Jim Cramer is pleading with Amazon not to engage in “sham” circular AI trading reminiscent of the kind of speculation that fueled the 1990s dot-com bubble, which burst more than two decades ago. Multiple reports on Wednesday said Amazon is in talks for a potential $10 billion investment in OpenAI in exchange for ChatGPT creators agreeing to use the cloud giant’s custom AI chips. “They really need a Trainium chip that’s selling well enough to give someone $10 billion to buy it,” Jim said at the club’s morning meeting Wednesday. “I hope they don’t play this game.” “I have a lot of respect for Amazon, but I’m shocked that they’re willing to put up with something like this,” Jim said on Wednesday’s “Squawk on the Streets” show. “You can’t do these trades. These trades aren’t real.” In recent years, many investors have been alarmed by the increasing levels of AI spending by mega-cap hyperscalers to participate in the so-called AI arms race. Advances in AI require building data centers and high-performance chips to run the systems. Jim said there is currently a flurry of interconnected investment activity that resembles the deals leading up to the year 2000. “The market is not going to let this happen,” he predicted, calling the stock market “a master of cruel tasks” and harshly warning of the overreach that drove the tech-heavy Nasdaq to its then-highest peak in March 2000 and caused it to plummet 78% in the next two-and-a-half years. OpenAI has contracts in place for 2025, securing large amounts of computing power from companies such as Nvidia, Advanced Micro Devices, Oracle, and Amazon’s cloud division. This equates to $1.4 trillion in infrastructure investments made by AI startups in recent months. Jim recently described OpenAI’s trading activity as “Year 2000 in a nutshell” and continues to make aggressive and leveraged bets, raising concerns about an AI bubble. (Jim Cramer’s charitable trust is long AMZN, NVDA. See here for a complete list of stocks.) As a subscriber to Jim Cramer’s CNBC Investment Club, you will receive trade alerts before Jim makes a trade. After Jim sends a trade alert, he waits 45 minutes before buying or selling stocks in his charitable trust’s portfolio. If Jim talks about a stock on CNBC TV, he will issue a trade alert and then wait 72 hours before executing the trade. The above investment club information is subject to our Terms of Use and Privacy Policy, along with our disclaimer. No fiduciary duties or obligations exist or arise from your receipt of information provided in connection with the Investment Club. No specific results or benefits are guaranteed.
