Mad Money w/ Jim Cramer 11/20/24

Summary

Mad Money w/ Jim Cramer – Episode Summary (11/20/24)

Released on November 21, 2024, Mad Money w/ Jim Cramer delves deep into the current state of the stock market, highlighting significant movements, standout companies, and strategic investments. This episode features insightful interviews with CEOs from leading companies, offering listeners a firsthand look at corporate strategies and market dynamics. Below is a comprehensive summary of the key discussions, insights, and conclusions drawn during the episode.

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1. Market Overview

Jim Cramer opens the episode by analyzing the broader market trends, emphasizing a shift towards value-oriented consumer behavior. He observes that consumers are increasingly prioritizing value over brand loyalty, leading to significant movements in retail stocks.

• Consumer Behavior Shift:

  • Cramer: "We become a nation of cheapskates. Nobody gets away with charging too much anymore... It's happening fast, and many companies are being left behind by the change." [03:15]

• Stock Performance Insights:

  • Cramer notes the contrasting performance of major indices:
    • Dow Jones: Gained 139 points.
    • S&P 500: Closed flat.
    • Nasdaq: Dropped 11%, with fluctuations throughout the day.
  • He highlights Target's stock plunge of over 21%, attributing it to failure in demonstrating value compared to competitors like Walmart and Costco.

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2. Featured Company: Williams Sonoma

Cramer transitions to an in-depth discussion with Laura Albert, President & CEO of Williams Sonoma, following the company's impressive quarterly performance.

• Exceptional Quarter Performance:

  • Cramer: "Williams Sonoma turned in a magnificent quarter... the stock soared to a new all-time high." [13:06]

• Laura Albert's Insights:

  • Customer-Centric Strategy:
    • Albert: "We're focused on our customer service... approachable prices... great value in the products we sell." [14:09]
  • Product Diversity:
    • Albert: "We are more than just a furniture brand. We have lifestyle and life-stage brands that cater to various customer needs." [15:39]
  • Holiday Preparations:
    • Albert: Discusses new holiday products and the resurgence of in-store shopping post-pandemic. [15:39]

• Market Share and Pricing Integrity:

  • Cramer: Commends Williams Sonoma for maintaining pricing integrity without relying on constant promotions, fostering long-term customer trust. [17:03]
  • Albert: Emphasizes direct sourcing and collaboration with vendors to maintain quality and reduce costs. [17:03]

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3. Featured Company: Palo Alto Networks

The episode features an interview with Cash Aurora, Chairman & CEO of Palo Alto Networks, focusing on the company's robust quarterly performance and strategic initiatives.

• Outstanding Quarter Results:

  • Palo Alto Networks reported an 8-cent earnings beat and 14% year-over-year sales growth. The company also raised its full-year forecast for 2025. [22:29]

• Platformization and Market Leadership:

  • Aurora: "We are the premium platform in network security, cloud security, and SOC management with AI." [23:28]
  • Cramer: Highlights the significance of the IBM partnership, bringing a $1 billion pipeline and solidifying market presence. [25:58]

• Government Contracts and Future Outlook:

  • Aurora: Discusses increased technology investments from the new administration, emphasizing the need for secure and efficient deployments. [28:49]
  • Forward-Looking Statements:
    • Anticipates continued market share growth and strategic deals, reinforcing Palo Alto Networks' position in the cybersecurity landscape. [29:45]

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4. Featured Company: Stanley Black & Decker

Cramer interviews Don Allen, President & CEO of Stanley Black & Decker, addressing the company's long-term strategies amidst a challenging market environment.

