More demand than supply gives companies an edge, Jim Cramer says

“Supply constrained,” are the two of the most important words CNBC’s Jim Cramer said he’s heard so far during earnings season and explained why this dynamic is favorable for companies.

“When you’re supplied constrained, you have the ability to raise prices, and that’s the holy grail in any industry,” he said.

Intel‘s strong earnings results were in part because of more demand than supply, Cramer suggested. He noted that the company’s CFO, David Zinsner, said the semiconductor maker is supply constrained for a number of products, and that “industry supply has tightened materially.”

Along with Intel, other tech names that are also supply constrained and performing well on the market include Micron, AMD and Nvidia, Cramer continued.

These companies don’t have enough product in part because the storage needs of artificial intelligence are incredible high, Cramer said. He added that he thinks demand has overwhelmed supply because semiconductor capital equipment companies didn’t manufacture enough of their own machines as they simply didn’t anticipate such a volume of orders.

Outside of tech, Cramer said he thinks airplane maker Boeing and energy company GE Vernova are also supply constrained, adding that he thinks the former will say it’s short on most of its planes when it reports earnings next week. GE Vernova is supply constrained with its power equipment, like turbines that burn natural gas, he continued, which is the primary energy source for the ever-growing crop of data centers.

GE Vernova and Boeing are also set to be winners because they make big-ticket items that other countries can buy from the U.S. to help close the trade deficit, Cramer added.

“In the end, we have more demand than supply in a host of industries and that’s the ticket for good stock performance,” he said. “I don’t see that changing any time soon.”

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Disclaimer The CNBC Investing Club holds shares of Nvidia and GE Vernova.