CNBC’s Jim Cramer said Thursday that uncertainty over the future of data center construction has made it increasingly difficult to value artificial intelligence stocks, which have soared over the past two sessions.
The plunge spread across the AI industry, hitting everything from chipmakers to companies that provide power and electrical equipment to data centers. of iShares Semiconductor ETF (SOXX) fell 3% on Wednesday and another 10% on Thursday. GE Vernova and sandisk They fell 7% and 22%, respectively, on Thursday. Investors worry that regulatory hurdles and opposition to new data centers could delay construction and undermine the growth prospects that underpin chipmakers’ valuations.
“We don’t know how much to pay for stocks related to data centers, which is why this moment is so tense,” the “Mad Money” host said.
Kramer pointed out that Nvidia As a typical example. The AI chip maker trades at about 12 times next year’s earnings and has an expected growth rate of 70%, making it look significantly undervalued. However, these revenue forecasts assume that demand will remain strong over the next few years.
“It’s an incredible bargain,” he said. “But if you can’t grow any more in the next year, it’s not a bargain, because the U.S. doesn’t allow new data centers as quickly as it does now.”
memory maker micron You also face risks. The company’s long-term take-or-pay contracts allow customers to see some revenue even if they don’t receive tips. But Kramer said it’s unclear how strong those contracts would be if the holders found themselves in a particularly difficult situation and didn’t have the money to pay.
advanced micro device Another evaluation dilemma arises. Cramer hailed the company’s latest results as “one of the best quarters we’ve ever seen,” highlighting CEO Lisa Su’s prediction that the broader data center market could eventually reach $1 trillion.
“If that’s the case, buy her (CEO Lisa Su) stock now,” Kramer said. “Would you do that? The stock price was $188 in March. Given that, $404 seems very high to me. Maybe that’s the real question.”
Kramer said the ultimate question is whether regulatory hurdles will significantly delay data center construction or just delay it. Until the outlook becomes clearer, even an exceptional earnings outlook may not be enough to justify a valuation for AI stocks.
Cramer’s Charitable Trust, a portfolio managed by CNBC’s Investment Club, owns shares in NVDA and MU.
