Jim Cramer, the host of Mad Money, highlighted the growing significance of data centers as a major theme in the technology sector during Tuesday’s episode. He pointed out that although it might not always be immediately visible in the broader market indices, data centers have become a significant investment focus.
“The data center has been the single biggest investment story for months on end, even if it’s not always obvious from the averages… This sea-change, one that we are undergoing in real time, with the data center theme suddenly going from positive to negative, is buried within the broader indices, but it’s like a living, breathing, seething animal, a snorting bull turned into a grizzly, scratching and clawing back the gains in your portfolio.”
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Cramer offered a historical perspective, tracing the rise of NVIDIA, a graphics and gaming chip maker, as pivotal to the development of modern data centers. He explained that the company’s invention of a semiconductor capable of enabling both accelerated computing and generative artificial intelligence became foundational to a wide range of technologies.
“This semiconductor becomes the backbone of electric vehicles, of robots, and most important, of the data centers themselves… Huge warehouses full of servers. No large tech company worth its salt can afford to do without these data centers.”
However, Cramer revealed that the situation took a dramatic turn when a Chinese company found a way to achieve similar results with fewer, less expensive chips, throwing the entire data center industry into turmoil.
Describing the company as “the odd man out of the Magnificent Seven,” Cramer emphasized the company’s central role in the tech market, noting that its products are essential to the operations of numerous tech companies. Cramer pointed out that President Trump’s administration may impose tighter export controls on Chinese technology, which could further complicate the company’s market position.
Among the companies most at risk from these changes, Cramer singled out semiconductor and semiconductor capital equipment players, with the GPU kingpin standing out as the most exposed. He concluded by suggesting that some people even argue that the company’s performance could be decisive to the future fortunes of major momentum stocks in the tech sector.
Jim Cramer Commented on 12 Stocks Linked to Data Centers
Our Methodology
For this article, we compiled a list of 12 stocks that were discussed by Jim Cramer during the episode of Mad Money aired on February 25. We listed the stocks in the order that Cramer mentioned them. We also provided hedge fund sentiment for each stock as of the fourth quarter of 2024, which was taken from Insider Monkey’s database of over 1,000 hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Jim Cramer Commented on 12 Stocks Linked to Data Centers
12. Vertiv Holdings Co (NYSE:VRT)
Number of Hedge Fund Holders: 92
Cramer mentioned Vertiv Holdings Co (NYSE:VRT) during the episode as he stated:
“A whole swath of industrials like Cummins for motors… Constellation Energy, Vistra for nuclear power. Vertiv for the guts of the data center. They’ve all been trading together. They’re linked and they’re hanging in the balance.”
Vertiv (NYSE:VRT) focuses on creating and maintaining essential digital infrastructure solutions and lifecycle services for data centers, communication networks, and a range of commercial and industrial industries. Cramer, in February, suggested buying some VRT stock and noted that it is a data center play.
“Okay, look, Vertiv… You need to know that the chairman of Vertiv is Dave Cote. He was my former next-door neighbor. He’s a brilliant industrialist. The stock is down very big. It’s involved with data centers, indeed. It’s actually a data center play and I think the stock has come down enough that I think you should buy some. But… not all, and not all at once. This is a wild trader and if it’s a wild trader, you don’t need to stick your neck out.”
11. Vistra Corp. (NYSE:VST)
Number of Hedge Fund Holders: 120
While discussing the current sentiment surrounding data centers, Cramer pointed out that Vistra Corp. (NYSE:VST) is linked to data centers.
“A whole swath of industrials like Cummins for motors… Constellation Energy, Vistra for nuclear power. Vertiv for the guts of the data center. They’ve all been trading together. They’re linked and they’re hanging in the balance.”
Vistra (NYSE:VST) is a power generation company and electricity provider catering to a diverse set of customers, including residential, commercial, and industrial sectors. Earlier in January, explaining how data centers might play out in the future, Cramer said:
“Right now, there are two utilities that generate a lot of nuclear power, Vistra and Constellation Energy… I think these two stocks are now way ahead of themselves. They trade like they’ll be able to build many nuclear reactors next to the currently approved ones because siting won’t be difficult… Oh, that’s true but building them will be. It takes ages to construct one of these things, big overruns… But hey, at least Constellation and Vistra’s real, even if their stocks have gotten overextended.”
