Jim Cramer warns excess supply could be the next biggest threat to the bull market

CNBC's Jim Cramer warned Wednesday that a wave of capital raises tied to the artificial intelligence boom could create a near-term headwind for stocks.

"Bull markets can be killed by business conditions or interest rates or geopolitical turmoil, but the thing that most easily leads them to the slaughterhouse is an excess of new supply," the "Mad Money" host said. "Like any market, when supply outstrips demand, prices go right down."

Cramer pointed to a growing pipeline of companies are seeking capital to fund massive AI infrastructure buildouts, including highly anticipated IPOs from SpaceX, Anthropic and OpenAI, as well as Alphabet's recent $80 billion stock sale. While Alphabet's deal was absorbed smoothly by the market, Cramer worries the market could eventually become saturated if too many companies attempt to tap shareholders at the same time.

"I get concerned that stock supply will overwhelm investor demand," he said. "Right now, looking at the calendar, I don't know how we are going to afford all of these deals without taking the market lower. It's too much capital at once."

According to Cramer, the biggest risk is that investors will need to sell existing winners to fund the next generation of AI offerings. He suggested that dynamic may already be weighing on Nvidia, a holding in Cramer's Charitable Trust, the portfolio run by the CNBC Investing Club.

"Nvidia's looking like the biggest piggy bank in the world," he said.

The stock dropped 3.6% during Wednesday's session.

Despite the near-term pressure, Cramer said the underlying AI investment thesis remains intact.

"Once we get through this period and we see that the buyers of Nvidia's wares are making a ton of money, we are home free," he said. "Until then, it's a battlefield and you better don your armor."