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Business

Jim Cramer says these 4 companies are the best ways to invest in the metaverse

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CNBC’s Jim Cramer said Wednesday he believes there are four standout stocks that investors should buy if they want to bet on the success of the so-called metaverse.

“Going forward, there will be many companies who try to claim they got a piece of the metaverse,” the “Mad Money” host said. However, for now, he said the best places to turn are Facebook-parent Meta, online gaming platform Roblox, semiconductor company Nvidia and Unity, a video-game software development firm.

The metaverse is an increasingly popular term on Wall Street that refers to immersive digital worlds in which people can connect using various devices. “Will younger people want a piece of this? I can’t be sure. I’m not one of them, but I know money managers love it and maybe that’s more important,” Cramer said.

While known in science-fiction circles for years, the metaverse has been in the spotlight in recent weeks after Facebook changed its company name to Meta. Executives at the firm, including CEO Mark Zuckerberg, have said the move was designed to reflect the company’s ambitions beyond social media. It is investing billions of dollars to develop this vision, expecting it to play out over the course of the next decade.

In addition to Meta, Cramer said Nvidia’s high-powered graphics chips will play an important role in the metaverse.

Roblox, on the other hand, has its “own internal metaverse already,” Cramer said, alluding to the fact Roblox users develop games that can then be played by other people on the platform.

Lastly, Cramer said Unity deserves a look as a metaverse play. The software company on Tuesday announced a stock-and-cash deal to buy the visual effects studio behind “Lord of the Rings” and “Avatar.”

“These are the companies that are currently doing the best work in the metaverse. In the end, I think it will succeed or fail based on its ability to create powerful experiences,” Cramer said.

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Business

Chip machine maker ASML will grow into a $500 billion business

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ASML Holding Semiconductor company logo seen displayed on smart phone. ASML is a Dutch company and currently the largest supplier in the world of photolithography systems for the semiconductor industry. (

SOPA Images | LightRocket | Getty Images

LONDON – ASML, a Dutch firm that makes high-tech machines used in semiconductor manufacturing, will see its market value climb from $302 billion to more than $500 billion next year, according to two tech investors.

Nathan Benaich, founder and general partner of boutique VC firm Air Street Capital, and Ian Hogarth, who sold his AI start-up Songkick to Warner Music Group, wrote in their annual “State of AI” report Tuesday that Europe’s largest tech company is the little-known “linchpin” in the global semiconductor industry.

Founded in 1984, ASML provides chip makers with essential hardware, software and services to mass produce patterns on silicon using a method called lithography.

It is the only company in the world offering extreme ultraviolet lithography machines that the likes of TSMC need to make the smallest and most sophisticated chips.

Each EUV machine has over 100,000 parts and costs $150 million. They’re shipped in 40 freight containers or four jumbo jets.

Closing the gap

Several chip companies have seen their stock prices soar after the coronavirus pandemic led to a global chip shortage, but ASML’s share price still has some room to grow, Hogarth told CNBC.

He said ASML’s market cap isn’t on the same scale as the likes of Nvidia or TSMC because it’s in Europe, where the market values high-tech firms slightly lower, and because its technology is more behind the scenes.

Nvidia is currently valued at $521 billion, while TSMC’s valued at $533 billion.

“As people look for alpha when investing in this trend of semiconductors being more and more critical to global supply chains, this (ASML) feels like it’s an obvious candidate,” Hogarth said.

ASML’s growth will be fueled by certain nation’s desire to onshore chip making and reduce their reliance on other countries. The vast majority of the world’s chips are currently made in Asia.

“If China is going to build the equivalent of what TSMC has today, or some of the leading American semiconductor companies, they’re going to need to buy a lot of these (EUV) machines,” Hogarth said. “So, the more countries consider this technology part of their key sovereignty, the more machines gets sold.”

Last month, ASML said it expects a sales boom over the next decade. It believes annual revenue will hit 24-30 billion euros ($28-$35 billion) by 2025, with gross margins up to between 54% and 56%. The prediction is significantly higher than the 15-24 billion euro range it had previously forecast.

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“We see significant growth opportunities beyond 2025,” the company said, adding that it expects to achieve an annual revenue growth rate of around 11% between 2020 and 2030.

ASML said “global megatrends in the electronic industry” coupled with “a highly profitable and fiercely innovative ecosystem” are expected to continue to fuel growth across the semiconductor market.

