Cramer Warns Data Center Sector at Risk if OpenAI Fails to Raise Massive Funding
Jim Cramer just sounded the alarm on a trillion-dollar domino effect.
The AI Cash Crunch
Forget the hype—the engine of the AI revolution runs on cold, hard cash. And if OpenAI can't secure its next mega-funding round, Cramer warns the entire data center sector could seize up. It's a stark reminder that even the smartest algorithms need dumb money to keep the lights on.
Infrastructure on the Brink
The data center industry has been betting big on an insatiable AI demand. Construction cranes dot skylines from Nevada to Singapore, building the physical shells for tomorrow's intelligence. But those shells are useless without the silicon brains inside. If the leading AI lab stumbles, that demand forecast vaporizes. Orders get canceled. Expansion plans get shelved. The whole supply chain—from chipmakers to cooling system vendors—feels the chill.
A Reality Check for Tech Bulls
This isn't just about one company's balance sheet. It's a stress test for the 'build it and they will come' thesis underpinning a massive segment of tech infrastructure investing. When the market gets a whiff of demand destruction, valuations get a haircut—and not the stylish kind. It's the classic finance play: over-leverage on a single narrative, then act surprised when the narrative wobbles.
The takeaway? The road to artificial general intelligence is paved with real dollars. And if the funding well runs dry, the data center gold rush could turn into a ghost town overnight.
Cramer claims now could be a humbling moment for OpenAI
Cramer remains fairly optimistic that OpenAI can raise the money, although he still thinks that this could be a humbling moment for the company’s “monster hubris.” He also considers the other side of the narrative, where the AI firm could demonstrate justification for its arrogance.
“Even if OpenAI raises, say $100 billion now in a private round and then comes back for a public round for another $100 billion next year, the data center theme could continue to hum.”
–Jim Cramer, Host of Mad Money
Of course, Cramer also believes the reverse is true; all the progress could be reversed if OpenAI cannot raise enough money. Meanwhile, OpenAI’s single-company dominance in the tech space has some market professionals concerned, as the company remains a cash-burning startup governed by a non-profit parent.
U.S. stocks rise as AI trade makes comeback
U.S.-listed stocks ROSE on December 19 as AI trade led by Oracle made a comeback with back-to-back gains. The Nasdaq Composite gained 1.31% to close at 23,307.62, the S&P 500 jumped 0.88% to 6,834.50, and the Dow Jones Industrial Average advanced 0.38% (+183.04 points) to settle at 48,134.89. All three indices recorded their second straight day of winning.
Oracle shares surged 6.6% after short-video platform TikTok agreed to sell its U.S. operations to private equity investor Silver Lake and a new joint venture that includes Oracle. The climb marked a turnaround for the stock, which had been under pressure after it emerged that the cloud infrastructure firm had lost a backer of one of its data centers due to concerns over high debt and AI spending.
Shares of AI chipmaker Nvidia climbed 4% after Reuters reported that the Trump administration could allow the firm to resume selling its AI chips to China. Earlier this month, news circulated that President Donald Trump is considering allowing Nvidia to sell its H200 AI chips to approved customers, including those in China.
Micron Technology also saw its shares gain 7% on December 19, following a nearly 10% surge the previous day. The surges came after the company announced revenue guidance for the current quarter, reassuring investors after recent jitters over dwindling AI trade.
Meanwhile, Justin Bergner, portfolio manager at Gabelli Funds, noted that several issues may potentially hinder a year-end stock rally, especially for AI and other tech firms. However, December has historically been a strong month for equities with both the S&P 500 and Nasdaq Composite averaging gains of over 1%, according to data retrieved from the Stock Trader’s Almanac.
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