CNBC’s Jim Cramer warned Wednesday that a wave of funding related to the artificial intelligence boom could create headwinds for stocks in the short term.
“Bull markets can be wiped out by economic conditions, interest rates, and geopolitical turmoil, but what most easily leads to a slaughterhouse is a glut of new supply,” the “Mad Money” host said. “As with any market, if supply exceeds demand, prices will fall quickly.”
Cramer pointed to long-awaited IPOs from SpaceX, Anthropic, and OpenAI, as well as a growing pipeline of companies seeking capital to fund the construction of large-scale AI infrastructure. of the alphabet Recent $80 billion stock sale. Although Alphabet’s acquisition was absorbed smoothly into the market, Cramer worries that the market could eventually become saturated if too many companies try to acquire shareholders at the same time.
“We are concerned that the supply of stocks will overwhelm investor demand,” he said. “As I look at the calendar right now, I don’t see how we can finance all these trades without bringing the market down. We have too much money at once.”
The biggest risk, Cramer said, is that investors will have to sell existing winners to fund the next generation of AI products. He suggested that dynamic effects may already be weighing heavily. Nvidiaa holding in Cramer’s Charitable Trust, a portfolio managed by CNBC Investment Club.
“NVIDIA looks like the world’s biggest piggy bank,” he said.
The stock fell 3.6% during trading on Wednesday.
Despite the short-term pressures, Kramer said the basic thesis of AI investing remains intact.
“Once we get through this period and see that the people who buy Nvidia products are reaping huge benefits, we can be free,” he said. “Until then, this is a battlefield, so you better wear your armor.”
