Intel CEO Lip-Bu Tan says data center CPU-GPU ratio is flipping. Cramer argues the market is punishing spend without profit. Amazon, Apple, Meta, Microsoft report this week.
Intel closed down nearly 8% Friday, even after a quarterly report that CEO Lip-Bu Tan called spectacular. The stock had surged more than 10% in after-hours trading Thursday. The broader tech selloff swallowed the gain.
The move was not about Intel. It was about a market that has lost patience with big AI capital spending. Alphabet's stock tumbled 40 points from a secondary offering price after the company raised its capex guidance again. Google Cloud had a strong quarter. The cash flow statement told a different story. Negative free cash flow from a company that once defined balance-sheet strength. Investors are no longer rewarding spend. They want returns.
Jim Cramer, whose Charitable Trust is the portfolio behind the CNBC Investing Club, has been preparing for this shift. The Trust has been consolidating holdings in traditional technology – semiconductors, software, data center – and moving into other kinds of tech, such as pharma and aerospace. Within semis, the Trust made Intel the focal point. The bet was that the ratio of graphics processing units to central processing units in data centers was about to flip.
Tan told Cramer last Thursday that the ratio of GPUs to CPUs has moved from four to one to one to one. Soon, he said, data centers will have four CPUs for every GPU. That would mean more demand for Intel's processors, which have historically been the backbone of data center computing. The gross margins on GPUs are far higher. A well-run Intel can capture volume and improve its own margins.
Tan also knows packaging, the process of bundling chips to make them more powerful as node shrinking becomes harder. Jensen Huang, Nvidia's CEO, has said Moore's Law has run out. Tan's packaging expertise, Cramer argued, gives Intel an edge as the industry pivots.
Cramer's thesis goes beyond the data center. The next wave of demand, he said, will come from AI agents and robots. Those run on CPUs, not just GPUs. B2B robotics, he said, is a huge market that cannot be left to Tesla alone. The hyperscalers will have to offer them. That creates a sustained demand driver for Intel's core products.
Apple, by contrast, has not spent hundreds of billions on AI. Its stock is having its best month in three years. Cramer called that decision brilliant, intentional or de facto. Apple chose to make the best handhelds, which allowed it to pick and choose which hyperscaler chatbot to affiliate with. Google, he noted, had to virtually give away its AI search because Gemini is not as strong as Anthropic's Claude.
The test for the entire tech trade comes this week. Amazon, Apple, Meta, and Microsoft report earnings. A beat and raise from any one hyperscaler could change the equation. Until then, the market is punishing spend without profit.
The Trust keeps tilting away from traditional tech. Intel is the single old-tech name it backs. The only way to amortize the AI spend, Cramer said, is with agents. Agents run on CPUs.
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