Jim Cramer issued a warning on X about potentially reducing U.S. computational capabilities for artificial intelligence. Responding to comments by Alibaba Group Holding Ltd. BABA Chairman Joe Tsai about a potential data center bubble, Cramer emphasized the critical importance of maintaining AI infrastructure.
What Happened: “Now Joe Tsai says there’s a bubble in data center building. Does China just want us to lose this lead?” Cramer wrote. He directly challenged the notion of scaling back U.S. computational resources, stating, “If you want to hobble the U.S. when it comes to robots and self-driving, then you need much more compute. It would be horrendous if the U.S. cut back.”
Cramer also noted the market implications, warning that Tsai’s comments were pushing down NVIDIA Corp. NVDA stock and highlighting a “death cross” that emerged in pre-trading on Tuesday.
The comments follow Tsai’s recent remarks at the HSBC Global Investment Summit in Hong Kong, where he cautioned about reckless data center expansion. Tsai warned that tech firms and investment funds are building infrastructure without a clear customer base, stating, “People are talking literally about $500 billion [in projects]. I don’t think that is entirely necessary.”
Why It Matters: Supporting Cramer’s perspective, Gene Munster from Deepwater Asset Management suggested that “the race to AGI should continue to drive infrastructure spending for the next few years.” Goldman Sachs analysts further bolstered this view, predicting AI-related investments could generate $305 billion in revenue by the end of 2025.
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Major tech companies like Microsoft Corp. MSFT and Amazon.com Inc. AMZN continue to invest heavily in AI infrastructure, with Alibaba planning to invest over 380 billion yuan ($70 billion) in AI within the next three years.
Price Action: Alibaba’s ADR closed at $132.75, down 1.29% on Tuesday. In after-hours trading, it rose 0.16% to $132.96.
Alibaba holds a 96.04% momentum rating and a 73.41% growth rating per Benzinga's Edge Rankings. The Momentum metric ranks stocks by price movement and volatility. For more insights, sign up for Benzinga Edge.
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