AI stocks sell-off may deepen as Cramer sees pressure on data center spending

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AI stocks sell-off pressure

Highlights

Micron fell 17%, GE Vernova lost 7%, and Sandisk dropped 22% on Thursday as investor concerns over post-election data center regulation pressured AI-linked shares.
Cramer warns smaller developers like CoreWeave, Iren, and Nebius face higher risk from borrowed project financing amid potential regulatory delays, increasing vulnerability within the sector.
Cramer notes no significant neocloud borrowers are defaulting, suggesting the AI-driven decline remains contained, helped by lower interest rates and easing inflation expectations.

Data center doubts hit AI-linked shares

As reported by CNBC, opposition to new data centers after the midterm elections is raising questions about future AI infrastructure spending and pushing down shares tied to the buildout. Micron fell 17%, GE Vernova lost 7% and Sandisk dropped 22% on Thursday, after all three stocks were also heavily hit in Wednesday's session.

Cramer says investors pushed AI stocks too high by assuming rapid data center construction would continue indefinitely. He warns that smaller developers such as CoreWeave, Iren and Nebius face greater risk because they borrowed money to finance projects that could now be delayed by regulation.

The "Mad Money" host says charts still show little support for many technology stocks, especially semiconductors, after their sharp run-up. Even so, he describes the decline as orderly rather than a replay of the 2000 collapse, saying most of the companies involved are lucrative businesses whose shares simply climbed too far.

Market risks remain contained, Cramer says

Cramer says his main concern is debt tied to the neocloud companies he identified, but adds that no significant borrower is currently defaulting. In his view, that limits the risk of the AI downturn spilling into a broader market breakdown.

He also suggests a fast sell-off may help the market clear out excesses from the AI boom more effectively than a slow, prolonged decline. For investors, he recommends holding enough cash to avoid panic while the sector remains under pressure.

Although semiconductor stocks may fall further, Cramer points to lower interest rates, signs of easing inflation and the possibility of an end to the Iran war as factors that could support sentiment. He says cash gives investors room to stay clear-headed and reduce losses until conditions improve.

Our earlier report on U.S. AI data center expansion highlighted mounting obstacles to the buildout, including higher financing costs, construction delays and tight power availability. We also noted that only a minority of planned projects looked credible, with local opposition and grid constraints adding to the risk that developers may struggle to deliver on ambitious capacity plans and maintain investor confidence.

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