• Investor Event Highlights:

  • Allen: Outlined plans to boost EBITDA to $2.5 billion by 2027 through market share expansion in key brands like DeWalt and Stanley. [31:23]

• Brand Strength and Market Position:

  • Allen: "Our portfolio of brands, including DeWalt, Stanley, and Craftsman, is the best in the industry." [33:18]

• Challenges and Strategic Responses:

  • Tariffs and Supply Chain:
    • Discusses navigating a $200 million tariff headwind and strategizing price increases to mitigate impacts. [36:10]
  • Long-Term Growth Amid Short-Term Headwinds:
    • Emphasizes the importance of cash flow management and strategic sourcing to drive long-term value. [36:10]

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5. Lightning Round

In the popular Lightning Round segment, Cramer offers quick buy, sell, or hold recommendations based on caller inquiries. Notable interactions include:

• Caller Jeff from New York:

  • Query: Advises on purchasing more shares of PepsiCo despite its recent downturn.
  • Cramer's Response: Suggests caution, noting potential further declines despite the stock's yield. [38:06]

• Caller Jane from Texas:

  • Query: Seeks opinion on Occidental Petroleum.
  • Cramer's Response: Recommends buying, highlighting Warren Buffett's endorsement and the company's balanced oil portfolio. [40:28]

• Additional Caller Remarks:

  • Nvidia Investment: A caller shares substantial investment success with Nvidia, prompting Cramer to discuss diversification strategies. [38:49]

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6. Notable Quotes

• Jim Cramer on Consumer Values:

  • "The American people are tired of paying up. They want a better deal... They'll eagerly switch lifetime habits in order to save some money." [09:00]

• Laura Albert on Pricing Strategy:

  • "When we price the goods the first time, we want you to say, wow, it's a great price and how gorgeous is that product." [17:03]

• Cash Aurora on Palo Alto’s Market Position:

  • "We know that we are the premium platform as it relates to network security, cloud security, and SOC management with AI." [23:28]

• Don Allen on Long-Term Vision:

  • "We're focused on finishing the supply chain transformation and driving more value at Stanley, Black & Decker to reach our EBITDA targets." [31:39]

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7. Closing Remarks

Jim Cramer concludes the episode by reflecting on historical market maneuvers, drawing parallels between past corporate strategies and current retail challenges. He emphasizes the importance of adaptability and value-driven approaches in maintaining market relevance.

• Marlboro Friday Analogy:

  • Cramer: "Retail execs need to pull off a Marlboro Friday by slashing prices aggressively enough to regain customer loyalty or risk becoming irrelevant." [41:31]

• Final Thoughts:

  • Encourages investors to seek out bull markets and remain vigilant in their investment strategies. [45:43]

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Conclusion

This episode of Mad Money provides a comprehensive analysis of current market trends, spotlighting companies that exemplify strategic resilience and consumer-centric approaches. Through insightful interviews and candid discussions, Jim Cramer equips listeners with valuable perspectives to navigate the complex landscape of Wall Street investing.

Transcript

[Jim Cramer]

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[Jim Cramer]

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[Laura Albert]

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[Nikesh Arora]

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[Jim Cramer]

Read it carefully. DIA Subject to risks similar to those.

[Nikesh Arora]

