Was Jim Cramer Right About Abercrombie & Fitch? Why AI-Driven Energy is the Better Bet Now
79min read In May 2024, Jim Cramer famously endorsed Abercrombie & Fitch (NYSE:ANF), calling it "the best retailer he followed at the time." While ANF briefly surged 24% post-endorsement, its trajectory since then has been a stark contrast to the explosive growth of AI-driven energy infrastructure stocks. As retail struggles with shifting consumer preferences and rising costs, the energy sector—bolstered by AI’s insatiable demand for computing power—is emerging as a far more compelling investment opportunity.
ANF’s Underperformance: A Cautionary Tale
Cramer’s endorsement on May 17, 2024, initially sparked optimism. However, the stock’s subsequent performance reveals the risks of betting on legacy consumer brands in a volatile market.
The data shows ANF’s stock peaked at $103 in early 2025 before collapsing 9% after its Q4 2024 earnings report, despite beating revenue and EPS estimates. Analysts cite concerns about rising freight costs, tariff pressures, and a 70 basis point drag from foreign currency. Even JPMorgan, which once rated ANF "Overweight," trimmed its price target to $142—a 6% discount to its current price.
The broader retail sector faces headwinds:
- Consumer Shifts: Younger demographics are prioritizing experiences over apparel.
- Margin Pressure: ANF’s 2025 guidance projects only 3–5% sales growth, while costs escalate.
AI-Driven Energy: The Growth Engine of Tomorrow
While ANF falters, AI’s energy demands are fueling a transformative boom in infrastructure. Data centers—now the backbone of AI training and inference—are driving a 12% annual rise in global electricity consumption.
The numbers are staggering:
- 2024: 415 terawatt hours (TWh), or 1.5% of global electricity use.
- 2030 Projections: 945 TWh (3% of global use), with AI workloads accounting for 27% of growth.
This surge is creating opportunities in two key areas:
1. Power Infrastructure: Companies like Vistra (VST) and Constellation (CEG) are upgrading grids and deploying renewables to meet rising demand.
2. AI-Optimized Energy Solutions: Firms such as Digital Realty (DLR) and Eaton (ETN) are integrating AI to improve grid efficiency, reduce outages, and manage renewable intermittency.
Why AI Energy Outperforms ANF
The contrast is stark:
- Growth vs. Stagnation: AI energy is a $945 billion industry in 2030—ANF’s entire market cap is just $4.3 billion.
- Scalability: Data centers are expanding globally, while ANF’s physical stores are constrained by geography and demographics.
- Innovation: AI’s "Mixture of Experts" models (e.g., DeepSeek) are cutting energy use by 94%, but ANF can’t innovate its way out of a saturated market.
Actionable Investment Strategy
Investors should pivot from fading retail brands to energy infrastructure poised for AI-driven growth:
1. Buy Power Infrastructure Leaders: Vistra (VST) and Constellation (CEG) are scaling renewables and grid upgrades.
2. Target AI-Optimized Energy Tech: Digital Realty (DLR) and Eaton (ETN) are integrating AI to boost grid reliability and reduce costs.
3. Avoid ANF: Its 7% downside risk (per GuruFocus) and lack of moat make it a speculative bet at best.
Conclusion: The Future is Powered by AI
Jim Cramer’s ANF endorsement was a flash in the pan—a relic of a bygone era when retail could thrive on brand loyalty alone. The world now runs on data, and the companies enabling that transition—through smarter grids, cleaner energy, and AI-optimized systems—are the true growth engines of the next decade.
The writing is on the wall: rotate out of retail and into energy infrastructure now—before the market fully prices in this seismic shift.
The choice is clear: Bet on the past, or invest in the future.
