Cramer Trust Trims Eaton Stake to Reduce Data Center Risk

Jim Cramer's Charitable Trust executed a sale of 50 shares of Eaton Corporation on Monday morning at a price of approximately $349 per share. The transaction reduces the trust's total holding to 175 shares. This move decreases the weighting of Eaton in the portfolio from 2% to 1.6%. The sale secures a gain of roughly 47% on stock originally purchased in December 2023.

The reduction in holdings reflects a strategic shift to lower the portfolio's dependence on the data center sector. Cramer announced this intent during the trust's annual meeting on Friday. He expressed concern that a potential economic slowdown following the midterm elections could affect industry growth. The primary worry involves major technology companies, known as hyperscalers, potentially reducing their capital expenditure plans for 2027.

Such a reduction in spending would impact suppliers like Eaton. The construction of new data centers has become more complex, and a pullback by the largest buyers would create ripple effects throughout the supply chain. Cramer stated he intends to continue cutting exposure to this specific buildout to mitigate these risks. The trust aims to avoid being overexposed if hyperscalers rethink their spending commitments.

Eaton recently reported quarterly results that exceeded analyst expectations for both revenue and adjusted earnings per share. The CNBC Investing Club team characterized the performance as a fantastic quarter. Order book data demonstrated broad strength across various divisions. Orders in Electrical Americas increased by 39% on a rolling 12-month basis. Orders in Electrical Global rose by 51%, while Aerospace orders grew by 20%.

Despite these strong financial indicators, the trust views the current concentration in data centers as a risk factor. The segment represented about 21% of Eaton's sales in 2025. This share is expected to rise further by 2027 after the company completes the separation of its Mobility business. The trust's decision to sell a portion of its position allows it to book profits while managing the risk associated with this growing revenue dependency.

The trust remains long in Eaton stock. Under the rules of the Investing Club, subscribers receive a trade alert before any transaction occurs. Cramer waits 45 minutes after sending an alert before buying or selling a stock for the charitable trust. If a stock has been discussed on CNBC television, he waits 72 hours before executing the trade.

The data center sector has stabilized following a sell-off last Thursday. The trust's actions align with a broader trend of profit-taking in high-growth tech stocks. The sale was completed shortly after the opening bell on Monday.