Jim Cramer expresses concerns about tech industry’s ‘lazy susan’ deals

CNBC’s Jim Cramer on Wednesday expressed concerns about circular trading among tech companies as Wall Street weighs the value of artificial intelligence powerhouse OpenAI.

“These days we constantly hear about what we would call these ‘lazy susan’ deals, except that they are celebrated as good news for both sides,” he said.

For Mr. Kramer, a “lazy susan” deal occurs when one company gives money to another company, which in return invests some of that money in the other company. He mentioned recent news that OpenAI is currently in negotiations. Amazon Receive at least $10 billion from online retailers. In return, the ChatGPT maker will buy Amazon’s artificial intelligence chips.

Kramer said he found the deal “suspicious” and wondered if it would make more sense for OpenAI to buy the chips itself. He wondered if companies were so eager to get involved with OpenAI that they might be willing to invest money just to get it back. However, Kramer emphasized that there is growing concern about these developments.

Cramer said there are signs that some companies are starting to shy away from big-ticket technology investments, with investors in particular scrutinizing OpenAI’s large spending commitments, including a deal to acquire $300 billion worth of AI infrastructure. oracle. He noted that Wednesday’s report stated: blue owl capital The company withdrew from funding a $10 billion data center from Oracle over concerns about the tech company’s rising spending and debt.

Kramer praised Blue Owl Capital’s move and said the company was exercising “discipline.” Tech stocks won’t rise unless more hyperscalers show discipline and ease their AI investments, he continued.

“Until someone says no to this type of circular trading and calls it a ‘lazy susan’ trade in the truest sense, it’s still not safe to bet on these stocks.”

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Disclaimer CNBC Investing Club owns stock in Amazon.