Nvidia's $250B OpenAI Backstop Raises Dot-Com Déjà Vu, Says Jim Cramer

Jim Cramer, the veteran host of CNBC's Mad Money, is sounding alarms over a new twist in the artificial intelligence boom. Over the weekend, reports emerged that Nvidia is in talks to backstop a staggering $250 billion data center project for OpenAI in Ohio. The proposed guarantee would cover lease and construction debt - not the chips inside - but the financial arrangement has Cramer flashing back to the dot-com bubble. "I lived through 2000," he said Monday. "I don't want the sequel." Nvidia's stock dropped more than 4% on the news, dragging other semiconductor names with it.

The circular nature of the financing is what bothers Cramer. Nvidia has already invested roughly $30 billion in OpenAI and another $10 billion in Anthropic - both major customers for its chips. It has also backed multiple neocloud providers that rent Nvidia-powered computing capacity. In Cramer's view, this echoes the late 1990s, when telecom equipment makers lent heavily to customers to buy their gear. Those arrangements initially boosted sales, but many collapsed when buyers couldn't pay. "What we learned in 2000 is that you don't lend to companies who buy your goods," he said.

Cramer stressed that Nvidia itself remains an exceptionally strong company, and he's not predicting a full crash. But history shows investor confidence can evaporate fast when suppliers become too dependent on customers whose spending relies on continuous access to capital. "If the buyer, OpenAI, can actually afford to pay - perhaps because it goes public - then Nvidia's in terrific shape," he said. "If the buyer can't pay, well, that's a different story." OpenAI confidentially filed for an IPO in June, with a private valuation above $800 billion, but no timeline has been set.

The risks extend well beyond Nvidia, Cramer warned. Many companies now count on AI data center spending for their earnings. "If the market decides it doesn't want to fund any more data centers, and the companies themselves don't have the money, we're back in 2000," he said. While Nvidia has the financial muscle to support such guarantees, strong balance sheets alone haven't always protected companies when customers overextend. "Nvidia shouldn't make these guarantees even if it has all the money in the world. Just history," Cramer concluded.

Source: CNBC