In the video, Jim Cramer discusses Nvidia’s critical role as a customer for CoreWeave and highlights concerns about GPU depreciation, emphasizing the need for companies to invest in the latest technology to stay competitive in AI computing. Despite recent stock performance challenges, Cramer remains optimistic about Nvidia’s fundamentals and the ongoing demand for AI infrastructure, suggesting that investments in AI may be more resilient during economic downturns.
In the video, Jim Cramer discusses the relationship between Nvidia and CoreWeave, a company that rents data centers and is backed by Blackstone. He emphasizes the importance of Nvidia as a key customer for CoreWeave and raises concerns about the depreciation schedule for GPUs. Cramer notes that while the lifespan of GPUs can vary—lasting a couple of years for training models and up to six years for inference—there is no expectation for customers to upgrade their GPUs frequently. This depreciation issue is critical for investors as it affects how they perceive the value of Nvidia’s products.
Cramer references comments made by Jensen Huang, Nvidia’s CEO, regarding the Hopper architecture, which he jokingly described as “worthless” compared to the upcoming Blackwell architecture. Cramer interprets Huang’s remarks as a strategic move to encourage customers to invest in newer technology. He believes that the rapid pace of technological advancement and the intense workloads associated with AI computing make it essential for companies to invest in the latest GPUs to remain competitive.
The discussion shifts to Nvidia’s stock performance, with Cramer and his co-hosts noting that Nvidia’s shares have traded poorly recently, despite the company’s strong earnings growth. Cramer mentions that he has purchased more Nvidia stock, viewing it as a bargain given its forward earnings multiple. He acknowledges the potential for a recession but believes that Nvidia’s fundamentals remain strong, particularly in light of the ongoing demand for AI computing.
The conversation also touches on broader market trends affecting AI and semiconductor stocks. The panel discusses concerns about peak AI capital expenditures and the potential for a slowdown in spending. Despite these worries, they note that companies actively investing in AI infrastructure do not seem to be pulling back on their spending, indicating continued demand for GPUs and related technologies.
Finally, the video concludes with a discussion on the resilience of AI spending during economic downturns. Cramer and his co-hosts suggest that investments in AI may prove to be more robust compared to other discretionary spending, as companies seek to enhance productivity and reduce costs through automation. They emphasize the importance of staying informed about Nvidia and the semiconductor industry, encouraging viewers to subscribe for the latest updates.