10. Constellation Energy Corporation (NASDAQ:CEG)
Number of Hedge Fund Holders: 85
Constellation Energy Corporation (NASDAQ:CEG) was mentioned and here’s what the Mad Money host had to say:
“A whole swath of industrials like Cummins for motors… Constellation Energy, Vistra for nuclear power. Vertiv for the guts of the data center. They’ve all been trading together. They’re linked and they’re hanging in the balance.”
Constellation Energy (NASDAQ:CEG) is an energy company involved in producing and selling electricity using a variety of resources, such as nuclear, wind, solar, natural gas, and hydroelectric power. On February 3, Cramer stated:
“When you look at the five best performers in the S&P 500, let’s see, what do you get? Constellation Energy is first and Vistra is fourth. Those are both nuclear power plays… When you look at Constellation and Vistra, look, these nuclear stocks have had explosive multi-year moves as the data center build-out has created this electricity shortage around the whole country and nuclear remains the preferred power source for any company that cares about climate change.”
9. Cummins Inc. (NYSE:CMI)
Number of Hedge Fund Holders: 53
Cramer pointed out the link between Cummins Inc. (NYSE:CMI) and data centers as he said:
“A whole swath of industrials like Cummins for motors… Constellation Energy, Vistra for nuclear power. Vertiv for the guts of the data center. They’ve all been trading together. They’re linked and they’re hanging in the balance.”
Cummins (NYSE:CMI) provides a wide range of power solutions, including engines, drivetrain systems, after-treatment technology, power generation systems, and electrified power systems, along with related engineering services and aftermarket support. In August 2024, discussing the company and its operations related to data centers, Cramer stated:
“Cummins actually hit a new all-time high earlier this month… For starters, these guys have definitely managed the energy transition, developing lower carbon solutions that work right out of the gate like natural gas-powered engine platforms as well as working on zero carbon stuff for the future for electric and hydrogen engines… More importantly, Cummins has a thriving power systems business where they make generators and commercial power systems for buildings, including yes, data centers, which are all being, being built all over the place. Even if truck sales are slow, the data centers are on fire. These are backup power systems.
Remember, data centers can’t afford to go offline during a power outage. When Cummins reported earlier this month, they delivered much higher than expected earnings and power systems accounted for roughly two-thirds of that beat. I was shocked at that. I just didn’t think it was that big. Now we spoke to CEO Jennifer Rumsey… and she explained that the data center has become a key source of growth for Cummins.”
8. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 126
Discussing Tesla, Inc. (NASDAQ:TSLA), Mad Money’s host said:
“Suddenly the data center feels fragile. The tech titans, Amazon, Alphabet, Meta, Oracle, Microsoft, throw in Tesla, have been dependent on this data center and the spend.”
Tesla (NASDAQ:TSLA) designs, produces, and sells electric vehicles and energy solutions, providing services such as vehicle sales, financing, energy storage products, as well as solar energy systems and related services to a wide range of customers.
Baron Partners Fund stated the following regarding Tesla, Inc. (NASDAQ:TSLA) in its Q4 2024 investor letter:
“Tesla, Inc. (NASDAQ:TSLA) designs, manufactures, and sells electric vehicles, related software and components, and solar and energy storage products. Shares rose on growth in the energy segment, the promise of new model launches in 2025, and increasing investor confidence in Tesla’s AI initiatives. Despite macroeconomic challenges, delivery data in major markets like China have shown considerable improvement. The energy and automotive segments demonstrated stronger-than-expected profitability. Tesla also expanded its advanced computing center in Texas, released improved version of its software-enhanced driving solution, and is set to launch new mass market vehicles years after the initial rollouts of Models 3 and Y. Expectations of deregulation under the incoming administration point to the potential acceleration of new technology rollouts, which could enhance Tesla’s leadership position in real world AI and bolster investor confidence that Tesla will benefit from these large and attractive growth opportunities.”
7. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 317
Cramer made a note of a link between the needs of companies like Microsoft Corporation (NASDAQ:MSFT) and data centers.
“Suddenly the data center feels fragile. The tech titans, Amazon, Alphabet, Meta, Oracle, Microsoft, throw in Tesla, have been dependent on this data center and the spend.”