Of stocks all ATs are subject to risk, including possible loss of principal Alps Distributors Inc. Distributor My mission is simple to make you money. I'm here to level the playing field for all investors. There's always a bull market somewhere, and I promise to help you find it. Mad Money starts. Hey, I'm Kramer. Welcome to Mad Money. Welcome to Kramerica. My friends, I'm just trying to make you a little money. My job is narcissist entertainment. It's to teach you, to educate you. So call me at 1-800-743-CBC. Tweet me. ImKramer. There's something happening here, and what it is is exactly clear. We become a nation of cheapskates. I say that as a compliment. Nobody gets away with charging too much anymore. Not in this country, no matter what industry, perhaps even the drug industry. It's happening now. It's happening fast, and many companies are being left behind by the change. I see it everywhere I go. In the grocery store, online, in the mall, and of course in the stock market, where you either demonstrate value like a Wal Mart or Costco or Amazon, or you get slaughtered like a target, which plunged $33 or over 21% today. And that's my takeaway from this sedate session, with Dow gaining 139points as me flat on the day and Nasdaq dipping point 11%, although it was much uglier midday. We think this cheapskate story is limited to retail, don't we? But it's not. For example, I've never really thought about value when it comes to tech. I cared about whether it was a better mousetrap. The price of goods was constrained by one simple issue, how much the customer is willing to pay and the customers seem pretty blind at cost when it came to tech. But now with Nvidia, the largest company in the world by the way, we're seeing something wholly different. We're seeing a company with a product that's incredibly expensive on the one hand, but incredibly cheap on the other. If you're a cloud service provider and you give Nvidia 40 GS for a version of its latest and greatest chip, a Blackwell, you can make five times that insanely expensive as a product, dirt cheap as an investment. We keep hearing that inverte is charging too much or the demand is topping out or the stocks overvalued. But the proof is in the pudding. And CEO Jensen Wong has repeatedly told me about this 5 to 1 ratio profit to cost ratio. That's not just talk. This quarter backed it up in video, reported a sizable top and bottom line beat healthy guidance for the current quarter. Blackwell, that latest invention, full production which was a huge worry going into earnings. Maybe that worry was contrived, ginned up perhaps. Jensen says demand for the current chips and anticipation for the new ones is quote incredible. Of course there's sellers, grumpy clueless people who keep hoping for another one day gain of 20% like we had last year on earnings. And they are disappointed. I say them sell. I don't care. Here's your hat. Watch your hurry and don't let the door hit you on the way out. The cloud service providers, Amazon, Google, Oracle, Microsoft simply can't resist buying these high end chips. Not because they feel compelled to keep up with the competition. That was another bear canard. But because 40 GS for one of these is a bargain. I'm sick of the bears telling me there aren't enough uses or that things are maxed out at Nvidia. I say do some darn homework. The so called expensive black oil is about making money with your money videos about value. You see the kind of bargain hunting I'm talking about everywhere these days. Even in pharma. Go listen to that Walmart quarterly conference call. The only fly in the ointment the whole time was that the price of the GLP1 Weight loss drugs and how they ding the pharmacy businesses gross margins. How could the price of one class of drugs be so important? I think it's because there's a scarcity of GLP ones even with Eli Lilly and Novo Nordisk going all out. It's only going to get better though because Lily's spending billions to build more plants in order to meet the demand for the wonder drug. No one else can do that. They aren't rich enough. The GOP desk ones, they represent value because it's not just about diabetes and weight loss. There are lifesavers. They're being used against hypertension, being used to reduce major cardiovascular events. They can help control sleep apnea. And of course, they're also effective. Never mentioned, never talked about. Against alcoholism with its terrible liver side effects. Millions of people, they haven't gotten approved