Jim Cramer Warns: Why This Nancy Pelosi-Linked Stock Could Be Risky in 2025

Marcus LeeSaturday, May 10, 2025 10:12 am ET
39min read

Nancy Pelosi’s husband, Paul Pelosi, made headlines in 2023 by purchasing 20 call options on Broadcom Inc. (AVGO) with a strike price of $800 (adjusted to $80 after a 10-for-1 stock split), set to expire in June 2025. While the transaction was legal and aligned with Broadcom’s AI-driven growth narrative, Jim Cramer—host of Mad Money—has sounded cautionary notes about the stock’s risks in 2025 that investors should heed.

The Allure of Broadcom’s AI Play

Broadcom’s rise as a leader in AI infrastructure has been undeniable. The company’s XPUs (AI accelerators) and networking chips have powered hyperscalers like Meta and Alphabet, driving AI revenue to $4.1 billion in Q1 2025—27% of total revenue. Analysts have projected a $90 billion AI revenue target by 2027, supported by a $198.66 price target, implying a 21% upside from late 2023 levels. Cramer initially endorsed the stock, calling it “a stock I like very much” after strong earnings.

But by 2025, his tone shifted.

Cramer’s Warnings: Four Key Risks

  1. Tariff-Driven Cost Pressures
    U.S. tariffs on Vietnam—a manufacturing hub for Broadcom’s legacy wireless and storage segments—have squeezed margins. Non-AI divisions saw a 9% sequential decline in Q1 2025, overshadowing AI growth. Cramer argued that these legacy businesses could drag down overall performance.

  1. Market Volatility and the “DeepSeek Selloff”
    In early 2025, Broadcom’s stock fell 17% year-to-date during the broader AI sector correction dubbed the “DeepSeek selloff.” While it rebounded thanks to VMware’s AI-private cloud synergies, Cramer highlighted the sector’s instability.

  2. Geopolitical and Hyperscaler Dependency
    Broadcom’s AI revenue relies heavily on hyperscalers like Meta, which accounted for 30% of its AI sales. Cramer warned that geopolitical tensions—such as U.S.-China trade disputes—could disrupt supply chains and client spending.

  3. Competitive Threats and Overvaluation
    Broadcom’s AI ambitions directly challenge GPU rivals like NVIDIA (NVDA) and AMD (AMD). While this has pressured their stocks—NVDA fell 25% and AMD dropped 15% against AVGO’s gains—Cramer cautioned that Broadcom’s $1 trillion market cap (briefly hit in late 2024) might not justify risks. He urged investors to consider cheaper AI stocks trading at <5x earnings, contrasting with AVGO’s forward P/E of 26.81.

The Data Doesn’t Lie

  • Stock Performance: From April 2024 to April 2025, AVGO rose 48.57%, outperforming peers. But its volatility—like the 17% YTD dip—highlights risks.
  • Hedge Fund Backing: 161 hedge funds held AVGO by Q4 2024, a 25% increase from 2023, signaling institutional confidence. However, reliance on a few clients and sectors remains a blind spot.
  • Margin Pressures: Broadcom’s non-AI segments now face $66 billion in EBITDA (Q1 2025), but legacy declines could strain profits.

Why Cramer’s Caution Matters

While Broadcom’s AI story is compelling, Cramer’s warnings underscore that even high-flying stocks can face headwinds. Pelosi’s 2025 expiring options—tied to a stock now trading near $160—might look risky if geopolitical tensions or hyperscaler spending slows.

The $198.66 analyst target remains achievable, but investors should weigh execution risks. Broadcom’s success hinges on balancing legacy businesses, navigating tariffs, and avoiding overreliance on volatile clients.

Final Verdict: Proceed with Caution

Jim Cramer’s mixed signals on Broadcom reflect its dual nature: a leader in AI infrastructure but a stock with significant vulnerabilities. Pelosi’s options expiration in 2025 adds a time-sensitive layer. Investors should:
- Monitor hyperscaler contracts and geopolitical developments.
- Compare AVGO’s valuation to cheaper AI peers.
- Consider the risks of legacy business declines and margin pressures.

In short, while Broadcom’s AI future is bright, the path to $198.66—and beyond—is fraught with pitfalls. For now, Cramer’s advice to “stay away” isn’t a dismissal of the stock’s potential but a reminder that even giants can stumble.

Final Tip: Use tools like to track its progress and decide whether the risks are worth the reward.