It added that growth in semiconductor markets and “increasing lithography intensity” are driving demand for its products and services.

Over the last 12 months, ASML’s share price on Amsterdam’s stock exchange has gone from 328 euros to 646 euros last Friday, peaking at around 753 euros on Sept. 23.

Not everyone is quite so bullish

In a note to investors on Sept. 28, analysts at New Street Research argued “semicap expectations are lofty” and that ASML has “limited” upside in 2022 as it “remains supply constraint in EUV.”

The firm has a positive five-year outlook on ASML but it has “tactically” downgraded the stock to a “neutral” for now.

Elsewhere, UBS also has a neutral rating on ASML’s stock. In a note to investors on Sept. 29, analysts at the investment bank said “We remain highly convinced on ASML’s growth potential in the mid-term but  … we struggle to see compelling upside to the shares on a 12-month view.”

Hogarth said he thinks the analysts are ignoring the “geopolitical dimension” and not acknowledging how much money nations are spending on building up their sovereignty when it comes to semiconductors.

Last year, Benaich and Hogarth predicted that Nvidia’s acquisition of British chip designer Arm would be blocked by regulators. Shortly after they made their prediction, regulators around the world announced a series of probes into the deal, which are still ongoing.

This year, they’re also predicting that there will be a “wave of consolidation” in the AI semiconductor industry, with “at least one of Graphcore, Cerebras, SambaNova, Groq, or Mythic being acquired by a large technology company or major semiconductor incumbent.”

They also believe Alphabet’s DeepMind artificial intelligence lab will have a “major research breakthrough in physical sciences.”

Disclaimer: Nathan Benaich has personal holdings of ASML shares. Ian Hogarth has none.

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Business

Jim Cramer says ‘run with the bulls’ and buy these winning stocks

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CNBC’s Jim Cramer on Wednesday offered investors a basket of stocks he believes can continue to succeed irrespective of Federal Reserve policy.

“Forget the big picture stuff. There are two things you need to keep track of when you’re picking stocks right now: The sector and the company, which includes the people running it,” the “Mad Money” host said.

The bottom line, Cramer said, is investors have two choices. The first is listening to the “Fed-obsessed experts,” he said. The second is to “forget about the money supply or the central bank and just run with the bulls. It’s not like they’re hard to find in this fabulous market.”

Semiconductors

A sign is posted in front of the NVIDIA headquarters on May 10, 2018 in Santa Clara, California.

Justin Sullivan/Getty Images

Cramer said he believes the entire chip industry is “in bull-market mode” with a number of companies doing well, such as NXP Semiconductors, Marvell Technology and Qualcomm.

“But I prefer AMD and Nvidia because they make incredible products and they have fabulous leadership,” Cramer said, noting that AMD, under CEO Lisa Su’s direction, is looking to finalize an acquisition for Xilinx.

Nvidia, similarly, is trying to complete a deal for Arm Holdings, Cramer noted. If it clears the necessary regulatory hurdles, Cramer said Nvidia “will become the most important semiconductor company of our time.”

Financials

Many of the country’s largest banks offer investors “the greatest bargains” relative to the rest of the stock market, Cramer said. That’s especially true when considering they “could be just a few months away from a new rate hike cycle,” Cramer said. Banks benefit from higher rates.

Cramer said his favorites right now are Morgan Stanley and Wells Fargo.

“Morgan Stanley’s not a bank anymore: It’s a wealth advisory service that happens to do some investment banking on the side. That means it’s bank light. I like that,” Cramer said.

Wells Fargo, on the other hand, offers a “turnaround story” after scandal-ridden years, Cramer said, adding he believes in CEO Charlie Scharf to keep delivering improvements.

“One day I expect Wells Fargo to return to the high $50s [per share], where it was when all hell broke loose. Until then, just stay the course,” Cramer said.

Retail

A medical worker wears a protective face mask outside Best Buy in Union Square in New York City.

Noam Galai | Getty Images

Cramer said he believes it’s not too late to purchase shares of Best Buy and Bed Bath & Beyond. The former’s digital transformation and tech membership program should allow for additional success, Cramer said, while the latter is another example of a turnaround story.

“They have all the tech you need in terms of shopping and buying,” Cramer said of Bed Bath & Beyond. “But what they really have is something I like to call ‘whimsy,’ something that you could only really find at Costco until recently. I think CEO Mark Tritton will take Bed Bath for a multi-year run.”

Agriculture

Cramer said the “most unknown bull market” out there is agriculture.

