Jim Cramer says the two-day AI stock rally does not justify an all-clear for the data center trade. He named three risks the rebound has left in place.
One of his 3 risks is the $63 billion Anthropic deal behind Tuesdays gains. Cramer had praised that same financing on X earlier in the day. By evening, he was questioning the borrowed money behind it.
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Why the Deal Behind the AI Rally Made Cramers List
Lenders including Blackstone and Bank of America are funding the Broadcom-arranged chip financing through a special purpose vehicle (SPV), set up only for this deal. Anthropic will lease the hardware from the SPV, which is buying Broadcoms chips and networking gear, with deliveries due from 2027.
On X, Cramer called the arrangement “excellent for all involved.” On Mad Money, he stressed that Anthropic is buying Broadcoms gear with borrowed money instead of its own profits.
“People dont seem to grasp that [Anthropic] got the money in the Broadcom-arranged financing deal to purchase equipment from Broadcom,” he said.
Broadcom has also agreed to cover part of the lenders risk, Bloomberg reported, through an arrangement known as residual value support. Under such deals, the chipmaker absorbs some of the shortfall if the leased hardware loses value.
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Can Neoclouds Keep Borrowing if the Fed Hikes Again？
Cramers other 2 risks also come down to the cost of debt. Neoclouds, smaller firms that rent out AI computing power, have borrowed heavily to build data centers.
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He named CoreWeave, Nebius, and Iren. CoreWeave shares rose almost 8% on Tuesday, yet its bonds have yielded as much as 15%.
“I have learned that after every positive story about anything in the data center, there will be a plethora of negative stories about something wrong, including CoreWeave,” he added.
Bond markets offered some relief the same day. Oil prices fell, and the 10-year Treasury yield slipped below 5%.
Cramer warned that calm could prove short-lived. The Fed decides on rates Wednesday, and Morgan Stanleys Michael Gapen expects officials to hold while signaling more hikes.
Next weeks midterm elections and possible Middle East flare-ups could add further volatility.
Cramer still calls himself an “unabashed believer in the AI build-out.” Banks and private lenders are taking a growing role in financing it, while chipmakers like Broadcom now backstop part of that debt.
For the most indebted names, such as CoreWeave, that leaves Warshs guidance at 2:30 p.m. ET as the next test of their borrowing costs.