for any indications they'll never get it for alcohol. Too complicated. But GOP Dash was not some simple hack drug. It's a revolution in health care. No wonder Eli Lilly can charge such a value, such a huge premium. It's valuable. What else? We have all sorts of data about how going out to dinner costs a lot more than it did pre Covid. But people hate that you know what they really like. Companies are trying to do something about it. Hence why Texas Roadhouse and Brinker, home of Chili's, are just crushing the numbers and making mincemeat of competitors. I went to a Texas roadhouse recently in Dallas. Oh, man. I spotted a dinner for less than 11 bucks. Made me feel like a king. Country fried chicken or grilled barbecued chicken or pulled pork or chicken Caesar. Two sides, 1099. Are you kidding me? In 2024? Not possible. But it is. That's only bested by the three for me deal from Chili's that you see advertised during every single NFL game. Fountain drinks, iced tea, chips, salsa, and that killer smash burger for 10.99. Again, you must be kidding me. In 2024? Yes. There's one word, one. One reason why Brinker and Texas Roadhouse are up 189% and 58% for the year, respectively. And that's value. The American people are tired of paying up. They feel gouged. They feel betrayed. They feel. They feel that the only thing about brand loyalty is that it isn't worth a dime. They want a better deal. They'll eagerly switch lifetime habits in order to save some money. Because prices are up so much that you feel like an idiot if you're paying off. And there's a reason why Costco has tens of millions of members. I wish you me on a field trip to Costco. It's just wild. I went to the Costco near Allentown, Pennsylvania the other day. It was more of a pilgrimage. No pilgrimage complete without a stop at the food court. In 1984, Costco offered a quarter pound all beef hot dog and a soda with free refills. For a buck fifty and a Portland, Oregon store. And it's nationwide now. And it's the same price. Are you kidding me? Whenever we stock up at Costco, I pay King's rim because we're ransom, because we're loyal to the cause of low prices. And Costco has instilled that loyalty in a very visible way. I like to go to Costco on an empty stomach with. Man, those free samples are dynamic. You see the little small pizza squares lately who don't fill up before you go there. But it's the buck 50 dog that makes me yearn for Costco. They can offer great deals because they carry a smaller selection of products. Enormous bulk gives them a lot of leverage. Yet right now, people only have loyalty to value. And that's the kind of country we've become. The value of a belt. Thank you. Or a shirt or underwear or jeans. From tjx. Shot the lights out this very morning. They buy excess inventory for struggling retailers for next to nothing, then mark up the goods ever so slightly, giving you amazing bargains. TJX has been keeping building as keeps building a lot of stores because they can't keep up with demand. Look at this thing. I got this thing for 15 bucks. The other guys are a pound of flesh from. From Venice. This is from Milan. 15 bucks. I would take it off, but I think it's probably not the right. I don't know. We got new people coming in, running the company. I don't want to leave a bad impression on them folks. Anyway, TJ Maxx, I love it. Which brings me full circle to Target. Our loyalty to value means that if you want to buy Dixie paper bowls, Kellogg's, Fruit Loops, dawn dish soap and Tide pods and then have them delivered, we'd much rather pay $48.13 from Walmart than $62.96 at Target. Yes, those are actual prices, actual goods that were bought today. And that's too big a differential. Walmart scale and smarts are simply besting Target in the price arena. Don't get me wrong, I love Target. I think it's so much fun to shop there. But in this new seller, sit at home and order world, why do I really care how much fun Target is? If they can bring it to my house at roughly the same time, why do I care if it comes in a red and white bag or not? I am loyal to value, and Wal Mart is offering me value. House of pleasure. And that's why Wal Mart stock could be up 66% for the year and still climbing while target saw 14%. Most likely still falling. Bottom line, prices have gotten so high over the past few years that we're losing our loyalty to brands. These days, this whole country is about one thing, the Benjamins. I said we take questions. I said we start with Chuck in Florida. Chuck.