“I’ve long been a fan of AGCO, but that Deere conference call last week [was] magnificent,” Cramer said. “I scoffed at Cathie Wood, the best money manager of 2020, when she said she was buying Deere for its tech — I owe her an apology. I apologize. She nailed it. The technology Deere talked about is truly revolutionary; it will save farmers billions of dollars in wages because everything is pretty autonomous. Deere’s still a buy.”

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Business

GameStop, Koss Corp, Wayfair & more

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Take a look at some of the biggest movers in the premarket:

GameStop (GME) – GameStop remains on watch after another Reddit-fueled surge Wednesday in the video game retailer’s shares, as well as other so-called “Reddit stocks” like BlackBerry (BB), AMC Entertainment (AMC) and Koss Corp. (KOSS). GameStop surged 55.8% premarket, while AMC rose 12.9%, BlackBerry gained 4.3% and Koss soared 81.3%.

Best Buy (BBY) – The electronics retailer’s shares fell 5.3% in premarket trading after its revenue and comparable-store sales missed Wall Street forecasts for the holiday quarter as pandemic fueled demand for electronics lessened. Best Buy’s quarterly earnings of $3.48 per share beat estimates by 3 cents a share, however.

Moderna (MRNA) – The drugmaker’s shares rose 2.9% in premarket action as its quarterly revenue vastly exceeded estimates and it forecast $18.4 billion in Covid-19 vaccine sales this year. Moderna did, however, report a quarterly loss of 69 cents per share, wider than the 35 cents a share loss that analysts were anticipating.

Wayfair (W) – The furniture and home goods seller earned $1.24 per share for its latest quarter, above the consensus estimate of 86 cents a share. Revenue was slightly below Wall Street forecasts, as were the number of orders and the shares fell 9% premarket.

Norwegian Cruise Line (NCLH) – The cruise line operator’s shares rose 1.9% in the premarket after quarterly revenue came in well above estimates, despite the Covid-19 related shutdown of cruises. Its loss of $2.33 per share for its latest quarter was slightly wider than the consensus estimate of a $2.17 per share loss.

Anheuser-Busch InBev (BUD) – Anheuser-Busch reported better-than-expected profit and revenue for the fourth quarter. The company also forecast higher earnings for 2021, however the beer brewer said its profit margins would be hurt by higher commodity costs. Its shares fell 5.3% in premarket trading.

ViacomCBS (VIAC) – ViacomCBS came in 2 cents a share ahead of estimates, with quarterly profit of $1.04 per share. Revenue essentially was in line with Wall Street forecasts. The company also said it had 30 million streaming subscribers, ahead of its planned March 4 launch of Paramount+ service that will replace the current CBS All Access service. Its shares dropped 2.8% in premarket action.

Teladoc Health (TDOC) – Teladoc dropped 6.5% in premarket trading after it reported a loss of 27 cents per share for its latest quarter, 3 cents a share wider than Wall Street had expected. The provider of video medical visits’ revenue came in above estimates.

Nvidia (NVDA) – Nvidia reported quarterly earnings of $3.10 per share, compared to a $2.81 a share consensus estimate. The company best known for its gaming chips saw revenue beat estimates as well. Nvidia also predicted strong revenue for the current quarter, but the shares were down 2.6% in premarket action.

Fisker (FSR) – Fisker struck a deal with contract manufacturer Foxconn Technology to assemble cars for the electric vehicle startup. The agreement calls for the companies to jointly produce more than 250,000 vehicles annually. Shares fell 1% premarket.

Pfizer (PFE) – The Covid-19 vaccine developed by Pfizer and BioNTech (BNTX) works equally well across all age groups, according to an Israeli study. It provided 94% protection against developing coronavirus symptoms a week after the second dose of the vaccine, and 92% effective in preventing severe disease.

Verizon (VZ) – Verizon was the top bidder in a government auction of 5G airwaves, spending $45.5 billion, while AT&T (T) bid $23.4 billion and T-Mobile US (TMUS) bid $9.3 billion.

Pure Storage (PSTG) – Pure Storage came in 4 cents a share ahead of estimates, with quarterly profit of 13 cents per share. The provider of business memory storage systems also saw revenue beat Wall Street forecasts. Pure Storage gave a mixed forecast, but it was the first time it gave any forward guidance since the pandemic began. Shares gained 2.5% in the premarket.

