Jim Cramer suggests that OpenAI should raise at least $200B out of the $300 billion it owes Oracle for the data center market to regain its footing. Cramer believes that OpenAI needs to raise a substantial amount of money, regardless of the circumstances, and it should do so as soon as possible.
Cramer also believes that the entire data center sector could collapse and remain down if OpenAI fails to raise the necessary funds. He further noted Wall Street’s concern over OpenAI’s spending on infrastructure even as AI stocks rallied on Friday, with the Nasdaq Composite gaining 1.31%. There is also growing investor concern following Oracle’s $18 billion bond sale in September, marking one of the largest debt issuances on record.
Meanwhile, Cramer emphasizes that OpenAI should strike while the proverbial iron is hot and raise at least $200 billion at a valuation ot $1 trillion. The funding, according to Cramer, will enable Oracle to build the necessary data centers, which will prompt other hyperscalers to continue investing in data center infrastructure, hence data center stocks can soar.
Cramer claims now could be a humbling moment for OpenAI
Cramer remains fairly optimistic that OpenAI can raise the money, although he still thinks that this could be a humbling moment for the company’s “monster hubris.” He also considers the other side of the narrative, where the AI firm could demonstrate justification for its arrogance.
“Even if OpenAI raises, say $100 billion now in a private round and then comes back for a public round for another $100 billion next year, the data center theme could continue to hum.”
–Jim Cramer, Host of Mad Money
Of course, Cramer also believes the reverse is true; all the progress could be reversed if OpenAI cannot raise enough money. Meanwhile, OpenAI’s single-company dominance in the tech space has some market professionals concerned, as the company remains a cash-burning startup governed by a non-profit parent.
U.S. stocks rise as AI trade makes comeback
U.S.-listed stocks rose on December 19 as AI trade led by Oracle made a comeback with back-to-back gains. The Nasdaq Composite gained 1.31% to close at 23,307.62, the S&P 500 jumped 0.88% to 6,834.50, and the Dow Jones Industrial Average advanced 0.38% (+183.04 points) to settle at 48,134.89. All three indices recorded their second straight day of winning.
Oracle shares surged 6.6% after short-video platform TikTok agreed to sell its U.S. operations to private equity investor Silver Lake and a new joint venture that includes Oracle. The climb marked a turnaround for the stock, which had been under pressure after it emerged that the cloud infrastructure firm had lost a backer of one of its data centers due to concerns over high debt and AI spending.
Shares of AI chipmaker Nvidia climbed 4% after Reuters reported that the Trump administration could allow the firm to resume selling its AI chips to China. Earlier this month, news circulated that President Donald Trump is considering allowing Nvidia to sell its H200 AI chips to approved customers, including those in China.
Micron Technology also saw its shares gain 7% on December 19, following a nearly 10% surge the previous day. The surges came after the company announced revenue guidance for the current quarter, reassuring investors after recent jitters over dwindling AI trade.
Meanwhile, Justin Bergner, portfolio manager at Gabelli Funds, noted that several issues may potentially hinder a year-end stock rally, especially for AI and other tech firms. However, December has historically been a strong month for equities with both the S&P 500 and Nasdaq Composite averaging gains of over 1%, according to data retrieved from the Stock Trader’s Almanac.
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