Jim Cramer: AI Trading Logic Shifts, Suppliers like Micron, Intel to Benefit from Massive Spending Cycle

BlockBeats News, July 1st. Former hedge fund manager and CNBC host Jim Cramer stated that Wall Street's pricing logic for AI trading has changed, with the market now rewarding tech companies providing products for the AI boom rather than clients footing the bill for AI investment. Cramer mentioned that in June, the combined market capitalization of the "Big Seven" evaporated by around $2.3 trillion, leading investors to question whether these companies' massive AI expenditures will eventually generate sufficient profit and free cash flow. Amazon, Alphabet, Microsoft, and Meta are among the companies with the largest AI data center spending, and he believes these mega-scale cloud service providers are becoming victims of their own AI ambitions.

Cramer noted that while these companies have the financial capacity to continue investing billions of dollars, the market demand for computing infrastructure has outstripped supply, driving up costs of key components like memory chips and networking equipment. This shift has favored the "sellers of the shovels" in the AI boom rather than those bearing the expenses. He stated: "The companies with the highest gains are the exact opposite of the Big Seven, producing products that are in short supply and facing overwhelming demand."

Cramer pointed out that memory chip manufacturers Micron Technology and Sandisk, as well as Intel, Marvell Technology, and AMD, were among the biggest winners in the second quarter. He mentioned that supply-demand imbalances have propelled strong profit growth for these companies, leading to continuous analyst upgrades and target price hikes. Among them, Cramer identified Intel as his new top pick, stating that CEO Pat Gelsinger is revitalizing the chipmaker, and Intel is poised to benefit from the growth in CPU, advanced chip packaging, and onshore semiconductor manufacturing demand in the United States.