L Brands (LB) – L Brands earned $3.30 per share for its latest quarter, 12 cents a share above estimates. The Victoria’s Secret parent’s revenue came in short of forecasts. L Brands, which also owns the Bath & Body Works chain, gave strong current-quarter earnings guidance. L Brands was up 2.7% in the premarket.

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Business

Stronger economic data could power stocks that thrive in a rebound in the week ahead

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The bull of Wall Street is seen during the pass of the snowstorm on January 31, 2021 in New York City.

Eduardo MunozAlvarez | VIEW press | Corbis News | Getty Images

A decline in new Covid infections, along with improving economic data and stimulus hopes, could boost stocks that flourish in a resurging economy in the week ahead.

In the past week, expectations for a strong economic rebound helped boost interest rates.

While the broader stock market was choppy, sectors that do well in a rebound – financials, airlines and industrials – stood out as leaders. This is known as the reflation trade.

Those stocks gained at the expense of growth and technology, down 2%. Strategists expect that reflation trade to continue as signs suggest that the economy could make a sharp comeback.

The S&P 500 was down 0.7% on the week to 3,906, while the Dow was up a tiny 0.1% at 31,494. The Nasdaq was off 1.57% for the week, to 13,874, with the decline in tech. Apple, for instance, gave up 4% on the week.

The big event in the week ahead is testimony from Federal Reserve Chairman Jerome Powell, who delivers his semi-annual testimony on the economy before the Senate Banking Committee on Tuesday and the House Financial Services Committee Wednesday.

He is expected to discuss the increase in interest rates, as well as concerns that inflation could begin to take off.

“He’s going to have to acknowledge that the data is improving and the virus situation is improving quite materially,” said Mark Cabana, head of U.S. rates strategy at Bank of America. “It is going to be hard for him to sound as dovish as he has been.”

But Powell is expected to continue to emphasize that the Fed will keep rates low for a long time and maintain its easy policies to help the economy.

Improving forecasts

Economists this past week ratcheted up tracking forecasts for first quarter gross domestic product, fueled in part by an unexpectedly sharp jump of 5.3% in January retail sales.

Goldman upped first-quarter growth to 6%, and Morgan Stanley said it was tracking at 7.5% for the first quarter. Economists linked the surprise gain in retail sales to stimulus checks sent to individuals under the last $900 billion stimulus program approved by Congress in late December.

The Biden administration has proposed another $1.9 trillion Covid relief package. That could come before the House of Representatives in the coming week.

“[Powell’s] going to stick to the script. The script is lawmakers need to continue to provide support for the economy. He’s going to be supportive of the administration’s effort to get a big package through,” said Mark Zandi, chief economist at Moody’s Analytics.

Key data during the week

Earnings continue to be important. There are more than 60 companies reporting, including Home Depot, Macy’s and TJX.

Key economic reports dropping next week include durable goods on Thursday, along with personal income and spending data on Friday

The Friday report includes the personal consumption expenditure price index, which the Fed monitors. The market is on the lookout for signs of rising inflation.

“I think the boom is going to start sooner than most people think,” said Ed Keon, chief investment strategist at QMA.

He said the stronger economy is helping drive Treasury yields higher, with the 10-year hitting a one-year high of 1.36% on Friday. Keon said the vaccine rollout is helping the outlook, as is the slowing spread of the virus.

“I think people were expecting a second-half boom, but I think the second quarter is going to be very strong, as people change their behavior,” he said.

“The caution when it comes to savings and not going out, that’s going to go away sooner than we think,” Keon said. “Right now, you might see a 10% GDP number in the second or third quarter. That’s also due to the fact we’re likely to get a big stimulus package.”

He said investors are underestimating the surge in economic activity that should start in March and pick up steam in the second and third quarter as more people resume dining out and other activities.

“I think the world is going to look very different than it has over the past 12 months. We’re still bullish. We’re still overweight stocks,” Keon said.

He said a flood of money could hit the economy.

“The size of the U.S. economy last year was about $21 trillion,” Keon added. “Households now have excess savings of about $1.5 trillion and the stimulus package probably will be in the vicinity of $1.2, $1.6 trillion.”

He said the service sector should start to see a benefit that has been lifting the goods making side of the economy. “You’re going to see an incredible boom.”

