The wave of artificial intelligence (AI) and data center development is now spreading to almost all sectors of the global economy. CNBC market commentator Jim Cramer described the AI revolution as a phenomenon that is difficult to stop, while emphasizing that investors in AI-related sectors are enjoying a huge profit surge by 2026 and beyond.
According to him, this year's first-quarter earnings season showed a boom in profits among companies directly involved in AI and data centers. The increase also involved utilities, energy, industrial and technology companies as demand for AI infrastructure continued to increase.
The 5-Layer Cake Concept
To explain how the AI ecosystem is developing, Cramer refers to the concept of a "five-layer cake" introduced by NVIDIA CEO Jensen Huang. The concept describes five layers of industries that are interconnected and benefit from global AI development.
The first layer is electricity, which is the basis for AI data center operations. Modern data centers require a huge amount of energy to operate AI model training and high-performance computing systems. Among the companies mentioned as benefiting are Vistra, GE Vernova and Constellation Energy.
The second layer involves the semiconductor industry. Cramer said AI requires high-powered processing chips, thus strengthening the position of companies such as NVIDIA, AMD and Intel. In addition, storage and memory companies such as Western Digital and Micron Technology are also receiving investor attention. At the same time, chip equipment manufacturers such as ASML and Applied Materials are also on the market radar.
The next layer is the hardware and infrastructure that supports AI operations. Cramer named Dell Technologies as one of the major players in providing data center servers, while Vertiv provides essential cooling systems for large-scale data centers. Companies such as Eaton are involved in electrical and power management solutions.
In the networking sector, Cisco Systems and Arista Networks are mentioned as the backbone of data connectivity, while Corning supplies fiber optic cables that connect the entire data center ecosystem. At the same time, supporting power system suppliers such as Caterpillar and Cummins are also in high demand to ensure data center operations run smoothly.
The fourth layer is AI models and cloud computing. Cramer said the growth in the use of AI models is giving the world's largest cloud providers such as Amazon through AWS, Microsoft through Azure, and Google through Google Cloud a huge advantage.
The final layer is AI applications that are used directly by consumers and businesses. In this category, Cramer cited OpenAI and its ChatGPT product as among the main examples of AI applications that have sparked an explosion in the use of the technology around the world.
Overall, Cramer stressed that AI is now becoming a large-scale economic driver. Huge capital flows are entering the utilities, energy, data centers, semiconductors and technology sectors as demand for AI increases. According to him, investors who own index funds such as the S&P 500 may receive some of the benefits, but those who manage to choose the right AI stocks have the potential to enjoy larger returns over the next few years.
