This article presents an overview of Jim Cramer Thinks AI Revolution Can Boost These 5 Stocks. For a detailed overview of such stocks, read our article, Jim Cramer Thinks AI Revolution Can Boost These 10 Stocks.

5. Eaton Corporation PLC (NYSE:ETN)

Number of Hedge Fund Investors: 63

Power management solutions company Eaton is one of the stocks Jim Cramer believes can grow on back of the AI revolution. Cramer said that Eaton is among the top companies that will see huge demand to handle the excess burden on the “ailing” power grid caused by the rise of generative AI applications.

As of the end of the fourth quarter of 2023, 63 hedge funds out of the 933 funds tracked by Insider Monkey had stakes in Eaton. The most significant stake in the company is owned by Philippe Laffont’s Coatue Management which owns a $960 million stake in the company.

ClearBridge Sustainability Leaders Strategy made the following comment about Eaton Corporation plc (NYSE:ETN) in its Q3 2023 investor letter:

“While renewable stocks have come under pressure of late, energy efficiency and decarbonization remain strong drivers for our industrials holdings, where Eaton Corporation plc (NYSE:ETN) and Trane Technologies (TT) were strong contributors. Eaton, whose electrical equipment enables the electrification of the power grid and electrical vehicle charging infrastructure, is benefiting from tax incentives supporting clean energy, growth in reshoring and expanding manufacturing in North America and the need for grid resiliency amid broad demand for electrification.”

4. Vertiv Holdings Co (NYSE:VRT)

Number of Hedge Fund Investors: 75

Jim Cramer believes the ongoing AI and data structure revolution can boost Vertiv, the Ohio-based company that makes power management and cooling solutions for computing and data centers. Over the past one year Vertiv shares have gained an eye-popping 465%. Cramer said that had Vertiv been a part of the S&P 500, it would have been the index’s best performer.

As of the end of the fourth quarter of 2023, 75 hedge funds out of the 933 funds tracked by Insider Monkey had stakes in Vertiv, up from 66 funds in the previous quarter.

Baron Small Cap Fund stated the following regarding Vertiv Holdings Co (NYSE:VRT) in its fourth quarter 2023 investor letter:

“Vertiv Holdings Co (NYSE:VRT), a manufacturer of critical infrastructure equipment for data centers, continued its ascent, up 29% for the quarter. The company is benefiting from a robust demand environment as well as successful implementation of its strategy to improve margins. As one of the leading providers of precision cooling for data centers, Vertiv stands to benefit from the increasing adoption of artificial intelligence (AI), as AI-related servers have higher energy density, which will necessitate more complicated cooling solutions. During the quarter, Vertiv held its first Analyst Day, where it introduced long-term growth targets for revenue growth of 8% to 11% CAGR out to 2028 and 500 bps of margin expansion to 20% adjusted EBIT margins and $3 billion of share repurchases over that same time frame. We trimmed the position into strength, but we remain significant shareholders as we see substantial upside over the long term, as the company executes its strategy in a strong industry backdrop.”

3. Intuitive Surgical Inc. (NASDAQ:ISRG)

Number of Hedge Fund Investors: 82

Jim Cramer has long been a believer in Intuitive Surgical, the California-based company that makes robotic products for surgical procedures. In a latest program, Cramer, while talking about companies that could benefit from the AI-led disruption in various industries, named Intuitive and said he likes the stock “very much.”

In April 2023, Cramer had tweeted:

“Intuitive Surgical delivered on everything that it promised when they were on Mad Money last. Great job.”

Baron Health Care Fund stated the following regarding Intuitive Surgical, Inc. (NASDAQ:ISRG) in its fourth quarter 2023 investor letter:

“Additional tailwinds to performance came from robotic surgical system pioneer Intuitive Surgical, Inc. (NASDAQ:ISRG). We believe Intuitive Surgical will continue to innovate and launch new products that enhance surgical outcomes, and we think the company has a long runway for growth.

Intuitive Surgical, Inc. sells the da Vinci surgical robotic system for minimally invasive surgical procedures. The stock rose on investor speculation that the company could launch a new robotic system in 2024. We believe Intuitive Surgical will continue to innovate and launch new products that enhance surgical outcomes, and we think the company has a long runway for growth.”

2. ServiceNow Inc (NYSE:NOW)

Number of Hedge Fund Investors: 91

ServiceNow could benefit from the AI revolution because companies need software infrastructure to process and parse the massive data created by generative AI applications, according to Jim Cramer.

In December 2023, Cramer said that “a lot of people” feel that ServiceNow Inc (NYSE:NOW) has become the “barometer” of the broader AI industry. Cramer said the company has done an “amazing job.”

“Loving ServiceNow into the q because, among other things, it’s close to NVDA—Melius.”

Baron Fifth Avenue Growth Fund stated the following regarding ServiceNow, Inc. (NYSE:NOW) in its fourth quarter 2023 investor letter:

“ServiceNow, Inc. (NYSE:NOW) offers cloud-based solutions that improve workflow efficiency through automation and digitalization. The stock rose 26.4% in the fourth quarter, finishing the year up 82.0%. Stock appreciation was supported by strong quarterly results above expectations with 24.5% year-over-year subscription revenue growth in constant currency and 30% non-GAAP operating margins despite ongoing macro complexities. In addition, the stock benefited from growing investor expectations that the company would benefit from the integration of GenAI technology into its products, and a rise in software stocks more broadly. Management noted that key business drivers included strong traction with government customers, improving momentum with new customers, and budget consolidation into platforms like ServiceNow. In addition, the company launched its GenAI-supported product line, sold under a new higher-priced Pro Plus sku, at the end of the quarter and has already signed on multiple customers with hundreds more in the pipeline. The new product line should generate material efficiencies for customers as it improves their ability to automate and digitize, and hence we expect broader adoption of the Pro Plus sku, creating an additional growth engine for ServiceNow, supporting the company’s long duration of growth.”

1. Salesforce Inc (NYSE:CRM)

Number of Hedge Fund Investors: 131

Salesforce is one of the stocks that will benefit from the ongoing AI revolution, according to Jim Cramer. He thinks that the massive rise of data centers to handle generative AI applications means there would be a demand for software solutions like Salesforce to process and parse this data. Last month, Jim Cramer said 2024 would be a “great year” for Salesforce.

The company recently posted Q4 results. Adjusted EPS in the period came in at $2.29, beating estimates by $0.02. Revenue in the quarter jumped 10.9% year over year to $9.29 billion, surpassing estimates by $70 million.

Polen Focus Growth Strategy stated the following regarding Salesforce, Inc. (NYSE:CRM) in its fourth quarter 2023 investor letter:

“In the fourth quarter, the top relative and absolute contributors to the Portfolio’s performance were Netflix, ServiceNow, and Salesforce, Inc. (NYSE:CRM).

Salesforce has continued to grow its revenues at what we see as a healthy rate despite market concerns about the impact of the weaker macroeconomy on its business and penetration rates in its core CRM offering. Even its most mature and largest offerings, Sales Cloud and Service Cloud, are still growing revenue at double-digit rates. In addition, management realized that their cost structure, especially in salespeople, had gotten too bloated. Over the past year and a half, the company has run a much more streamlined expense structure that has led to strong operating margin expansion and earnings growth. Importantly, we do not feel Salesforce has cut into its innovation or sales muscle through these cost cuts but has eliminated unnecessary excess fat from the organization.”

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