CNBC’s Jim Cramer said Thursday that OpenAI is reminiscent of the speculation and aggressive leveraged bets that caused the dot-com bubble to burst in the 1990s. “OpenAI is the year 2000 in a nutshell,” Kramer said on “Squawk on the Street,” comparing today’s AI-for-everything thinking to the Internet-for-everything mindset that plagued the market more than 20 years ago. In the late 1990s, the Nasdaq seemed unstoppable, hitting an all-time high in March 2000. When everything fell apart, the tech stock ratio fell by nearly 80% in about two and a half years, hitting bottom in October 2022. It took until 2015 for the Nasdaq to return to record highs. Comparisons to the Dark Ages have been endless, and predictions have been made that history is about to repeat itself. Michael Varley, an investor in The Big Short, recently said that AI-driven markets could decline before companies’ spending on technology. While Kramer isn’t calling for a dot-com crash, he’s increasingly concerned about what OpenAI means for the current market, as much of the artificial intelligence trade depends on the company’s success. “They may be reckless,” the “Mad Money” host said, leaving open the question of whether OpenAI’s big move using “other people’s money” will work. In a Sunday, Nov. 16 column for CNBC Investing Club members, Cramer predicted that the “magical year of investing” was coming to an end and placed OpenAI at the center of last month’s two-pronged market decline, “one related to the soaring price of Oracle’s debt insurance and reckless ‘backstop’ comments by OpenAI CFO Sarah Friar. The other is the endless apotheosis of nuclear substitutes for natural gas and quantum substitutes for graphics. All sorts of one-offs, including processing units, or GPUs, the gold standard of artificial intelligence, and self-driving adjacencies, and, most egregiously, all sorts of entities that look like data center additions but have far more to do with sophisticated and exploitative Bitcoin scams that go by other names than 21st century regulations. ” The Nasdaq has rebounded from its late November lows and is about 2% off its all-time high reached in late October.
