Cramer examines the bull cases for Nvidia as it sets new highs

Just because CNBC’s Jim Cramer thinks investors should own Nvidia — not trade it — doesn’t mean he thinks they should buy it right now. On Tuesday, he said he still believes in the company but explained why the stock’s rally may not continue.

“While Nvidia’s a great company with a great stock, in the end, it’s still a stock. That means there are other inputs besides the fundamentals,” he said. “For Nvidia to go higher, it needs fuel. But there’s not enough money coming in to keep the rally going.”

Cramer reaffirmed his belief that Nvidia, which hit a new high Tuesday, “pretty much owns AI, and AI pretty much owns the future,” saying the company has been focused on developing extremely fast chips for decades. But he said investors should be savvy enough to know that the stock could come down a little.

He reviewed a few bullish takes on Nvidia, including a case for the stock from Melius analyst Ben Reitzes and an ultra-bullish view from technical analyst Dan Fitzpatrick, saying that he generally agrees with these authors but not necessarily with their most upbeat predictions.

Reitzes highlighted Nvidia’s dominance in the sector and said it could generate $240 billion in free cash flow over the next three years, while Fitzpatrick stressed the point that artificial intelligence is still in its infancy and gave the stock a 52-week target of $2,000.

But it’s hard to imagine that the AI darling — which is currently worth about $2.8 trillion — could double in value without crushing the rest of the market, Cramer said. He also pointed out that valuation depends on inflation, saying “just because Nvidia can spew cash doesn’t mean we’re going to value that future cash as much as we do now.”

“The buyers haven’t repealed the laws of what governs a stock, even if that stock is Nvidia,” he said.

Nvidia declined to comment.

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Disclaimer The CNBC Investing Club Charitable Trust holds shares of Nvidia.