ARM Holdings landed back on Cramer’s radar Monday after Broadcom announced it was buying NetLogic Microsystems for $3.7 billion.
Broadcom’s CEO spoke about the need to regulate power consumption in the wireless market, and the “Mad Money” host said ARM Holdings is a company that’s critical to developing smaller mobile devices with longer-lasting batteries.
ARM-based chips are in most mobile phones and MP3 players. ARM also developed the processor in the iPhone and iPad.
“ARM practically owns the mobile handset market now, especially the iPhone,” Cramer said, “and that looks like it's not going to change anytime soon given the company’s lead in mobility and, most importantly, energy efficiency.”
There's also a catalyst that makes ARM Holdings even more attractive, he said. Microsoft’s Windows operating system has only ever run on Intel’s chip architecture. However, MSFT announced in January that Windows 8 is also going to run on ARM-based chips. And this Wednesday is Microsoft's analyst meeting.
While some on Wall Street are worried about ARM Holding's seemingly high valuation, Cramer thinks there’s plenty of room to the upside. He thinks the name is a buy and suggests “nibbling” at the stock ahead of Microsoft’s analyst meeting.
“This is one of those cases where the market opportunity is so much bigger than the stock’s current market capitalization, you have to hold your nose and pay up,” he said.
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