Nvidia ‘s strong earnings report made it clear that the company is still donning the AI chip king crown. So, why is the stock down in Thursday’s session? The reason, according to CNBC’s Jim Cramer, is that investors are worried that Nvidia’s largest customers cannot keep spending at such a blistering pace unless they start to see a big increase in profits due to their AI efforts. Nvidia shares were down about 4% on Thursday, to roughly $188 apiece, retreating back toward the flat line year to date. “There’s a perception that all we really care about, or should care about it, is how much money Amazon is borrowing, and Microsoft is borrowing, and Meta is borrowing, and will they end up not being able to make any money?” Cramer said Thursday on “Squawk on the Street.” Cramer’s Charitable Trust, the portfolio used by the CNBC Investing Club , has owned Nvidia shares long before OpenAI’s ChatGPT kicked off the AI boom in late 2022. “It’s a skepticism about their clients, not about Nvidia,” Cramer stressed. Amazon, Microsoft, Meta Platforms, and Google parent Alphabet — often called the hyperscalers — offered up larger-than-expected capital expenditure outlooks during their most recent earnings reports. Their combined spending is projected to be around $700 billion this year . But such aggressive plans are putting pressure on their free cash flow, which is the money a company has left over after paying its expenses and buying equipment to use on debt service, dividends, stock buybacks, and to invest in growth. Amazon is expected to have negative free cash flow in 2026, according to Wall Street estimates compiled by FactSet. Alphabet is projected to be down 64% year over year to $26 billion. Meta’s is modeled to fall 86% to $6.1 billion. Microsoft is the relative outlier. In its fiscal year ending in June, analysts project its free cash flow to be roughly flat from a year ago, at $71.3 billion, according to FactSet. On Wednesday night’s earnings call , Nvidia CEO Jensen Huang was asked whether he was confident that his customers would continue to be able to grow their capex. “I am confident in their cash flow growing,” he said. “The reason for that is very simple. We have now seen the inflection of agentic AI and the usefulness of agents across the world in enterprises everywhere. You’re seeing incredible compute demand because of it. In this new world of AI, compute is revenues.” “We’re generating profitable tokens that are productive for customers and profitable for the cloud service providers,” Huang said. A token is the basic building block of AI computing. “In order to generate tokens, you need compute capacity. And that translates directly to growth and that translates directly to revenues,” the CEO added. Cramer said, however, that bondholders of the hyperscalers, which have used debt to buy Nvidia chips, do not want to hear about revenue in the future; they want to hear about profits. While admitting they have a point, Cramer emphasized that he remains confident in the viability of the AI buildout and Nvidia’s role in it. That’s especially true because Nvidia is seeing plenty of growth from other types of customers, something CFO Colette Kress called out Wednesday night . Hyperscalers were slightly over half of Nvidia’s data center revenue in its fiscal 2026 fourth quarter, but Kress said the growth was led by the rest of the company’s data center customers “as revenue diversified.” While the hyperscaler debate may not dissipate imminently, Cramer said he’s excited by Nvidia’s growing relationship with the likes of Claude creator Anthropic and OpenAI. Nvidia and Anthropic, back in November, announced a technology partnership. He said OpenAI and Anthropic are “just blossoming as gigantic customers.” Nvidia chips trained OpenAI’s ChatGPT. Cramer said the bottom line is that Thursday’s stock boils down to this: “Clients have no choice. They have to spend the money. And then you can say, but maybe they don’t have enough money. Well, there will be this gap where they have revenues but not earnings. But they are all afraid to not make the spend.”