[Chuck]

Hey, Jim, it's Chuck from Boynton Beach.

[Don Allen]

How are you?

[Nikesh Arora]

I'm Boynton beach, and my wife will be there in about a month and a half and maybe she'll have me. I don't know. She's not that crazy with me lately. Maybe it has to do with the NFL and watching George football. What's going on?

[Chuck]

Yeah, I just want to say it was a pleasure meeting you and your wife in Palm Beach a couple of months ago. I'm still sipping on the bottle.

[Nikesh Arora]

You went to the. Did you go to the bottle signing? Sure. Yeah. Man, that fuss forum, I love it. We got the new version ensemble. What's going on?

[Chuck]

Yeah, Jim, I want to ask you about a digital bank in Latin America. They do their business mainly in Brazil, but they branched out to Colombia and Mexico as well. They had a great third quarter. They're rapidly growing and they're going to launch a telecom mobile service as well. Warren Buffett has taken a stake in them. And Jim, I wanted to get your opinion on new holdings symbol.

[Nikesh Arora]

You know, I've been waiting for this thing to explode because it's got some of the best shareholders, some of the smartest people in the world have been waiting and waiting and waiting and now it's happening. And you, my friend, have horse sense. I like that stock. Oh, come on. I want more questions. I got the music. I'm trying to make a new impression over here. Control room. People. It's actually not. These are the people I'm up against. I want to do more, they want to do less. Okay, fellas from London, I think. All right, look, the consumers loyalties have changed. Allegiances to specific brands are out and loyalty to value is in. Oh, man. Tonight, William Sonoma soared to new all time high today. I'm checking with the CEO, fresh off that retailers raised outlook and earnings beat. Then Powell after the networks crossed the tape after the close. The sellers come in because they don't know what they're doing. But that's okay because you have every right under the first minute to be as stupid as you want to be. Pl. I'm sitting down with Stanley Bachendecker, CEO, to hear from how Trump's trade policy could affect their business. So stay with Kramer. What does it take to design and.

[Don Allen]

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[Nikesh Arora]

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[Nikesh Arora]

Well, well, well. You look at this incredible breakout. One of my favorite stocks, Williams Sonoma, the furniture and home goods retail that also owns West Elm, Pottery Barn, some other brands. At a time when retail space has been truly troubled, Williams Sonoma turned in a magnificent quarter this morning. One that sent the stock up a staggering 27% today. Truly amazing. Not only did they deliver a big top and bottom line beat, they also posted better than expected. Same store sales raised their full year forecast. Potentially they got a ton of cash to buy back stock. They were they ever right? Of course, even that doesn't explain this monster move. In the end, a lot of money managers were also betting against Williams Sonoma shorting the stock in anticipation of some sort of big miss. Those shorts got squeezed today. They were forced to buy shares to close out their position. That sent the stock even higher. New all time high. Let me just say some they are useful idiots helping to get shareholders higher prices. Thank you. So how the heck did William Snow would pull this off at a time when so many of his peers are struggling? Why don't we go straight to the source? Let's go to Laura Albert, the President CEO of Williams Sonoma to find out. Ms. Albert, welcome back to Mad Money and congratulations on a staggeringly phenomenal quarter.

[Laura Albert]

Thanks, Jim.

[Nikesh Arora]

So let's go over what you did here because it's not just a year you're a nuts and bolts. First you talk about great supply chain, you also have you gain market share. But in reality, I want to step back for a second. There's a line that caught me in the conference call. We are a lot more than just a furniture brand. And that is the truth about what you're doing here, isn't it?

[Laura Albert]

Yeah. I mean, it's not just a macro economic play associated with housing. Right. We have lifestyle brands and we have Life stage brands and we have our furniture business. And the truth is we're still running. We still ran negative comps in Q3, and yet we're delivering exceptional operating earnings because we're focused on our customer service. And that customer service has always been world class. And by focusing on it, we build up that loyalty with our customers. And they trust us. They shop online because they know how good the quality the product does is because they've seen it in their stores. And also we have approachable prices. There's a lot of people selling things that are beautiful, but our prices are approachable. We have great value in the products that we sell. And so at this time of year, which is our favorite, by the way, this is the time people come to us to decorate their homes, celebrate the holidays and buy gifts. And we are stocked and we are ready for the holidays.

[Nikesh Arora]

Well, you are holiday headquarters. And I want you to tell people some of the exciting things they got. I remember for Halloween one time I got stuff that was just incredible from you. How about for Christmas?

[Laura Albert]

Well, first, let's talk about Thanksgiving. You know, I don't know if you're set for Thanksgiving. I personally set up both my Thanksgiving table and all my Christmas decor last weekend. And my favorite product this year is this, which is Thanksgiving, our Thanksgiving crunch. It's like your Chili crunch, but it tastes like the Thanksgiving dinner. So if you have people coming over who don't want to eat the turkey or you want to make a different meal, this is instant Thanksgiving in a jar. We love this. We love this. So that's a new product, but of course, the favorite, and I'm just talking about the Williamson brand, but you know, the favorite. This is the favorite. And this is the time of year comes back out. And I was just in our stores near your house, Jim, in New Jersey, and I talked to a woman who was buying 30 of these, giving them to everyone. And I'm so inspired. I mean, people are so excited this year. When you go out and you go to these malls, you'll see how happy the shoppers are and how excited they are about the holidays. And so different from the pandemic. I mean, we're. We're back. We're back at retail. It's very exciting.

