Jim Cramer explains why he thinks the AI boom is different than the dotcom bubble

CNBC’s Jim Cramer on Monday pushed back against the narrative that Wall Street’s fervor for artificial intelligence is the same as the dotcom bubble of 2000, saying there are major differences in terms of the quality and funding of the current Big Tech stocks that are leading the market to new heights.

“Speaking as an internet pioneer, what I see now is the polar opposite of what we were seeing 25 years ago. When the dotcoms made bad investments, nearly all of them went under,” he said. “But, worst case scenario, if Google and Amazon and Meta make bad investments and take big losses, that’s just another day at the office.”

Cramer explained that some on Wall Street doubt the validity of hyperscalers’ huge investments in AI and data centers, and they fear the AI boom will bust and send the market into chaos like what happened at the end of the dotcom era.

But Cramer suggested that each of the major players in the space — namely Nvidia, Microsoft, Meta, Apple, Alphabet, Amazon and Tesla — are all “developing a reputation for something different” and are more substantive than many of the dotcom companies. He noted that most of the data centers are being built by these massively rich companies, which was not the case for some dotcom-era outfits that bought infrastructure and fell into debt. However, he said he was somewhat concerned with Oracle‘s announcement it would build data centers with “big money from OpenAI,” as “we have no idea where that money’s really going to come from.”

He also suggested that the tech megacaps aren’t “the types of companies that will roll over and go under in a few months’ time.” Instead, he said that for the most part, they’re flush with cash and could pivot and write off debt if they needed. He also expressed optimism that these companies will continue to succeed as AI technology becomes more and more advanced.

However, despite his confidence in Big Tech and the AI thesis, Cramer said he doesn’t think investors should stop scrutinizing major stock moves and investments in the space.

“So, should we take the dotcom bomb scenario off the table? Oddly, I don’t want it to be taken off the table,” he said. “See, The skepticism keeps things in check. If there weren’t such a negative bent to the story right now, everyone would be in this pool, and we’d all drown.”

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Disclaimer The CNBC Investing Club holds shares of Apple, Meta, Microsoft and Nvidia.