Was Jim Cramer Right About Meta Platforms (META)? A Shift Toward AI Infrastructure Plays

Julian CruzMonday, Jun 9, 2025 11:39 pm ET
25min read

The tech sector has been a battleground of optimism and skepticism, but few names have drawn as much attention as Meta Platforms (META). In 2024, Jim Cramer, the outspoken host of Mad Money, repeatedly praised META's AI investments and dominance in digital advertising, forecasting a bright future for the stock. Now, with META's shares up over 50% since his initial recommendations, investors might wonder: Was Cramer's bullish stance justified, or has the market already priced in his vision? And more importantly, where should investors turn next?

Cramer's Case for Meta: AI as the Growth Engine

Cramer's enthusiasm for META began in August 2024, when he highlighted the company's 3+ billion monthly active users and its AI platform, including the Llama series of models. He argued that META's ability to monetize AI through advertising and its underappreciated valuation—forward P/E of 24x versus peers like Apple (30x)—made it a “hidden gem.” By November 2024, he doubled down, claiming the market “underestimates Meta's dominance in digital advertising” and its potential to become the largest generative AI platform by year-end.

The results were undeniable: META's stock rose 39.66% from August 2024 to early 2025, aligning with Cramer's calls. However, this surge came amid mixed signals. While Meta's Q1 2024 earnings showed strong revenue growth (+27% YoY), its AI spending spooked investors, leading to a post-earnings dip. Cramer's defense—“buy the dip”—proved prescient, but his bullish stance now faces a critical question: How much more upside remains?

The Case for Shifting Focus: AI Infrastructure's Undervalued Gems

While META's rise validates Cramer's short-term call, the long-term story of AI lies elsewhere: the infrastructure enabling it. Hedge funds are already pivoting. According to Goldman Sachs' Q2 2024 analysis, Amazon (AMZN) and Microsoft (MSFT)—both AI cloud leaders—ranked as the top two holdings among hedge funds. Meanwhile, NVIDIA (NVDA), the GPU kingpin, saw 41 hedge funds list it as a top 10 holding, reflecting its role in AI's hardware backbone.

But the real opportunity may lie in undervalued infrastructure plays. Consider:
1. Taiwan Semiconductor Manufacturing (TSMC):
- TSMC's 3nm chip technology dominates global production, securing 90% market share in advanced semiconductors.
- Valuation: TSMC trades at an EV/Sales ratio of 12.1x, far below NVIDIA's 30.7x, despite its critical role in AI hardware.

  1. Utilities and Renewable Energy:
  2. Data centers require massive power—doubling electricity demand by 2026—and companies like NextEra Energy (NEE), a leader in renewable infrastructure, are poised to benefit.

  3. Hedge Fund Interest: Utilities saw a 15% increase in institutional ownership in 2024 as investors bet on AI's energy needs.

  4. Fiber and Connectivity:

  5. Crown Castle (CCI), a top tower and fiber provider, offers exposure to 5G and AI-driven data demands. Its EV/EBITDA ratio of 14.5x is compelling versus peers.

Why Pivot Now?

While META's AI ambitions remain valid, its stock's valuation and execution risks suggest caution. Cramer's “buy” signal has already been priced in, and competition from rivals like DeepSeek (which triggered a 13% drop in NVIDIA's shares in January 2025) highlights the sector's volatility. Meanwhile, infrastructure stocks offer safer, scalable growth:
- NVIDIA's EV/EBITDA of 47.8x vs. TSMC's 21.3x signals a valuation gap.
- Utilities and semiconductors face less regulatory scrutiny than Big Tech, with steady demand from hyperscalers like AWS and Azure.

The Bottom Line: Rotate to the Foundation of AI

Investors should heed Cramer's wisdom but not cling to it. While META's AI future is bright, the real growth lies in the infrastructure enabling it—semiconductors, data centers, and utilities. With hedge funds already overweighting these sectors and valuations still favorable, now is the time to shift allocations.

Recommendations:
1. Add TSMC (TSM) for its semiconductor leadership at a reasonable multiple.
2. Buy NextEra Energy (NEE) to capitalize on AI's energy demands.
3. Monitor NVIDIA (NVDA) for dips but prioritize diversification into undervalued peers.

The AI revolution isn't just about algorithms—it's about the infrastructure that powers them. Follow the data, not just the headlines.

Disclosure: This analysis is for informational purposes only and not a recommendation. Consult a financial advisor before making investment decisions.