Wall Street pundit Cramer warns that NVIDIA's $250 billion deal hides risks akin to an internet bubble
Wall Street commentator Jim Cramer warned that NVIDIA plans to provide a $250 billion financing guarantee to OpenAI for building data centers, a model similar to the telecom industry's risks before the internet bubble in 2000. As a result of this news, NVIDIA's stock price fell by more than 4%. Cramer pointed out that if buyers cannot continue to pay, it will trigger a chain reaction, but this does not indicate a bearish outlook on NVIDIA itself
Jim Cramer, a well-known market commentator on Wall Street, warned on Monday about the latest massive financing arrangement between NVIDIA and OpenAI, stating that its structure resembles the dangerous patterns seen in the telecommunications industry before the internet bubble burst in 2000.
"I lived through 2000," said the host of "Mad Money." "I don't want to see a sequel."
Cramer's remarks come in the context of reports that NVIDIA is discussing providing approximately $250 billion in financing guarantees to OpenAI to support the construction of a 10-gigawatt artificial intelligence data center park in Ohio. The guarantee would cover the project's leasing and construction debt but would not include the NVIDIA chips deployed inside the data center. Following this news, NVIDIA's stock fell more than 4% on Monday, dragging down several semiconductor stocks.
Cramer pointed out that this practice of suppliers providing financing support for large-scale purchases by customers is highly similar to the behavior of telecommunications equipment manufacturers in the late 1990s—when equipment vendors pushed sales growth by lending to customers, but when cash-strapped buyers were unable to pay, both suppliers and investors suffered massive losses. "The lesson we learned in 2000 is that you shouldn't lend money to companies that buy your products."
Cramer emphasized that he is not bearish on NVIDIA as a company, nor is he predicting an imminent AI bubble burst. The real risk lies in the over-reliance of suppliers on large-scale spending by customers, who in turn are heavily dependent on ongoing external financing; once confidence wavers, the consequences could be chain reactions. He specifically noted that whether OpenAI can continue to pay for chips through public offerings or other channels will be a key variable. "If buyers can afford it, NVIDIA is in great shape; if they can't, that's another story."
Cramer warned that the risks are not limited to NVIDIA alone. Currently, too many companies' earnings expectations rely on the continued expansion of data center investments. "If the market decides to stop funding data centers, and the companies themselves have no money, then we will go back to 2000."
