Jim Cramer explains why fossil fuels remain vital as the Big Tech boom continues

CNBC’s Jim Cramer on Thursday told investors that resources like fossil fuels will remain important and enable technological innovations, even as investments in renewable energy continue to grow.

“If we need more energy we’re going to get it from what comes out of the ground … fossil fuels that will power the data center, specifically natural gas,” he said. “You may be reluctant to invest in it, you might think who cares, but you need to know how vital all of this fossil fuel technology is to the growth of the Magnificent Seven.”

Cramer highlighted Big Tech’s “insatiable demand for energy,” saying that AI-forward companies like Meta, Nvidia, Google and Microsoft are building more and more data centers that guzzle electricity. And the grid can’t handle the power needed by these data centers, he added.

While the tech megacaps are investing heavily in nuclear energy, Cramer suggested that power won’t play a huge role in the data center for at least a decade. Nuclear plants are difficult to build, he said, and towns are reluctant to allow them nearby. He also reviewed GE Vernova‘s recent quarter, saying the company’s strength came from electrification and natural gas, not wind or nuclear power.

Cramer pushed back against the notion that combustion engines will become obsolete — a sentiment that Tesla CEO Elon Musk perpetuated during the electric vehicle maker’s earnings call Wednesday night. But Cramer also stressed that the conversation around fossil fuels extends beyond the automotive industry.

“This is not just a grudge match between the old and the new, a battle of electric vehicles versus internal combustion,” he said. “The truth is, fossil fuels are essential for a lot more than vehicles, like it or not.”

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Disclaimer The CNBC Investing Club Charitable Trust holds shares of Nvidia, Google, Meta and Microsoft.