Jim Cramer on how Microsoft and Nvidia grow by reinventing themselves

Breaking down recent business moves by software giant Microsoft and chipmaker Nivida, the "Mad Money" host said the best tech stocks work because the companies underneath them are constantly innovating. Subscribe to CNBC Pro to access the full episode of Mad Money: https://cnb.cx/32bAheG

CNBC’s Jim Cramer said Monday it’s a mistake for investors to write Nvidia stock off as overvalued.

The U.S. chipmaker earlier unveiled new product launches and revealed it expects to beat profit estimates in the company’s current fiscal quarter.

“Nvidia’s stock looks expensive because the company almost always beats the earnings estimates and beats them handily,” the “Mad Money” host said. “That means those projections are borderline irrelevant, people. The stock ultimately turns out to be cheap in retrospect”

The comments come after shares of Nvidia, which is valued at $377 billion, climbed more than 5%, closing at $608.36. Year to date, shares are up 16.5%.

“Nobody in the world has a vision like [CEO] Jensen Huang, so Nvidia the stock lives on even though it pole-vaulted $32 today,” Cramer said. “I think it will end up looking cheap a year from now based on what the company’s actually going to earn, which will most likely be a lot more than predicted.”

Amid a global supply shortage for semiconductors, Nvidia said it now figures total revenue for the first quarter will top the $5.3 billion it initially forecast.

Nvidia produces chips for a range of applications in various industries, including graphics, gaming and vehicle components.

Some of Nvidia’s new offerings include a server chip called Grace and components used for artificial intelligence, chatbots, speech recognition and self-driving cars.

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