Jimmy Cramer went straight into the AI spending war by saying that Oracle could be the one company that forces the entire hyperscaling world to slow down.
He said Oracle’s role in the OpenAI partnership puts real pressure on how to move forward in building AI, and said the company needs to “discipline” before things evolve. He pointed to Oracle’s debt and said the bond market would eventually push the company down.
“Oracle already has a lot of debt. Its balance sheet is not good. At some point, it will heed the bond market’s warning and slow things down.”
Jim also said that the data center race is burning cash at a level that even strong operators are struggling with. He warned that “Oracle cannot risk blowing up its balance sheet for Sam Altman,” and said the slowdown is “when and how we will get out of this quagmire.”
The biggest players leading this race are Amazon, Microsoft, Google, Meta, and OpenAI along with Oracle, Jim said. He said they are all trying to outspend each other by building data centers in every location they can secure.
He also said that they do this to prevent competitors from touching their core business. He did not soften this point at all. He said this “reckless and unwise data center spending” had led to lower valuations across the group.
Jim said that OpenAI “is being funded by venture capitalists and the company seems ready to spend itself to death,” and that the rest of the sector will continue to match that pace as long as the ChatGPT maker refuses to slow down.
The report tracks Oracle’s debt risks
Jim said OpenAI has already committed more than $300 billion over five years to Oracle technology, and added that its other market promises are closer to $1.4 trillion. This scale makes the entire space fragile, he said.
He pointed to the $18 billion sale of Oracle bonds, and said the response was sharp because traders rushed into credit default swaps. He said these trade-offs show how real the fear is that Oracle will face pressure if spending continues at the current pace.
If Oracle holds back on spending, competitors will feel secure enough to slow down as well, and that could push their shares higher, Jim said. He simply said it:
“This way Oracle stays alive, and OpenAI is forced to choose which companies it really wants to target. Because someone who stands for everything stands for nothing.”
According to Jim, “Institutional money and institutional memory fled bubble stocks months ago and moved into all kinds of non-tech growth plays.”
He described this as the real strength of the market right now. This is why Mag Seven’s withdrawal is not the disaster many expected, he said. He said the rotation had already occurred before the recent shocks.
Market turnover leads to the identification of new locations
Jim He said Wall Street’s fear of a new data center bubble is missing the point because the hype died down months ago. He said investors had already turned to aviation, retail and fintech, describing these groups as “the salvation of this market” as speculative names emerged.
He compared the current situation to the dot-com bust, but said this time is different because “there is now more money and more money indexed to the S&P 500 than there was 25 years ago,” so the average investor is not wiped out.
Jim then said that this rotation makes him “more bullish than most people,” and said there was “a lot of strength in the same stocks that tried to save us in 2000, but failed because there wasn’t enough capital to trade them.”
Jim’s final point was that “we are not in the year 2000. It is what I call the year 2025, with an orderly migration to legacy and sustainable growth in which you are the beneficiary of AI, not the creator of it.”
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