We're trimming an AI winner and putting some of the proceeds into a data center power play

Published Tue, Jun 18 20249:20 AM EDT

Shortly after the opening bell, we'll be selling 10 shares of Broadcom at roughly $1,853 and buying 55 shares of Dover at roughly $179. Following Tuesday's trades, Jim Cramer's Charitable Trust will own 65 shares of AVGO, decreasing its weighting in the portfolio to 3.54 %from 4.07% and 305 shares of DOV, increasing its weighting to 1.63% from 1.35%. We're finally trimming Broadcom now that we are no longer restricted from trading the stock. This sale reflects what we would have done last Friday. This semiconductor stock and software company has been an absolute race horse since reporting a beat and raise quarter last Thursday, driven by AI-related revenue and execution on its integration of VMware. AVGO YTD mountain Broadcom YTD Adding to the enthusiasm was the announcement of a 10-for-1 forward stock split, which came on the heels of one from our other chip name Nvidia . Post-earnings, Broadcom has been anointed by many as the second best chip stock to play the artificial intelligence theme — a view we've held for nearly a year. With the market catching up to our thinking, we don't want to be greedy during this parabolic move. Broadcom has rallied 30% over the past seven sessions before Tuesday's open. From this sale, we'll lock in a fantastic gain of more than 112% on stock purchased in August 2023. DOV YTD mountain Dover YTD We'll put more than half of the Broadcom sale proceeds to scale further into Dover, which also benefits from the data center infrastructure investment cycle. Dover's Colder Products Company subsidiary makes thermal connectors used in the liquid cooling of data centers and is a key ecosystem partner of Nvidia 's AI factories. This group has come under fire lately on concerns around the energy efficiency gains of Nvidia's Blackwell next-generation GPU (graphics processing unit). However we still think the long term power demand story is strong because of how early it is in the investment cycle. That data center energy play is also why we're in electrical component and power management giant Eaton . In essence, the more chips in circulation means greater power demand. Outside of AI, Dover has several other business lines with the potential to grow at a double digit clip. Those include heat exchangers, CO2 systems, and biopharma components. (Jim Cramer's Charitable Trust is long AVGO, ETN DOV. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.