CNBC’s Jim Cramer said Wednesday that it’s time for companies to prove the fruits of artificial intelligence.
“We need cold, hard facts,” the “Mad Money” host said. Or maybe I’ll become even more suspicious than I already am.
The AI boom is fueling huge spending by technology companies, with no end in sight. Analysts estimate that total AI capital investment could exceed $1 trillion by 2027. While Kramer remained optimistic about the long-term opportunity, he argued that the market needs more evidence that these investments are leading to measurable financial benefits for customers.
Kramer said one of the biggest concerns this earnings season is that companies implementing AI are rarely able to point to significant revenue increases or cost savings from the technology.
“We’re still in the early stages of earnings season, but already we haven’t heard anything material about the use of AI,” he said.
Banks, in particular, let him down on the AI front. Kramer said financial institutions appear to be natural beneficiaries of AI because of its potential to automate processes and improve efficiency, but executives have shown little evidence that the technology is materially improving performance.
Kramer said it wasn’t a complete cricket. “It’s valuable, but it doesn’t do anything to improve the numbers. It doesn’t help with any efficiency gains that we can see, and it doesn’t allow for job cuts. Does that mean AI is a failure? No. But I don’t see it making much of a difference.”
While AI infrastructure companies continue to benefit from the spending boom, Kramer said the same cannot yet be said for many of the companies purchasing this technology.
“Certainly Anthropic is benefiting…component companies are doing well,” he said, alluding to companies such as memory chip makers. micronprofits soared. “But shouldn’t the end customer be able to at least say they have millions in savings?”
Kramer said only a handful of companies, especially fintech companies, are doing so. block and web security providers cloudflarehas revealed that recent staff reductions are due to the introduction of AI. Block did so in February, and Cloudflare’s layoffs were revealed in May. Additionally, critics argue that some companies may cite AI as a fancy excuse for layoffs, leading to the birth of the term “AI cleaning.”
Ultimately, Kramer said, unless more companies start reporting tangible benefits, the voice of AI skepticism will grow louder and affect the tech industry’s biggest spenders.
“The more time we spend without asking how real customers make money, the longer it will look like hyperscalers are making money, like today,” he said with a grain of salt.
