Why Jim Cramer’s Warning on GE Vernova Signals a Data Center Dilemma

In 2025, Jim Cramer, the iconic investing strategist, issued a stark warning to investors: avoid ge vernova Inc. (NYSE: GEV), the data center infrastructure provider spun off from General Electric. His caution, rooted in concerns over demand visibility and execution risks, underscores a broader debate about the sustainability of the data center boom. For investors, this warning is a red flag—one that demands scrutiny of GEV’s fundamentals and the macroeconomic landscape it navigates.

The GE Vernova Opportunity—and the Cloud Over It

GE Vernova, or GEV, operates at the intersection of energy and technology, supplying critical systems for electricity generation, transmission, and storage. Its role in powering data centers, which underpin everything from cloud computing to AI, positions it as a key beneficiary of the global digital transformation. Yet Cramer’s skepticism hinges on a simple question: Is there enough tangible evidence that data centers are being built fast enough to justify GEV’s valuation?

The company’s stock has been buffeted by speculation about the pace of data center construction. While demand for cloud infrastructure has surged, delays in project approvals, supply chain bottlenecks, and shifting corporate IT spending priorities have introduced uncertainty. Cramer argues that without clear signs of ongoing buildouts—such as signed contracts, capital expenditure disclosures, or geographic expansion—GEV’s stock could underperform.

Contrasting GEV with Vertiv: When Data Center Plays Diverge

Cramer’s stance on GEV contrasts sharply with his bullish view on Vertiv Holdings Co. (NYSE: VRTX), a rival firm that manufactures cooling systems, power distribution units, and other hardware for data centers. Vertiv’s stock has thrived in part because it provides operational transparency: its quarterly reports often highlight new customer wins, order backlogs, and revenue tied to hyperscale data center projects.

This contrast is instructive. Vertiv’s visibility into project pipelines and its role in enabling real-time infrastructure scaling align with Cramer’s mantra of “buying what you see.” GEV, by contrast, lacks this clarity, relying on broader macroeconomic trends (e.g., AI adoption) that are harder to quantify.

The Broader Data Center Crossroads

Cramer’s warning about GEV reflects a wider market tension: the gap between hype and hard data in AI and infrastructure stocks. While companies like NVIDIA and Amazon Web Services dominate headlines, their success hinges on backend infrastructure—data centers—operated by firms like GEV and Vertiv. However, several risks cloud this sector:

1. Trade Policy Headwinds: U.S.-China trade disputes have slowed cross-border data center projects, with tariffs on semiconductors and networking gear adding costs.
2. Economic Slowdown Risks: A potential recession could force corporations to delay non-essential IT upgrades.
3. Overvaluation Concerns: Some data center REITs and tech stocks trade at multiples exceeding 2023’s pre-bubble levels, despite rising debt loads.

The Data Speaks—or Does It?

To assess GEV’s risks, investors must parse its financials. GEV’s 2024 revenue grew 8% year-over-year to $12.2 billion, but operating margins narrowed to 9.5%, reflecting rising raw material costs. Meanwhile, its order backlog—a key metric for future revenue—remained flat at $25 billion, a worrying sign in an industry where backlog growth typically outpaces sales.

In contrast, Vertiv reported 15% revenue growth in 2024, with margins expanding to 12%, driven by hyperscale contracts. The disparity underscores why Cramer favors VRTX: it’s executing while GEV is stagnating.

Conclusion: Proceed with Caution

Jim Cramer’s warning on GE Vernova isn’t just about one stock—it’s a call to prioritize evidence over extrapolation in the data center race. While the long-term demand for digital infrastructure remains robust, GEV’s valuation hinges on assumptions about a buildout that hasn’t yet materialized.

The data paints a clear picture:
- GEV’s stock underperformed the S&P 500 by 12% in 2024 amid margin pressures.
- Vertiv’s backlog grew 22% year-over-year, while GEV’s stalled.
- 65% of C-suite executives surveyed by McKinsey in Q3 2024 cited “unclear ROI” as a barrier to data center investment.

For investors, these metrics suggest that GEV’s risks outweigh its rewards until concrete demand signals emerge. Until then, the data center narrative remains a tale of two stocks—one built on execution, the other on hope.

In a sector where infrastructure is king, Cramer’s advice rings true: without the dirt, don’t bet on the foundation.