Microsoft (NASDAQ:MSFT) creates software, services, devices, and solutions, encompassing productivity tools, cloud services, enterprise applications, gaming, as well as products for both consumers and businesses. More recently, in January, Cramer noted the company’s data center buildout as he said:
“How about two wild cards? First is Microsoft. Now, this has become a battleground stock because its aggressive data center build-out, so far failed AI PC, got a call ‘em as I see ‘em, a possible fallout with OpenAI, and the possibility that Copilot is nothing but Clippy 2, yes, that little paperclip that almost ruined Microsoft Office in the late nineties. I keep trying to figure out how CFO Amy Hood can be positive on her part of the conference call, which is really frankly the only part of the conference call that matters because she handles the guidance.
And the guidance is the guidance. We pared this one back for the Charitable Trust and if it weren’t for the fact that Microsoft has an installed base to meet demand, I have to tell you, we would’ve sold our entire position.”
6. Oracle Corporation (NYSE:ORCL)
Number of Hedge Fund Holders: 105
Highlighting the dependency of companies like Oracle Corporation (NYSE:ORCL) on data centers, Cramer said:
“Suddenly the data center feels fragile. The tech titans, Amazon, Alphabet, Meta, Oracle, Microsoft, throw in Tesla, have been dependent on this data center and the spend.”
Oracle (NYSE:ORCL) is a tech company that delivers a wide variety of IT solutions for businesses. Before the company posted its earnings in December 2024, Cramer stated:
“Now first, here’s Oracle, one of the major companies building out these data centers. I think they’ll show incredible strength, amazing, really fabulous sales because there’s practically an endless demand for data centers. Let’s see if they’re still planning to build those things like crazy…. We’ll learn more from Oracle Monday evening.”
5. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 262
Cramer noted that tech titans like Meta Platforms, Inc. (NASDAQ:META) have a need for data centers and said:
“Suddenly the data center feels fragile. The tech titans, Amazon, Alphabet, Meta, Oracle, Microsoft, throw in Tesla, have been dependent on this data center and the spend.”
Meta (NASDAQ:META) creates products that facilitate global communication through platforms such as Facebook, Instagram, Messenger, and WhatsApp, along with augmented and virtual reality hardware, software, and content. In early February, Cramer highlighted the company’s involvement in the Stargate project and said:
“Now we got some huge data center announcements from Microsoft [and] Meta last month, then Oracle, SoftBank, and OpenAI teamed up to form something called Stargate with a $500 billion AI infrastructure plan that was announced at the White House on President Trump’s first full day in office… but then DeepSeek happened and Wall Street’s now trying to figure out if the Tech Titans have been spending way too much money on AI hardware.”
4. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 223
Cramer noted the investors’ slipping confidence in data centers, which carries the possibility of impacting NVIDIA Corporation (NASDAQ:NVDA) but urged that the company’s upcoming earnings release will clarify many things.
“Tomorrow evening, Nvidia reports so right now I think we have two markets. There’s the market that’s dependent on Nvidia and its fellow tech titans… The selling in Nvidia world is so vicious. To the sellers, it can be only one victor and they think it’s not gonna be the data centers…
In the end, though, I don’t think things are nearly as binary as it seems. The house is not divided against itself. 24 hours from now, we’ll know if NVIDIA’s selling a lot of product or if it can’t because it doesn’t, it can’t make it fast enough. We’ll know if it’s possible that it has more large customers than just the tech titans. Oh, so we can stop counting those dollars. We’ll know if it can avoid making chips for China entirely so that that’s not a concern. It can be taken off the table. We’ll know these things to be self-evident, including all the orders. And then after we know that, life will go on. Consider NVIDIA’s earnings to be what I call a clearing event. All of the sturm und drang will already be done and the damage will be complete.”
NVIDIA (NASDAQ:NVDA), known for its advancements in graphics, computing, and networking technologies, is seeing significant growth due to its GPUs and the CUDA software platform, both of which are essential to AI infrastructure.
3. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 166
Cramer, whilst dissecting the data center theme and the companies that are dependent on it suffering, noted that Apple Inc. (NASDAQ:AAPL) has not been hit.
