CNBC's Jim Cramer said Thursday that uncertainty over the future of a data center build-out has made artificial intelligence stocks increasingly difficult to value, leading to the steep selling over the past two sessions.
The sell-off swept across the AI trade, hitting everything from chipmakers to companies supplying power and electrical equipment for data centers. The iShares Semiconductor ETF (SOXX) fell 3% Wednesday and another 10% Thursday, while GE Vernova and Sandisk dropped 7% and 22%, respectively, on Thursday. Investors are concerned that regulatory hurdles and opposition to new data centers could slow the build-out, undermining the growth forecasts supporting chipmakers' valuations.
"We don't know what to pay for any of the stocks connected to the data center and that's why this moment is so fraught," the "Mad Money" host said.
Cramer pointed to Nvidia as a prime example. The AI chipmaker trades at roughly 12 times next year's earnings with an expected growth rate of 70%, making it appear remarkably cheap. But those earnings projections assume demand will remain strong for years to come.
"That's an incredible bargain," he said. "But it is not a bargain if, the following year, it can't grow any further, because the U.S. won't permit new data centers as fast as they do now."