TLDR
- Jim Cramer compares OpenAI to the dot-com bubble of 2000, warning about speculation and aggressive bets in AI
- OpenAI CEO Sam Altman declared an internal “code red” over concerns that Google’s Gemini 3 is gaining users
- Cramer says OpenAI’s main problem is financial, not competitive, as rivals like Alphabet and Microsoft can borrow money more cheaply
- OpenAI has slowed development on advertising products, AI agents, and a personal assistant called Pulse
- Cramer suggests OpenAI needs fresh capital through settling its New York Times lawsuit or securing more Microsoft investment
CNBC host Jim Cramer has drawn parallels between OpenAI and the speculation that led to the dot-com crash in 2000. He expressed concerns about the AI company’s financial position and competitive pressures.
Cramer made the comparison on “Squawk on the Street” Thursday. He said OpenAI represents the same kind of aggressive betting that caused the 1990s internet bubble to burst.
The Nasdaq reached record highs in March 2000 before losing nearly 80% over the next two and a half years. It took 15 years for the index to return to those peak levels.
“OpenAI is 2000 in a nutshell,” Cramer said. He compared today’s AI-focused market to the everything-internet mentality of 25 years ago.
Cramer is not predicting a dot-com-style crash. However, he has expressed growing concern about OpenAI’s impact on current markets.
Code Red Declaration
OpenAI CEO Sam Altman recently declared an internal “code red” at the company. Reports suggest this stems from concerns that Google’s Gemini 3 is gaining user traction.
Cramer said the competition isn’t about which model answers questions better. Both can be wrong. The issue is distribution and user habits.
“Gemini 3 is easy to find and easy to trust,” Cramer said. He warned that this market could become winner-take-all if November usage data shows Gemini overtaking ChatGPT.
OpenAI has slowed development on several projects. These include advertising products, consumer AI agents, and a personal assistant called Pulse.
Financial Pressures Mount
Cramer argues the bigger risk for OpenAI is financial rather than competitive. Tech giants like Alphabet, Amazon, Meta, and Microsoft can borrow tens of billions at low rates.
OpenAI is already heavily indebted and cannot access credit as cheaply. This puts the company at a disadvantage in what Cramer calls a “capital war.”
“All of OpenAI’s competitors have better access to credit,” Cramer said. The “Mad Money” host questioned whether OpenAI’s big swings with “other people’s money” will work out.
Cramer suggested two potential solutions for OpenAI’s funding problem. The company could settle its lawsuit with The New York Times to reduce legal costs. It could also persuade Microsoft to take a larger stake and strengthen the balance sheet.
The pause in OpenAI’s development creates opportunities for competitors. Meta could face less pressure on its advertising business. Amazon might gain time to reposition Alexa. Salesforce could promote its own AI tools.
Cramer referenced comments from OpenAI CFO Sarah Friar about a “backstop” that contributed to market concerns in November. The Nasdaq dropped during that period but has since recovered to about 2% below its late October record highs.
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