AI Stocks Rally Again as Cramer Warns Data Center Financing Risks Persist

The gains followed Monday's rally, which was sparked in part by Anthropic's S-1 filing, according to CNBC. Cramer, host of "Mad Money," said he was pleased that money was flowing back into tech, but he rejected the idea that the trade was now safe. "I don't think that's a reason to call all clear. I think it's a reason to look at other sectors in the economy," he said.

Cramer's caution centered on smaller AI infrastructure companies, known as neoclouds, that are taking on significant debt to fund data center construction. Rising interest rates have intensified concerns about their ability to service those borrowing costs, he said. He singled out CoreWeave, whose bonds have yielded as much as 15%, along with Nebius and Iren. CoreWeave shares rebounded almost 8% on Tuesday, but Cramer warned that new negative stories about the company could emerge. "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 said.

He also questioned whether the Broadcom-Anthropic financing deal was as reassuring as investors believed. While the $63 billion package showed lenders were still willing to finance large AI investments, Cramer said Anthropic was borrowing money to buy Broadcom's technology rather than paying for it with profits from its own business. "People don't seem to grasp that [Anthropic] got the money in the Broadcom-arranged financing deal to purchase equipment from Broadcom," he said.

Cramer said the calmer bond market on Tuesday could prove short-lived. Oil prices declined and the 10-year Treasury yield fell below 5%, easing some pressure on AI companies that borrow heavily for data center investments. But he noted that conditions could reverse, especially with the Federal Reserve set to announce its latest interest rate decision Wednesday afternoon and Chairman Kevin Warsh scheduled to hold a post-meeting press conference. The midterm elections next week and potential flare-ups in the Middle East could add volatility, he said. "With the exception of Nvidia, these data center companies don't have a lot of money. So they have to borrow the money," Cramer 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" but is not ready to declare the coast clear until financing challenges ease.

Separately, industry executives at TechCrunch Disrupt earlier this month said the data center boom is also creating pressure and opportunity for the U.S. electric grid. Apoorv Bhargava, founder and CEO of Weavegrid, said utilities are grappling with new variables including renewable energy and new load from electric vehicles, data centers and heat pumps. Weavegrid's software is intended to help organizations deploy energy efficiently and optimize connections to reduce utility bills, according to TechCrunch.

Tim Heidel, CEO of Veir, said his company is working to expand the physical grid and make it more efficient. Veir sells superconductive power lines that it says can carry power five times farther than traditional cables while requiring 20 times less space. The startup raised $110 million in a Series C funding round earlier this month. "The scale of the investment in AI infrastructure is driving a tremendous amount of innovation," Heidel said, adding that new technologies need to be adopted as fast as possible to ease the next stage of growth.

Kristen Eberhard, vice president of policy at Rewiring America, said the surge in data center energy demand has created urgency around grid modernization and a willingness among industries to try new approaches. "I feel like this era of AI and load growth is a very improv era," she said. "There's a lot of yes-and-ing going on. So yes, we need more transmission lines. Yes, we need more centralized power plants, and we also need to make sure that we're taking advantage of all this other stuff that we had previously been leaving on the table when we didn't have this urgency of the AI demand." TechCrunch reported that critics worry the surge in connections could raise electricity bills in the short term and lead to outages or technical problems in the long term.