Jim Cramer warns AI’s circular financing frenzy echoes the dot-com bubble
The latest chapter of the AI boom is stirring up memories of the excesses that fueled the dot-com bubble, CNBC’s Jim Cramer said Monday.
“I lived through the year 2000,” the “Mad Money” host said. “I don’t want it to continue.”
Sunday, The Wall Street Journal reported HE Nvidia He was discussing a $250 billion boost for OpenAI that would help fund a planned 10-gigawatt AI data center campus in Ohio. CNBC confirmed the report on Monday and Nvidia declined to comment. The proposed guarantee would support the project’s lease and construction debt, not the Nvidia chips used on-site. Shares of Nvidia fell more than 4% on Monday, and many semiconductor stocks fell along with it.
The discussions are the latest example of the increasingly cyclical nature of AI funding. Nvidia has invested in several companies that are big customers of its chips, including a $30 billion investment in OpenAI in March and a $10 billion investment in Anthropic last year. The chipmaker has also supported multiple neocloud providers that lease Nvidia-powered computing capacity to customers. Nvidia said these investments support the growth of the AI ecosystem and offer attractive long-term returns.
Cramer said the cyclicality of regulation reminds him of the late 1990s, when telecom equipment manufacturers helped customers finance large purchases to fuel growth. Although these deals initially boosted sales, many unraveled as cash-strapped buyers could no longer make payments, leading to heavy losses for both suppliers and investors, he recalled.
“What we learned in 2000 is that you don’t lend money to companies that buy your goods,” Cramer said.
Cramer emphasized that he still sees Nvidia as an incredibly strong company and does not foresee a repeat of the dot-com crash. On the contrary, he said, history shows that investors can quickly lose confidence when suppliers become overly dependent on customers whose large expenditures depend on constant access to capital.
“If the buyer, in this case OpenAI, can actually pay for these chips, perhaps because they’re publicly traded… then Nvidia is in a terrific position,” Cramer said. “If the buyer can’t pay, that’s a different story.”
OpenAI confidentially filed for an IPO in June but has not announced a timeline for the IPO. The company was valued at more than $800 billion by private investors in March as it competed with rivals while also racing to expand the computing infrastructure needed to power its artificial intelligence models. Alphabet And Meta.
The risks extend far beyond Nvidia, Cramer said, as a growing number of companies now depend on continued investment in AI infrastructure.
“There are a lot of companies that rely on the data center for their revenue,” he said. “If the market decides it doesn’t want to finance more data centers and companies don’t have the money or can’t get paid, then we’re back to the year 2000.”
While Cramer said Nvidia has the financial resources to support projects of this scale, he argued that strong balance sheets alone are not always enough to protect companies from negative impacts if customers begin to overextend.
“Nvidia shouldn’t be making these guarantees even if it had all the money in the world. It’s just history, that’s all, it’s just history,” he said.
