Data center stocks can get on track if OpenAI raises money, Jim Cramer says

CNBC’s Jim Cramer on Friday explained how he thinks the data center sector can regain its footing on the market, saying OpenAI needs to raise cash to pay Oracle, one of its major partners.

“No matter what, OpenAI needs to raise a lot of money, and it needs to raise it now,” he said. “Or else the whole data center edifice will go down and stay down.”

While artificial intelligence stocks managed to rally on Friday — with the tech-heavy Nasdaq Composite gaining 1.31% — the group has been under pressure in recent months as Wall Street scrutinizes hyperscalers’ massive infrastructure spending.

Oracle and OpenAI in particular have raised eyebrows, as the ChatGPT maker committed to pay more than $300 billion to the software company. Cramer suggested investors grew concerned after Oracle raised $18 billion in its September bond sale — one of the largest debt issuances on record in the tech industry.

OpenAI should “strike while the iron’s hot and try to raise $200 billion at a trillion dollar valuation,” Cramer said. That funding will allow the company to pay Oracle the money it needs now to build data centers, he continued. If that happens, he said, other hyperscalers will have to keep spending on infrastructure, and data centers stocks can take off.

Cramer said he’s fairly optimistic OpenAI can raise the money. But the outfit has “monster hubris,” he continued, and suggested now could be a “humbling moment” for the company, or it could “demonstrate that they’re right to be arrogant.”

“Even if OpenAI raises, say $100 billion now in a private round and then comes back for a public round for another $100 billion next year, the data center theme could continue to hum,” he said. “Of course, if Open AI can’t raise enough money, then we just reverse everything we saw today, and we go back down.”

OpenAI and Oracle did not immediately respond to request for comment.