“Today we’ve got a defense of our large-cap tech companies, which have been endlessly targeted by our European allies. These, these countries, they’ve used our tech companies, Amazons, the Alphabets, the Apples like honeypots. Now when it happens, our government will retaliate for a similar amount of money. No more plunder… We know that what’s happening is go, we know it’s happening. Why? Because every member of the Magnificent Seven, save one, Apple, are drooping because they may have spent too much money on data centers.
The fact that Apple hangs in there is actually proof positive the data center is what’s on the line because Apple’s the only one that hasn’t spent fortunes paying Nvidia for the lifeblood of the AI platform. They always figured they could just license from, the technology from somebody else given their massive user base. Yes, Apple didn’t have to spend tens of billions of dollars in these warehouses full of servers. So its stock hangs in, irrespective of potential tariffs from Chinese components.”
Apple (NASDAQ:AAPL) designs and sells a wide range of consumer electronics, including smartphones, computers, tablets, wearables, and various accessories, alongside offering subscription-based services.
2. Alphabet Inc. (NASDAQ:GOOGL)
Number of Hedge Fund Holders: 234
Alphabet Inc. (NASDAQ:GOOGL) was mentioned during the episode and here’s what Cramer had to say:
“Today we’ve got a defense of our large-cap tech companies, which have been endlessly targeted by our European allies. These, these countries, they’ve used our tech companies, Amazons, the Alphabets, the Apples like honeypots. Now when it happens, our government will retaliate for a similar amount of money. No more plunder… Suddenly the data center feels fragile. The tech titans, Amazon, Alphabet, Meta, Oracle, Microsoft, throw in Tesla, have been dependent on this data center and the spend.”
Alphabet (NASDAQ:GOOGL), created in 2015 after Google’s restructuring, is known for its Google Search engine. The company plays a major role in digital advertising, with Google Search being a driver of its success. In early January, Cramer commented on the company and said:
“Alphabet has a facility dedicated to quantum computing. This is super fast computing using superconductors that require a specialized computer environment based in part on cryogenic technology. Sounds promising, the others burn too hot, right, the regular data centers. But it’s not a reason to buy Alphabet because it’s nothing that’s ready at scale. I like Alphabet, own it for the Charitable Trust, but that’s because we like their dominance in Search, progress in YouTube, and incredible strength of Google Cloud services, well ahead of what people think. Quantum computing is just a long-term project.”
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 339
Cramer, whilst discussing market sentiment toward stocks like Amazon.com, Inc. (NASDAQ:AMZN) that are tied to the data center theme, said:
“Today we’ve got a defense of our large-cap tech companies, which have been endlessly targeted by our European allies. These, these countries, they’ve used our tech companies, Amazons, the Alphabets, the Apples like honeypots. Now when it happens, our government will retaliate for a similar amount of money. No more plunder… Suddenly the data center feels fragile. The tech titans, Amazon, Alphabet, Meta, Oracle, Microsoft, throw in Tesla, have been dependent on this data center and the spend.”
Amazon (NASDAQ:AMZN) has become a major presence in the global technology sector, with a diverse range of offerings that include e-commerce, advertising, and subscription services. Mar Vista Investment Partners, LLC stated the following regarding the company in its Q4 2024 investor letter:
“Amazon.com, Inc.’s (NASDAQ:AMZN) profitability was the key highlight of the third quarter financial results, with AWS and International Retail achieving record operating margins, and North America Retail posting its second-best margin in five years. Even more impressive was the fourth quarter operating income forecast, projecting up to $20 billion, significantly exceeding the expected $16 billion and suggesting a record 11% margin. This exceptional performance was driven by economies of scale, logistics efficiencies, successful AI implementations, increasing ad revenue, and accelerated AWS growth.
We keep our investment in Amazon due to several factors: AWS growth has further potential, Amazon Prime Video monetization is in its initial stages, and the company is expanding into promising sectors like Pharmacy and Logistics. Furthermore, with strengthening profitability and cash reserves exceeding $100 billion, the possibility of substantial capital returns increases. By continuing to innovate and invest in technologies like AI and cloud computing, Amazon is well-positioned to keep its competitive edge.”
While we acknowledge the potential of Amazon.com, Inc. (NASDAQ:AMZN) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AMZN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.
