Jim Cramer says the AI trade has shifted to suppliers as Intel surges 254% year to date

Jim Cramer says the AI trade has shifted -- and these stocks are leading now

CNBC's Jim Cramer on Tuesday offered up a straightforward framework for Wall Street's current approach to the artificial intelligence trade. "Wall Street's now rewarding tech companies with products in high demand and punishing their customers," the "Mad Money" host said. The shift comes as the "Magnificent Seven" collectively shed roughly $2.3 trillion in market value during the month of June as investors questioned whether the group's enormous AI spending will ultimately generate enough earnings and free cash flow to justify their decisions. The Mag 7 consists of Apple, Google parent Alphabet, Amazon, Microsoft, Meta, Nvidia and Tesla. The biggest spenders on AI data centers in the group are Amazon, Alphabet, Microsoft and Meta. Now, Cramer said these so-called hyperscalers have become victims of their own AI ambitions. The companies have the financial resources to keep pouring billions into AI, Cramer said, but demand for compute infrastructure has outstripped supply, driving up the cost of critical components such as memory chips and networking equipment. That dynamic, Cramer said, has rewarded the companies selling the picks and shovels of the AI boom rather than the companies footing the bill. "The biggest gainers are the exact opposite of the Magnificent Seven," he said. "They make products that are in short supply, with demand that's off the charts." Nvidia fits the bill as a key supplier of AI compute, but Cramer said the stock has fallen into the laggard camp due in large part to concerns about custom chip competition. Cramer pointed to memory chipmakers Micron and Sandisk, along with Intel, Marvell Technology, and AMD, as some of the second quarter's biggest winners. He said the supply-demand imbalance has fueled strong earnings growth and a steady stream of analyst upgrades and price target hikes across the group. Among the group, Cramer singled out Intel as his new favorite stock. He credited CEO Lip-Bu Tan with revitalizing the chipmaker, and said Intel is well-positioned to benefit from rising demand for CPUs, advanced chip packaging and domestic semiconductor manufacturing. Cramer's Charitable Trust, the portfolio run by CNBC's Investing Club, owns Intel shares. "It's a national treasure," he said. While Cramer said the Club continues own six of the Mag 7 constituents -- Tesla is the exception -- he thinks the suppliers will continue to benefit as long as demand for AI infrastructure outpaces supply. "Some of you may think that's unfair ... but the market has spoken and I don't know if it'll learn another language next quarter, let alone the rest of the year," he said.

Jim Cramer Says Wall Street Is Rewarding AI Makers While 'Punishing' Their Biggest Customers - Intel (NAS

Jim Cramer said Tuesday that Wall Street is increasingly rewarding companies supplying artificial intelligence infrastructure while punishing the technology giants spending heavily to build it. AI Suppliers Take The Lead Speaking on CNBC's Mad Money show, Cramer said investors are favoring chipmakers, memory companies and networking suppliers over hyperscalers committing hundreds of billions of dollars to AI infrastructure. "Wall Street is now rewarding tech companies with products in high demand and punishing their customers because they're spending too much and we don't know how it's is going to be profitable," Cramer said. He contrasted the performance of AI suppliers with that of the so-called "Mag Seven," arguing that the biggest winners over the past quarter have been companies selling critical components rather than buying them. Major technology companies have continued to invest hundreds of billions of dollars in AI infrastructure, even as investors debate when those investments will begin generating meaningful returns. Memory Makers Lead The Rally "Both stocks have more than tripled in the last three months," he added. Cramer also named Advanced Micro Devices Inc. (NASDAQ:AMD) among his AI infrastructure winners, citing its CPU and GPU businesses as critical to modern data centers. Cramer Calls Intel a 'National Treasure' Intel shares have surged 254.57% year to date and are up 511.07% over the past 12 months, making the stock one of the semiconductor sector's top performers. He added that Intel's foundry business could become another key growth driver, adding, "It could be the company to solve the memory shortage one day. National treasure." Price Action: The stock rose 6.01% to close at $139.63 on Tuesday, before climbing another 4.76% in extended trading. Benzinga edge rankings indicate INTC has a Momentum score in the 99th percentile, and a positive price trend across short, medium and long term. Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Photo courtesy: katz / Shutterstock.com Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.