Week ahead calendar

Monday 

Earnings: Dish Network, Royal Caribbean, Marathon Oil, Ingersoll-Rand, Occidental Petroleum, Transocean, Zoominfo, ONEOK, HSBC

10:00 a.m. Leading economic indicators

Tuesday

Earnings: Home Depot, Macy’s, Intuit, Thomson Reuters, Square, Toll Brothers, Jazz Pharmaceuticals, McAfee, Medtronic, Pioneer Natural Resources, Bank of Montreal

9:00 a.m. FHFA home prices

9:00 a.m. S&P/Case-Shiller home prices

10:00 a.m. Fed Chairman Jerome Powell semi-annual economic testimony Senate Banking Committee

Wednesday

Earnings: Lowe’s, NVIDIA, Viacom, Public Storage, Booking Holdings, TJX, Brookdale, Royal Bank of Canada, Apache, Petrobras, Pure Storage, L Brands, Casper Sleep

7:00 a.m. Mortgage applications

10:00 a.m. New home sales

10:00 a.m. Fed Chairman Powell semi-annual economic testimony at House Financial Services Committee

Thursday

Earnings: Salesforce.com, Norwegian Cruise Lines, Etsy, Best Buy, HP, Shake Shack, Beyond Meat, Anheuser-Busch Inbev, Dell Technologies, Virgin Galactic, American Tower, Cleveland Cliffs, Airbnb, Carvana, Door Dash

8:30 a.m. Atlanta Fed President Raphael Bostic

8:30 a.m. Jobless claims

8:30 a.m. Durable goods

8:30 a.m. Q4 GDP second reading

10:00 a.m. Pending home sales

10:00 a.m. Advanced economic indicators

10:00 a.m. St. Louis Fed President James Bullard

3:00 p.m. New York Fed President John Williams

Friday

Earnings: Fluor, Cinemark, Draft Kings, Foot Locker, AMC Networks

8:30 a.m. Personal income and spending

8:30 a.m. Advanced trade

9:45 a.m. Chicago PMI

10:00 a.m. Consumer sentiment

Saturday

Earnings: Berkshire Hathaway

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Technology

Nvidia cryptocurrency mining processor for Ethereum announced

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Jensen Huang, president and CEO of Nvidia, speaks during the company’s event at the 2019 Consumer Electronics Show in Las Vegas on Jan. 6, 2019.

David Paul Morris | Bloomberg | Getty Images

Nvidia on Thursday announced it will release a new series of semiconductors specifically for mining ether, the second-largest digital cryptocurrency.

The new chip type is called CMP, or Cryptocurrency Mining Processor. The first cards will go on sale in March, an Nvidia spokesperson said.

Ether mining is a process in which computers solve complicated math programs to help the Ethereum cryptocurrency network run. In exchange, miners get ether, the digital coin that runs on the Ethereum network. Ether hit a record high on Thursday, up over 160% year-to-date to over $1,914.

Ether’s mining algorithms run best on graphics cards, which is the kind of chip that Nvidia is known for. Miners often buy several graphics cards and put them in a single machine to maximize their return.

Last fall, Nvidia released a new series of graphics cards marketed at PC gamers that have been consistently sold out. The semiconductor industry is also facing a shortage across the board.

Thursday’s announcement suggests that at least some of the demand for Nvidia’s chips came from cryptocurrency miners, not just gamers.

“CMP products — which don’t do graphics — are sold through authorized partners and optimized for the best mining performance and efficiency,” Matt Wuebbling, head of GeForce marketing at Nvidia wrote in a blog post.

Nvidia said that the latest chip in its gaming graphics cards series, the RTX 3060, would be modified when it’s released later this year so it won’t mine ether effectively. Cards that have already been sold, like the RTX 3070 or RTX 3080, do not have the same limitations, the Nvidia representative said.

“RTX 3060 software drivers are designed to detect specific attributes of the Ethereum cryptocurrency mining algorithm, and limit the hash rate, or cryptocurrency mining efficiency, by around 50 percent,” Nvidia’s said in a blog post.

Graphics cards were first developed to enable high-definition computer games but they’re increasingly essential for new technologies like artificial intelligence. Their usefulness in mining ether isn’t new, either — in 2017, Nvidia said it made hundreds of millions of dollars per quarter selling chips to cryptocurrency miners.

“Cryptocurrency and blockchain is here to stay. The market need for it is going to grow, and over time it will become quite large,” Nvidia CEO Jensen Huang said in 2017.

PC gaming is also growing strongly. Consumer spending on PC gaming hardware was up 62% in 2020, according to an NPD Group estimate. A graphics card is often the most expensive part of a gaming PC.

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