Jim Cramer warns investors not to get fooled by the latest AI stock rally

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Mad Money

Published Tue, Oct 27 20266:24 PM EDT

Key Points

• CNBC’s Jim Cramer warned that the latest rally in AI stocks doesn't mean the data center trade is out of the woods.
• Cramer pointed to three lingering risks.

CNBC's Jim Cramer warned Tuesday that investors may be getting ahead of themselves by declaring the artificial intelligence trade back on track.

AI-related stocks rallied for a second straight session, fueled by renewed enthusiasm for chipmakers after a group of banks and Blackstone announced $63 billion in financing for Anthropic to purchase Broadcom's computing hardware. The gains followed Monday's rally, sparked in part by Anthropic's S-1 filing. But Cramer cautioned the renewed optimism doesn't resolve the pressures facing the data center trade, which was hit hard late last week.

"I'm pleased that people feel so comfortable that tech is all good to go because there is money flowing back in," the "Mad Money" host said. "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."

Cramer's skepticism centers on three lingering risks.

First, Cramer remains concerned about smaller AI infrastructure companies, known as neoclouds, that are taking on significant debt to fund the data center build-out. Rising interest rates have intensified worries about their ability to sustain those borrowing costs. Cramer singled out CoreWeave, whose bonds have yielded as much as 15%, along with Nebius and Iren. Despite an almost 8% rebound in CoreWeave shares Tuesday, he warned that fresh negativity around CoreWeave 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," Cramer said.

Cramer emphasized that he remains "an unabashed believer in the AI build-out." But until the industry's financing challenges ease, he isn't ready to declare the coast clear.