Cramer Criticizes Amazon's AI Deal, Citing Dot-Com Parallels

New York, December 17, 2025 – CNBC host Jim Cramer has criticized Amazon for its potential "circular AI deal," drawing parallels to the speculative excesses of the dot-com bubble in the late 1990s. Cramer warned that Amazon's rumored investment in AI infrastructure could inflate valuations without delivering real value. His comments, aired during a live segment, highlight growing investor skepticism amid the ongoing AI boom.

Background on Cramer's Critique

Jim Cramer, known for his bold market calls, targeted Amazon's strategic moves during a CNBC broadcast. He referenced reports of Amazon considering a deal to supply cloud infrastructure to an AI startup in exchange for equity or preferential access to models, labeling it "circular." Cramer stated, "This is straight out of the dot-com playbook."

The critique follows leaks about Amazon's AWS division exploring deeper ties with AI firms like Anthropic. The deal could involve Amazon fabricating AI semiconductors and providing compute resources, while receiving AI model outputs or equity in return.

Details of the Alleged Circular AI Deal

Amazon has not confirmed the deal, but insiders point to negotiations with AI players building on its $4 billion investment in Anthropic. The rumored structure includes:

AWS providing infrastructure: Custom Trainium and Inferentia chips, plus data center capacity.
Equity swap: Amazon receiving additional stakes or priority model access.
Scale ambitions: Competing with Nvidia, targeting 1 million AI chips by 2027.

Critics argue this inflates AI hype without independent validation, reminiscent of past excesses.

Historical Context: Echoes of the Dot-Com Bubble

The dot-com bubble (1995-2000) saw Nasdaq soar 400% before collapsing 78% by 2002. Key parallels include:

Speculative investments: Firms trading capacity for equity, leading to bankruptcies.
Hype over profits: Amazon survived the bust but shed 90% of its value.
AI parallels today: Current valuations place AI firms at 100x earnings multiples.

Data shows AI capex across Big Tech hitting $200 billion in 2025, rivaling dot-com infrastructure spends.

Market Reaction and Broader Industry Impact

Amazon shares dipped 2.3% following Cramer's remarks, affecting the Nasdaq-100. Other cloud-reliant stocks also slid.

Investor sentiment: Hedge funds like Citadel trimmed Amazon positions.
Competitor moves: Microsoft and Google pursue similar AI pacts.
Regulatory scrutiny: The FTC eyes such deals for antitrust risks.

Implications for Investors and the AI Landscape

Cramer's critique underscores a pivotal moment for AI: exuberance versus reality. While Amazon's $2.1 trillion market cap affords risk tolerance, prolonged circular deals could erode margins. Optimists argue Amazon's e-commerce moat funds innovation.

For investors, the lesson is caution: diversify beyond AI pure-plays and monitor free cash flow. If history rhymes, selective survivors will thrive, but frothy bets risk a 20-30% correction.

As AI capex peaks, Cramer's voice serves as a reality check, urging discipline in a sector projected to add $15.7 trillion to global GDP by 2030.