[Nikesh Arora]

Well, I do want to go back to something you said about, about customer service. It is very clear that you are taking market share part of a customer service, but also part of it because you're offering a super premium product at what many people think is a value price. How are you able to explain that to people? Because no one else is doing that. No one.

[Laura Albert]

But we've been at it for a long time. And we've had these vendor partners for decades. I know they're children. We have been doing business. We built our businesses together, and we work together to bring great products to life, but also to reduce costs and constantly look at ways to make the product better. And it's. It's direct source, right? So we're direct, directly sourcing. We have our teams in Asia doing that work and going and making sure the quality is perfect. And, you know, sometimes we have a few issues here and there, and we do our best to make it right for our customers. But our perspective is when we price the goods the first time, we want you to say, wow, it's a great price and how gorgeous is that product? And that's the focus we've had since the pandemic, is to continue to pull back on this up, down promotional pricing that so many of our competitors run, you know, and they're running buy more, save more. If you spend this, you get this much off. And that's all good for the short term, but then you get customers trained to wait for that promotion, which is never a good thing because you're really competing with yourself. But it's harder to actually pull this off than you think, because in the short term, you know, you see the negative numbers. So I've been singing this song for the last two years, and I'm pulling it Back, pulling back. And now you're starting to see the real effects of that reg price business and the customers trusting, trusting us on the pricing integrity the first time.

[Nikesh Arora]

I think everyone else is caught in that spiral except for you. And congratulations to you for not being caught in that by asthma. I mean it really is amazing how prevalent it is and it just, it never works. They think it does, but it doesn't. Now you're doing something. We see a lot of collaborations. I think there's too many people just talking about collaborations like someone did something in Instagram. You've got big time collaborators and you're saying it's driving brand heat tell and bringing new customers. And they're two of our favorite people. So go ahead. The two most famous one, the Tucci and the Jean George are just I can't wait to buy them.

[Laura Albert]

First of all, the nicest people. So gracious. They come to our store, they sign books, they talk to our customers. They love what they do. And when someone loves, they do. You know, it's really infectious. And you know, Stanley Tucci is just amazing. He has a new color out that we love. He has new products coming all the time. And then in a Garten is our Thanksgiving partner. But beyond just the William Summer brand which we talk about the most and has the biggest spike at, you know, the Christmas holiday season, the other brands to have amazing partnerships, especially our children's home furnishings business, we have had this incredible partnership with Love Shack Fancy. They do such a beautiful job with their proprietary look and we have developed a whole bedding and bedroom collection around it and we keep adding to it and it's great for dorm rooms.

[Jim Cramer]

It's great.

[Laura Albert]

Anyway, so we love that. And then we do fun things. We don't take ourselves that seriously. We're doing National Lampoon, you know, at Potter Burn and in all these brands we have a variety of real tastemakers and then also, you know, people who are just in the zeitgeist of being popular and fun and that's what we do. And it brings new customers in and it gives our, our current customers something new to buy.

[Nikesh Arora]

At the same time, you are more competitive than ever. I was talking, you're on the border sales force talking about with Mark Betty up today. We you're just not stoppable. And I thought I said, I brought up the fact that you talk about these wins. You won the J Marriott, JW Marriott in Vegas, the Ritz Carlton, the Papagayo, the Google Sony. These are big wins for you, correct? I mean you do so many things, but this, you beat other great competitors.

[Laura Albert]

To get the B2B is a real growth driver for us. I think it's been underestimated and we haven't even begun to scratch the surface on the potential there people, a lot of people don't even know we're doing it right. And so we continue to build the infrastructure. We have an incredible team of people selling products to all the people you just mentioned and more. And what we can do is we can design the whole thing for you. We don't just have one line, we can do the whole thing. And if you need something very special, we can work on that together. So it's a, it's a big deal. It's a big part of our growth story.

