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Sam Kramer welcome to Mad Money.
Jim Cramer (1:57)
Welcome to Crane Mark I'll give my friends hey, I'm just trying to make money here. My job is entertainment. I'm going to be doing some explaining, so call me at 1-873-CBC. Tweet me Jim Cramer look, either believe or you don't believe. It is as simple as that. You either accept that OpenAI is going to pay for the billions of dollars of chips they just order from AI amd, or you refuse to believe it and you assume AMD will get stiff because OpenAI doesn't have the money or won't need the chips. I prefer to accept the answer I got on this walk on the street this very morning from Lisa Su, the brilliant CEO of amd. She's not worried and neither is Greg Brockman, the co founder and President of OpenAI. He will be doing the pay. Even though there are countless AI skeptics, the market clearly believes that OpenAI can afford to spend tens of billions of dollars or on AMD's highest end chips in addition to Nvidia's chips. Which is why AMD stocks shot up 24% today, igniting almost the whole market. Dow did dip 63 points. SB of is 0.36%. The Nasdaq jumped 0.71%. That's what the action is. I know that I am a believer ever since Jensen Huang, the CEO of Nvidia told me about the possibilities of accelerated computing and and artificial intelligence. I don't know 2018, I thought that there could be some sort of revolution going here. Jensen told me I was thinking too small. He said it was actually going to usher in the fourth industrial revolution. Now initially I thought that seemed a little bit hyperbolic. We've had three industrial revolutions. First, there was the steam engine and the rise of machine production. Second, electricity and mass production. Third, the last five decades of digital technology, automated production, electronics, telecom, the PC and the Internet. And now is the fourth Industrial revolution, the era of artificial intelligence and machines. That reason that is the next iteration. Machines that we'd rather deal with than humans. Machines that will either be our assistants or our enemies. If you believe Hollywood. I see no reason to disagree with Jensen Huang. His predictions have been right the whole time. He predicted I would be seismic and his company would be at the heart of it. Today though, today we found out we have a second heart with OpenAI. The most aggressive of the generative AI plays stepping up the plate and announcing a gigantic deal with AMD to supply cutting edge chips. The kind that rival what if videos making rival. I wish. I found it shocking. I knew that AMD was working on chips that could compete with Nvidia. I knew that for a while. OpenAI's Greg Bachmann told us this morning that he basically needed all the computing power he could get his hands on. And AMD's product was excellent. OpenAI will be taking a stake in AMD. A slug of warrants which kick in as AMD stock goes higher. This deal could be worth tens of billions of dollars to AMD and Lisa Sue. Now the stock market lapped it up with AMD rallying $39 from nearly 24% in one session. But more important, all the parts of the data center went higher. The usual suspects, a Dell, aam, Marvell Micron and the more pro se companies that design and build the centers. They all had still one more rally in them. Any good news about this particular part of the economy since everything connected to it roaring. But what matters to me is that there's a never ending parade of billionaires, hedge fund managers and their journalist mouthpieces who simply will not relent. They refuse to accept that all this is happening. It is happening. They think these sky high levels of spending have to lead to a crash not unlike the dot com implosion in the year 2000. Oh, they got the same old litany. The spending will get more reckless and more and more reckless companies involved, more and more they'll trade based on alchemy. The transactions be phony lazy Susan deals where you give me 10 million investment, I give you 10 million. Orders are 10 billion and 10 billion just a table and a swivel. It sends you the money and then you send it right back. Yes, that's a lazy Susan sale. These critics are so confident that they can make you feel like a fool for trying to make money this way. They act as if the gains in the stock somehow don't count. Like you have no right to them because someday, someday they're going to go away. Now I've been wrestling with these naysayers and pessimists for my all my working life all the way from Dow 1000, Dow 46,700 and it's incredible what magicians they are. They can still make you somehow feel foolish for buying stocks and me for recommending them. You can bet they don't believe in the fourth industrial revolution. They think it's all snake oil. I talk about this endlessly and how to make money in any market just endlessly that these people have kept. These are the people who have made you so you can't make a lot of money. The billionaires, they come on, they have the money and it's almost as if they don't want you to make the money. No, it's like they don't want, they don't want you to make the money. But let me tell you just how wrong they are. Okay. Last month Jensen Wong won a very similar deal with opening this time a 10 gigawatt deal. The AMD was 6 with the latest and greatest Nvidia merchandise. Unlike AMD with its granted warrants, Opening Video actually is going to be investing 100 billion in open air in stages over the life of the deal. If you haven't studied Jensen's moves, you might not know that he's an excellent investor. He does all the work himself. I'm telling you I have people been in the room. He intimated that rather than this being a circulated lazy circular, lazy Susan dealers as the billionaires described and the hedge fund shorts described simply great investment, up and coming company. He pointed out that there can be no circular deal if there's no quid pro quo. No matter I hear from people immediately, ones I haven't talked to in years, who are outraged that I believe that Jensen, when. I believe Jensen when he said that the deal was exclusive. This Guy has created $4 trillion of market capitalization less than five years. Why the heck wouldn't I believe it? Of course I heard from none of those critics today when we found out that it really wasn't exclusive. To the point where OpenAI seems to view AMD's chips as equal to Nvidia's. I mean, I found it a little insulting. They needed computing power to meet the demand because the demand is overwhelming them. I asked how they were going to pay for it and they told me basically not to worry about it. But they have a no nonsense cfo and Sarah Fryer, a story fixture at young companies and former managing director at Goldman Sachs, whom I trust through and through. And AMD's Lisa Su is one of the toughest execs in the business. Both have impeccable credentials. But look, what can I tell you? I trust them. I mean, what am I going to do? That's all I can tell you is I trust him. In 1999 though, well, there was nothing but scheissers and crooks and liars and mountbags right at the top of the big companies. As the founder of the street.com I know wherever I speak the executives running OpenAI and AMD are not like these people. They, these, the current iteration, are honorable. The people back then had nothing to do with the people right now. I take offense when people question what Jensen's doing, I really do. But what's the hurry here? Aren't the hyperscalers worried that the equipment they're buying isn't worth it, that it might, they might go broke spending all this money, that by the time they get the equipment it is going to be obsolete? No, no, no, no, no. That's not what they worried. Or in part because the hyperscalers, all very deep pockets, they don't care about the cost. In the end they're afraid of being the next Microsoft. Being left, but left in the dust, left behind. See, each one has its own verticals that need a matter, has social ads. Tesla's robotics, autonomous driving. Google has searched. Microsoft is the enterprise. Amazon is retail. They're all deathly afraid of someone else coming in to take their business. After today's announcement by Open Air, I think they're right to be afraid. They're right to keep spending. They have to. And that's what OpenAI's partnership with AMD is all about. They want to challenge every one of these verticals. They need every bit of computing. They need both Nvidia and amd. Oh, and what do I think about the stock of Nvidia here? After this Open air deal with amd, I, oh, nothing's changed. It's just like the second industrial revolution. I always knew there would be another railroad. Here's the bottom line. The hyperscalers are all vulnerable. If a open Air gets this computing power and given the number of chips is buying, I think this company can go after everybody's business. No wonder the hyperscalers are spending so aggressively too. If they stop, they're worried about open Air. Well, let me just say, Bill, OpenAI will eat their lunch. And I've got to tell you, those guys are tough enough that I believe them. Let's go to John in Indiana. John.