CNBC's Jim Cramer cautioned on Monday that a wave of large initial public offerings and capital raises could pose a threat to the current bull market, even as corporate fundamentals remain strong.
The warning came the same day Anthropic, the company behind Claude, filed its IPO prospectus, bringing one of Wall Street's most anticipated public debuts a step closer. Investors have long waited for public offerings from AI leaders Anthropic and OpenAI. Cramer said the potentially huge fundraising needs of such companies could strain an already crowded market. IPOs have raised $148 billion so far this year, and he worries the new supply of shares could exceed what investors are willing to buy, derailing the rally.
"Politics can weaken the bull, higher rates can choke it, but if you want to slay the darn thing, use the IPO lance and stab it again and again," the "Mad Money" host said. According to Cramer, the market then grows weaker and weaker until it is vulnerable to a bad quarter, a rate hike and a run on the margin bank.
Cramer stressed that his concern is not about whether AI itself is viable. He drew a contrast with the speculative internet startups that collapsed in the dot-com bust of 2000. Many of today's leading technology companies, he noted, have established businesses and real demand for their products.
"This time around the companies are real. They tend to make big money. We trusted them before this moment. We will trust them after," he said.
Still, Cramer sees one troubling parallel between the two eras: the sheer amount of capital being raised. During the dot-com boom, a flood of stock offerings eventually exhausted investors' buying power and helped bring the market down. Supply outpaced demand.
He fears a similar pattern could develop as companies including Meta, Alphabet, SpaceX and Oracle turn to capital markets. In his view, these large fundraising efforts could soak up investor dollars that might otherwise go into the S&P 500 and other stocks, pressuring the broader market. Cramer's Charitable Trust, the portfolio run by CNBC's Investing Club, owns shares of Meta and Alphabet.
"I think both the debt and the equity markets are running out of money," he said. That could leave the market without the funds companies need to finance their ambitions before investors see any payoff.
Cramer was careful to say he is not predicting a market peak. "I am not calling a top," he said. "I am just saying that I do not like what I see."
