Jim Cramer recently warned Amazon against making what he calls “sham-like” deals in the world of AI. He believes these decisions echo the risky behavior that led to the dot-com bubble bursting over 20 years ago.
Reports say Amazon is considering a $10 billion investment in OpenAI. In this deal, OpenAI would agree to use Amazon’s special AI chips. Cramer criticized this move, expressing concerns that Amazon seems desperate to sell these chips.
He commented on CNBC’s “Squawk on the Street,” saying, “You can’t do these deals. These deals are not real.” His concerns reflect a broader unease among investors about the massive amounts of money being poured into AI. Companies, including Amazon, are trying to gain an edge in what’s often termed an “AI arms race.” To keep up, they need new data centers and powerful chips, which are costly.
Cramer’s worries don’t come out of nowhere. In the late 1990s, companies engaged in similar questionable investments. The market eventually reacted, leading to a huge crash in tech stocks that wiped out nearly 78% of their value over two and a half years. As Cramer put it, “The market is not going to let this happen.”
Recently, OpenAI has been very active, teaming up with firms like Nvidia and Oracle, and committing $1.4 trillion to building its infrastructure. Cramer remarked that OpenAI’s rapid deal-making feels like a repeat of 2000, raising fears that we might be heading for another tech bubble.
Investor sentiment has shifted. Many are keeping an eye on the heavy spending in AI to see if it leads to a new bubble or simply strengthens the market. As Cramer notes, the business world is watching closely.
For more on the tech industry’s direction and investments, you can check out the insights from CNBC here.
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