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.

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.”