On CNBC’s Squawk on the Street Monday morning, Jim Cramer said the tape has soured on the trade that carried the market for most of the past year. “We’re defaulting to all right, give me anything but tech, give me anything but data center. We’ve got. They dug their own graves,” he said, describing money leaving hyperscaler capex plays and moving into enterprise software and pharmaceuticals.
David Faber pressed on the mechanics. “There is a part of tech that’s showing some momentum. And interestingly, it’s of course, well, if we don’t move as quickly as might otherwise be the case, because the data center opposition is such that things are not getting built as quickly. Well, who’s the potential beneficiary? Software companies,” he said.
The segment framed a rotation triggered by bond market volatility and spreading political opposition to data center construction in states including Texas, Pennsylvania, and Virginia. The names Cramer and Faber circled included ServiceNow (NYSE:NOW | NOW Price Prediction), Salesforce (NYSE:CRM), Adobe (NASDAQ:ADBE), and Johnson & Johnson (NYSE:JNJ).
Data Center Backlash Is Real Right Now
Cramer’s sharpest claim is that the backlash is self-inflicted. “They fooled people. Some people thought it was good. Some people thought it was bad. Whatever they wanted to do, it was the wild west of data centers. It would have been better had they made an agreement ahead of time,” he said.
Whether community objections are fair does not change the outcome for investors. A delayed project remains delayed regardless of the merits.
State-level friction is now on record. Colorado Legislative Council Staff cataloged 2026 state actions covering rate design, cost-shifting, and permitting for large-load projects, including California Senate Bill 57, Illinois Senate Bill 25 requiring Clean Air permits for data center construction, and Maryland Senate Bill 937.
PJM Interconnection’s independent market monitor concluded that data center load growth is the primary reason for recent and expected capacity market conditions, the kind of grievance that hardens political opposition and slows approvals.
Software Beneficiary Case Deserves Scrutiny
Faber’s logic is that constrained capacity drives value to companies that sell efficiency on existing infrastructure. ServiceNow’s Q2 results support this, with subscription revenue of $3.877 billion, up 23% year-over-year in constant currency, and management stating that ServiceNow AI ACV exceeded expectations, surpassing $1 billion.
Salesforce tells the same story with different vocabulary. Marc Benioff described Agentforce ARR surpassing $1 billion and combined AI and data ARR reaching $3.4 billion, alongside a $25 billion accelerated share repurchase disclosed in its Q1 FY2027 press release.
The rally shows in the tape. NOW is up 29.63% over the past month, CRM is up 27.74%, and ADBE is up 22.73%, though all three remain down year-to-date.
The insulation argument has a hole. Every platform ultimately runs on the same compute utilities that are being fought over, and ServiceNow’s CFO flagged that accelerating AI adoption and more customers utilizing hyperscale partnerships are pressuring subscription gross margin, the cost side of the same constraint.
Pharma Rotation Rewards Balance Sheets More Than Pipelines
Cramer pointed to Johnson & Johnson’s balance sheet and pipeline. Joaquin Duato said J&J has 28 products and platforms that each generate more than $1 billion in annual sales, with worldwide Q2 sales of $25.3 billion, up 5.6% operationally.
That is a defensive story with a low beta of 0.231, and JNJ is up 33.4% year-to-date, typical of a rate-driven rotation into healthcare.
Merck (NYSE:MRK) differs. Rob Davis pointed to “greater than $70 billion of commercial opportunity we have from over 20 new products”, and MRK is up 45.25% year to date on pipeline milestones driving the move.
Moderna (NASDAQ:MRNA) is the odd one out. MRNA is up 115.47% in the past week alone on melanoma vaccine data, with Merck showing a 49% reduction in recurrence/death risk versus KEYTRUDA alone, and Reddit sentiment has run very bullish, with scores ranging from 78 to 95, a speculative catalyst trade on clinical data.
Buyback Signal Is the Sharpest Idea
Cramer said “we are in an irrational market” where stock performance is set by buyback size rather than fundamentals. Salesforce is the cleanest example, having retired 103 million shares, representing 11% of shares outstanding through a debt-funded ASR.
When a market rewards share count reduction that aggressively, it tells you investors currently trust financial engineering more than revenue growth. That reflects a stance about demand durability.
The rotation works only if software winners convert AI usage into resolutions customers pay for, and if pharma pipelines survive regulatory contact. ServiceNow’s line that “Customers aren’t paying us for tokens, they’re paying for resolutions” is the version of that bet worth watching.
Data center delays can end as quickly as they began, and a single disappointing pipeline readout can undo months of pharma outperformance. The buyback frustration Cramer voiced is likely the more durable observation.
Contact [email protected] for any questions or corrections.
Top Gaining Stocks
Top Losing Stocks