CNBC’s Jim Cramer said Monday that the latest chapter in the artificial intelligence boom is reviving memories of the excesses that fueled the dot-com bubble.
“I lived until 2000,” said the “Mad Money” host. “I don’t want a sequel.”
On Sunday, the Wall Street Journal reported that Nvidia was discussing a $250 billion backstop for OpenAI that would help finance a 10-gigawatt artificial intelligence data center campus in Ohio. CNBC confirmed the report on Monday, while Nvidia declined to comment. The proposed guarantee would support the project’s lease and construction debt, not the Nvidia chips installed inside the facility. Shares of Nvidia fell more than 4% on Monday, dragging many semiconductor stocks down with it.
The talks are the latest example of the increasingly circular nature of AI funding. Nvidia has invested in several companies that are major customers of its chips, including a $30 billion investment in OpenAI in March and a $10 billion investment in Anthropic last year. The chip maker has also supported several neocloud providers that lease Nvidia-powered computing capacity to customers. Nvidia said that investment supports the growth of the AI ecosystem while providing attractive long-term returns.
Cramer said the cycle of the program reminded him of the late 1990s, when telecommunications equipment makers helped customers finance large purchases to fuel growth. While those deals initially boosted sales, he recalled that many came at a time when captive buyers could no longer pay, causing huge losses for suppliers and investors alike.
“What we learned in 2000 is that you don’t lend to companies that buy your property,” said Cramer.
Cramer stressed that he still considers Nvidia a very strong company and does not predict a repeat of the dot-com crash. Instead, he said history shows that investors can quickly lose confidence when suppliers rely too heavily on high-spending customers who depend on continued access to cash.
“If the buyer, in this case, OpenAI, can afford these chips, maybe because they’re public … then Nvidia is in a very good position,” Cramer said. “If the buyer can’t pay, that’s a different story.”
OpenAI privately filed for an initial public offering in June, but has not yet announced a timeline for its initial public offering. The company was valued at more than $800 billion by private equity investors in March as it scrambles to ramp up the computing infrastructure needed to power its artificial intelligence models while competing against mainstream rivals. Alphabets again Meta.
Cramer said the risk extends beyond Nvidia because a growing number of companies now depend on continued investment in AI infrastructure.
“A lot of companies rely on the data center for their money,” he said. “If the market decides it doesn’t want to fund more data centers, and the companies themselves don’t have money, or don’t make money, then we’ll be back in 2000.”
While Cramer said Nvidia has the financial resources to support projects of this scale, he said strong balance sheets alone weren’t always enough to protect companies from collapse when customers were overextended.
“Nvidia shouldn’t be making these guarantees even if they have all the money in the world. It’s just history, that’s all, just history,” he said.
