- AI stocks rallied for a second straight session on Tuesday after a group of banks and Blackstone announced $63 billion in financing for Anthropic to buy Broadcom’s computing hardware. CNBC’s Jim Cramer said the rebound is not “a reason to call all clear,” but rather “a reason to look at other sectors in the economy.”
- His first worry is neoclouds, the smaller AI infrastructure companies taking on heavy debt to build data centers. He singled out CoreWeave, whose bonds have yielded as much as 15%, along with Nebius and Iren, and warned that fresh negativity around CoreWeave could emerge despite its almost 8% rebound on Tuesday.
- Second, he questioned whether the Broadcom-Anthropic deal was as reassuring as investors believed, noting that Anthropic borrowed money to buy Broadcom’s equipment rather than paying from its own profits. Third, he said Tuesday’s calmer bond market, with the 10-year yield below 5%, could reverse with the Fed decision, next week’s midterms and Middle East flare-ups.
- Data center ETFs show how much damage remains even after the bounce. The Global X Data Center & Digital Infrastructure ETF is 20% below its June high, the iShares U.S. Digital Infrastructure and Real Estate ETF is 15% below its June high, and the Pacer Data & Infrastructure Real Estate ETF is 22% off its May high, even after gains of 2% to 5% over two days.
What Happened?
The “Mad Money” host said Tuesday that the data center trade, which was hit hard late last week, still faces financing pressure after a rally sparked in part by Anthropic’s S-1 filing on Monday and extended by the Broadcom financing news. “With the exception of Nvidia, these data center companies don’t have a lot of money. So they have to borrow the money,” he said. “The rates are getting so high that the return is getting uncertain. That hasn’t changed at all.” He added that he remains “an unabashed believer in the AI build-out.”
Why It Matters?
Cramer’s point is that the AI trade depends on cheap and plentiful credit, not just demand for chips. When neocloud bonds yield as much as 15%, the cost of capital eats into the returns on new data centers, and any rise in Treasury yields makes it worse. The Anthropic deal shows lenders are still willing to fund the build-out, but borrowing to buy a supplier’s hardware also ties the fortunes of the lender, the buyer and the supplier more tightly together.
What’s Next?
The Fed decision on Wednesday afternoon and Chair Kevin Warsh’s press conference are the next test for rate-sensitive AI infrastructure names. Cramer said he expects new negative headlines after every positive data center story, including about CoreWeave, so volatility is likely to persist. Investors should watch neocloud bond yields and the data center ETFs as gauges of whether the financing stress is easing or returning.
Affected Tickers and Coins: CRWV, NBIS, IREN, AVGO, NVDA, DTCR, IDGT, SRVR