[Nikesh Arora]

Well, look, I want to congratulate you and all your shareholders for just really doing a remarkable job in one of the toughest environments I've seen in a very, very long time. Surprisingly tough given where unemployment is just. Great job. Delore Albert, presidency of Williams Sonoma. Fabulous that you came on the show. Thank you so much. Everybody's back after the break. First and foremost, the thing that powers your business is power. And when it comes to power, Ford Pro has options. Now scratch that, we've got every option.

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[Nikesh Arora]

What you make of these results from Palo Alto Networks. The cybersecurity powerhouse has been a huge winner for my child trust. After the close, Palo Alto reported what I thought was an excellent quarter. An 8 cent earnings beat off a $48 basis higher than expected sales of 14% year over year. All the key enterprise software metrics like remaining performance obligation, next generation security, annualized recurring revenue. They were great to. On top of that, management gave us strong guidance for the current quarter and raises full year forecast for 2025. Now look, this stock has a habit of selling off response to earnings. That's why we pick it up every single time. I always tell our club members it's the time to go. I say, don't sweat it. The stock was up almost 15% since the company last report in August. I think some investors want to need more bullish forecasts. I say, give me a break. This is the way it is. So let's take a closer look with the cash Aurora, the chairman CEO of Palo Alto Networks to learn more about it and of course know more about its 2 for 1 split. Mr. Rohr, welcome back to Mad Money.

[Cash Aurora]

Thank you very much, Jim Nikesh, it.

[Nikesh Arora]

Looks like the quarter and the year off to a strong start. Maybe you can fill us in on where the big orders are coming from.

[Cash Aurora]

Well, Jim, we're seeing, you know, I said in our prepared remarks and earnings call, this idea we sort of talked about over the last 12 months about platformization is finally taking center stage. We looked at how many of our peers are talking about platforms and now we see a 50% increase in our entire industry. Everybody saying, I've got a platform too. But no, we know that we are the premium platform as it relates to network security, relates to cloud security, and it relates to the new area of SIM and SOC management with AI. So we're seeing tremendous amounts of interest in people platformizing. We had two videos we showed one from Colgate, one from NXP where the customers used to be customers of our products. In one category, they have gone soup to nuts. Follow on to networks across the board because it gets them better security, saves them money and they have to do less work. So we are seeing that trend take off. We did 70 platform deals this quarter, including some of our curator deals. So, yeah, we're seeing generally strong demand across the board.

[Nikesh Arora]

Well, you're seeing a great momentum in the platformization. I think that you're also seeing, amazingly I didn't count on this, a kind of a renaissance of firewall business. I mean, it just seems like there's a refresh going on that's falling into your lap.

[Cash Aurora]

Well, Jim, I said this to one of the analysts asked the question. I said, we're delighted that some of our industry peers have refresh cycles because that allows our customers to say, ah, finally I can consolidate on a single platform with Palo Alto, where I already have their sassy. So I'm really excited about their refreshes. We have, obviously we have a refresh every year because stuff that we sold six years ago comes towards end of life and we've got to get them new firewalls. But I'm Delighted that people are running out of old firewalls. One new firewalls and I always maintain firewalls growth 4 to 6%, 5 to 8% in the market. We've constantly, steadily shown that we've constantly taken market share. It's kind of like, you know, every year our market share goes up to 202 to 300 basis points in hardware and it's sticky. We don't have churn. The only people who leave are the ones who go to the cloud. And I keep reading now that people want to set a hybrid strategies because cloud is getting expensive. So I think we're in a good space. We like where we are from a hardware perspective. We don't try and set the bar too high from an expectations perspective, but we think we're going to steadily execute against that 5 to 8%.

[Nikesh Arora]

Well, that's what we want. Now we talked last time we had just gotten the IBM deal. I figured at this point you can start giving us a, a little feel for how that's working.

