Jim Cramer backs Nvidia and Meta as Wall Street sees 24% upside

Jim Cramer recommended buying Nvidia Corp. and Meta Platforms Inc., joining a Wall Street consensus that both AI stocks remain undervalued despite gains of 460% and 1,300% since 2023.

"The market is still underestimating the durability of this AI cycle," Cramer said on his CNBC show. "Nvidia owns the full stack, and Meta is building infrastructure at half the cost anyone thought possible."

Nvidia dominates the market for AI accelerators through its full-stack strategy spanning chips, networking and software. The company's CUDA ecosystem and data center revenue growth have driven its 460% rally since early 2023, yet most analysts maintain buy ratings with price targets implying further upside.

Meta shares surged 6% on July 10 to $669.21, capping a 15% weekly gain — the best since early 2024. The rally followed a Bank of America analysis showing Meta's AI infrastructure costs may be roughly half of prior estimates, at about $22 billion per gigawatt versus the $45 billion Wall Street had modeled. BofA's Justin Post reiterated a buy rating and $835 price target, implying 24% upside from Friday's close.

The recommendation arrives as Meta accelerates its AI buildout. The company raised its 2026 capital expenditure guidance to as high as $145 billion and plans to deploy 6.5 gigawatts of AI compute capacity this year, including 5.5 gigawatts in the second half. Meta also plans to begin manufacturing its custom AI chip, code-named Iris, in September through partners Broadcom Inc. and Taiwan Semiconductor Manufacturing Co.

For Nvidia, the bull case rests on sustained demand for its Blackwell architecture and the widening moat created by CUDA software lock-in. The company's data center segment has posted triple-digit revenue growth for five consecutive quarters, and enterprise AI adoption remains in early stages.

For Meta, the cost efficiency breakthrough changes the investment math. BofA estimates that if Meta monetizes half its projected compute capacity at market rates, incremental revenue could reach $95 billion to $142 billion — a figure that would rival its core advertising business. Wolfe Research estimates each gigawatt Meta monetizes externally could add roughly 20% to earnings per share.

The key risk for Meta is regulatory. The European Commission issued preliminary findings on July 9 that Instagram and Facebook breached the Digital Services Act through addictive design features, potentially exposing Meta to a fine exceeding $12 billion. Markets have largely treated the risk as a multi-year legal process rather than an immediate cash cost.

Both stocks face their next catalyst in the coming weeks. Meta reports second-quarter earnings later this month, where investors will watch for an official Meta Compute business announcement and any further capex guidance increase. Nvidia's next earnings report will provide the clearest read on whether Blackwell demand is accelerating or plateauing.

This article is for informational purposes only and does not constitute investment advice.