similar results, but they also anticipated much better future prospects. Instead, the company was more cautious about the future, and this led to speculation that the bubble might burst. 

Before the publication of the quarterly report, however, there were those who were expecting a real collapse due to economic performance below expectations. This did not happen, and the decline was only due to the disillusionment with future performance that had been widely overestimated. 

So on one hand, the company Nvidia seems to have a bright future ahead of it, but perhaps slightly less exciting than the financial markets had hoped. 

At this point, as soon as the markets have finished pricing in the new expectations, the downward trend that started in July could also come to a halt. 

In other words, it is not at all certain that the bottom of this phase must necessarily be much lower than those 100$ touched last Friday.