Jim Cramer, CNBC’s market commentator, has identified companies and sectors that are likely to benefit from the wave of artificial intelligence (AI).
What Happened: Cramer believes AI will be crucial to significant market rallies in the coming years. “This technological revolution is crossing all barriers, even potentially becoming the heart of our national security apparatus,” Cramer said. He suggested that AI could be the key to substantial financial gains over the next half-decade, CNBC reported on Wednesday.
Companies like NVIDIA Corp NVDA, which produces graphics chips vital for generative AI, have seen significant growth recently. Cramer highlighted that the computing power required for AI-enabled machines is at the core of the current re-industrial revolution and will boost stocks from various sectors.
According to Cramer, the construction required for new data centers is one reason why stocks like Caterpillar Inc. CAT are performing well. Power management company Eaton Corporation PLC ETN and Vertiv Holdings Co VRT, which manages wiring in data centers, are also seeing gains due to increased demand.
Cramer also identified companies like Salesforce Inc CRM and ServiceNow Inc NOW, which manage and parse data, as potential beneficiaries of the AI wave. He also pointed out the importance of sustainable power generation utilities like Constellation Energy Corp CEG and natural gas companies like Enbridge Inc ENB in this new tech era.
“The AI revolution is already producing some of the most investible themes of all time,” Cramer concluded.
Why It Matters: Cramer’s forecast comes as AI stocks have been experiencing a boom, with companies like Super Micro Computer joining the S&P 500 Index.
However, Cramer has also expressed caution about certain AI stocks, such as Super Micro Computer Inc SMCI, which he believes has “gotten too hot”.
He earlier suggested alternative AI investments such as Dell Technologies Inc DELL, Advanced Micro Devices, Inc. AMD, and Cadence Design Systems Inc CDNS.
Meanwhile, Harvard economist Ken Rogoff has warned of a potential AI stock bubble, citing the expectation of AI remaining unregulated as a potential risk.
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