Cramer Warns of AI Financing Risks

CNBC’s Jim Cramer warned Tuesday that a two-session rally in AI-related stocks does not mean financing risks in the data center trade have passed. The rally followed renewed enthusiasm for chipmakers after banks and Blackstone announced $63 billion in financing for Anthropic to buy Broadcom computing hardware; gains also followed Anthropic’s S-1 filing. Cramer said the money flowing back into technology stocks was no reason to declare the sector “all good to go.”

Cramer identified debt at smaller AI infrastructure firms, known as neoclouds, as one risk. Higher interest rates have raised concerns about their ability to service borrowing used to build data centers. He singled out CoreWeave, whose bonds have yielded as much as 15%, as well as Nebius and Iren. CoreWeave shares rebounded almost 8% Tuesday, but Cramer warned that negative reports about the company could reappear.

He also questioned whether the $63 billion Broadcom-Anthropic financing deal was as reassuring as investors believed: Anthropic is borrowing to buy Broadcom’s technology rather than paying from its business profits, he said. A third risk is that calmer bond markets may not last. Oil prices fell and the 10-year Treasury yield dropped below 5% Tuesday, easing borrowing pressure, but conditions could reverse. The Federal Reserve was due to announce its interest-rate decision Wednesday afternoon, with Chairman Kevin Warsh’s press conference afterward; next week’s midterm elections and possible Middle East flare-ups were additional volatility risks.

Cramer said that, except for Nvidia, data center companies do not have much money and must borrow, while high rates make returns uncertain. He remains a believer in the AI build-out but is not ready to declare the coast clear until financing challenges ease.

CNBC’s Jim Cramer warned Tuesday that a two-session rally in AI-related stocks does not mean financing risks in the data center trade have passed. The rally followed renewed enthusiasm for chipmakers after banks and Blackstone announced $63 billion in financing for Anthropic to buy Broadcom computing hardware; gains also followed Anthropic’s S-1 filing. Cramer said the money flowing back into technology stocks was no reason to declare the sector “all good to go.”

Cramer identified debt at smaller AI infrastructure firms, known as neoclouds, as one risk. Higher interest rates have raised concerns about their ability to service borrowing used to build data centers. He singled out CoreWeave, whose bonds have yielded as much as 15%, as well as Nebius and Iren. CoreWeave shares rebounded almost 8% Tuesday, but Cramer warned that negative reports about the company could reappear.

He also questioned whether the $63 billion Broadcom-Anthropic financing deal was as reassuring as investors believed: Anthropic is borrowing to buy Broadcom’s technology rather than paying from its business profits, he said. A third risk is that calmer bond markets may not last. Oil prices fell and the 10-year Treasury yield dropped below 5% Tuesday, easing borrowing pressure, but conditions could reverse. The Federal Reserve was due to announce its interest-rate decision Wednesday afternoon, with Chairman Kevin Warsh’s press conference afterward; next week’s midterm elections and possible Middle East flare-ups were additional volatility risks.

Cramer said that, except for Nvidia, data center companies do not have much money and must borrow, while high rates make returns uncertain. He remains a believer in the AI build-out but is not ready to declare the coast clear until financing challenges ease.