CNBC host Jim Cramer has endorsed a new J.P. Morgan report suggesting that physical and financial limits—not a market crash—will naturally curb the massive spending by tech giants on artificial intelligence (AI).

The ‘Gating’ Factor

Cramer, responding to Michael Cembalest's “Smothering Heights” annual outlook, argued that fears of an AI bubble akin to the dot-com era lack nuance.

Instead of a valuation collapse, Cramer pointed to “electric power gating” as the primary force that will stop hyperscalers from overspending.

The J.P. Morgan report identifies U.S. power generation constraints as a critical “What Could Go Wrong” risk for the AI sector.

While data centers are projected to drive two-thirds of U.S. load growth, the grid is struggling to keep pace, adding only 25 GW of reliable capacity in 2024.

This physical scarcity of electricity acts as a hard cap on how fast companies can deploy new infrastructure, effectively “gating” their capital expenditures regardless of their ambition.

After reading Michael Cembalest's brilliant Eye on The Market opus just out from JP Morgan, i believe that bubble talk will be rested by a recognition that there will be an electric power "gating" that will keep the ...