Summary:
⚈ Vertiv’s strong rally helped support Cramer’s bullish stance.
⚈ Some warn the data center boom may be nearing a bubble.
Though CNBC’s Jim Cramer is arguably best known for making perfectly-timed wrong calls, his most persistent stock pick has been the wildly successful semiconductor giant Nvidia (NASDAQ: NVDA).
In an April 23 X post, Cramer apparently revealed his favorite sector for 2025, opining that, despite what the trading activity suggests, data centers remain a particularly enticing investment.
The Mad Money host and former hedge fund manager’s ‘judgement’ is a continuation of his earlier stance on the industry. In February, he issued a similar recommendation, explaining that data centers are the dominant theme in the 2025 market, even if the fact isn’t immediately obvious.
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.
Vertiv stock’s Wednesday rally vindicates Cramer’s optimism
On April 23, the data center infrastructure provider Vertiv (NYSE: VRT) seemingly proved Cramer’s thesis correct, as VRT shares soared more than 18% in the pre-market on Wednesday following a strong quarterly report and even stronger forward-looking guidance.
Though Vertiv stock could not quite maintain the massive upside, it nonetheless ended the session 8.64% up at $78, demonstrating investor confidence in both the company and the industry.
Are data centers a Jim Cramer or an ‘Inverse Cramer’ trade?
Elsewhere, there is some indication that data centers could be more of an ‘inverse Cramer’ trade. Though the sector has been booming in recent years as technology firms scramble to meet the infrastructure demands of artificial intelligence (AI), some cracks have also started showing.
Most notably, Microsoft (NASDAQ: MSFT) elected to downscale on some of its data center projects while Alibaba (NYSE: BABA) director Joe Tsai warned that the boom has, in fact, turned into a bubble that could erase much of the current generation of providers in an event akin to the Dot-com bubble.
Featured image via Shutterstock
