However, after the close, the company "reported a great quarter," TheStreet's Jim Cramer said on CNBC's "Mad Dash" segment. As a result, shares surged at the open, jumping more than 8.5% and hitting new 52-week highs of $167.36. However, Red Hat stock couldn't hold onto its gains, closing higher by just 0.86% at $154.42.
Fiscal fourth-quarter earnings of 91 cents a share came in 10 cents ahead of analysts' expectations, while revenue grew 22.8% year-over-year to $772.3 million and also topped analysts' expectations. Even better? First-quarter and full-year guidance came in ahead of expectations as well.
There are a ton of increasing price targets on Tuesday morning as a result. Some include RBC, Stifel Nicolaus, BMO, Wells Fargo, JMP Securities, Deutsche Bank and number of others, Cramer pointed out.
KeyBanc analyst Alex Kurtz currently holds the highest price target on Wall Street, calling for shares to rally to $184. That represents about 13% upside from current levels.
VMware has good position in this segment because of its tie-in with Amazon's (AMZN) - Get Report Web Services platform, noted Cramer, who also manages the Action Alerts PLUS charitable trust portfolio.
Because of Red Hat and VMware's unique position, he is anointing them as "cloud kings." Red Hat and VMware join Adobe Systems Inc. (ADBE) - Get Report in this esteemed group, a company Cramer referred to as a cloud king following the its excellent earnings results and in an effort to value Dropbox Inc. (DBX) - Get Report ahead of its IPO.
Whether it's Alphabet Inc. (GOOGL) - Get Report(GOOG) - Get Report with its Google Cloud offering, Amazon Web Services or Microsoft Corp. (MSFT) - Get Report and its Azure offering -- as analysts recently called for Microsoft to head to a $1 trillion valuation -- the cloud continues to churn out impressive growth.
Red Hat will keep riding that trend, Cramer said.
At the time of publication, Cramer's Action Alerts PLUS had a position in AMZN, GOOGL and MSFT.