[Cash Aurora]

Jim, I was mentioning one of my board members and I had this debate yesterday in our board meeting about which deal is going to be better for Palo Alto, IBM or our Prisma Access browser deal. My bets on the IBM deal, he bet on the Prismaxis browser deal. I'm delighted they both do well because we both win. So the IBM deal has been amazing for us. We got 550 customers this quarter from IBM and Qrog. We closed $80 million of TCV business with them. You generate $1 billion pipeline together between IBM and us. We never had a billion dollar pipeline between us and IBM ever in the history of our cybersecurity business. So this is good. This portends good business for us in the future. Of course we have to go and do a lot of hard work, grind it out, win a lot of deals. But you know, it's a forced event where people have to migrate towards the best SOC platform there is in the industry.

[Nikesh Arora]

Said that. I mean sometimes we see these deals, they're for show. And I'll ask what it was. Oh yeah, that's a fine deal. This was clearly not for show. This is a very substantive, rigorous deal that you have with them.

[Cash Aurora]

Well, Jim, you know when you get a call from the really smart investors in the market, the private equity guys, saying oh, I didn't know this deal was in play, we would have loved to participate and say, oh, you must have done a good deal because those guys are very smart. And if they come looking and saying why didn't we know about this? You feel like you've got a great deal and it's great for both us and IBM. It's doing amazing for us and it's doing amazing for them.

[Nikesh Arora]

Okay, talk to me. I use you as my Sherpa to understand a lot of things I do. You always explain, particularly when we're in San Francisco, the CNAP market and why this is so important. Explain this to me, Jim.

[Cash Aurora]

What's interesting is the cloud security market. As everybody went to the cloud, we were all deploying to the cloud, we made mistakes. Somebody's configured us wrong or GCP wrong. And it's not the fault, it's the user's responsibility. You wrote some code and there was a whole class of security capability in cloud that has emerged called cnapp. Right. We have Prisma cloud in there. But as we see the cloud workloads going to production, as we see people deploying AI, you're seeing that the secure needs to be deployed in production. That's where cloud detection response starts to play a part. Our business there has gone 10x in the number of agents we sold in the last year. Right. Because we're seeing people saying protect me in production and take the noise that I'm getting in the configuration space and prioritize it. So I only focus focus on fixing the most important things first so I can't be breached. So I think this market converges the next three to five years. Cloud security goes through a sort of next cycle where cloud detection response and sock become equally important. That again points towards our ex IM product which we are so successfully selling over the last two years.

[Nikesh Arora]

Got it. Now let's talk about government business. We first, we have a change in administration. I know if that makes things so that it'd be more interesting, more hot, because obviously the enemies don't really care, they just want to beat us. But also Department of Defense, big contract in play. How are you doing with them?

[Cash Aurora]

Look, the US government has a lot of legacy infrastructure that needs to be replaced or upgraded. You're seeing a lot of technology focus already in the new administration. A lot of people who are talking about how this thing needs to move faster, things need to get more optimized. The only way to make things faster and more optimized to deploy better technology. Technology, right. The benefit of AI is only going to come if you deploy. That requires data centers, that requires new technology. So I think we're going to see increased technology investment from things that the new administration is going to do. And I said this in our earnings call, you know, we see a lot of high standard deviation decisions, most likely, which hopefully will be good for us. But high standard deviation is high risk. High risk means you can have high returns. So I'm positive, I'm hopeful that some of the changes that we're going to see are going to accelerate the investment in technology. To drive efficiency, you have to automate. To drive efficiency, you have to deploy AI. To do that, you have to do it securely. And that's where we all come in.

[Nikesh Arora]

And then one last question. I am very happy is a my trust is very happy. You give us a 2 for 1 split, people should recognize more people should recognize you're a science and math guy. You know that though even though it doesn't create more value, it does make it easier for people to buy a share.

[Cash Aurora]

We want to make sure that everybody in your club can go participate in our stock, Jim, So this is for you.

[Nikesh Arora]

Well, they're certainly doing that and that's why I'm so glad to have you on and especially on an excellent quarter day, Nikesh Arora, chairman CEO of Palo Alto Networks. Nikesh, of course, it's great to have you on the show.

[Cash Aurora]

Thank you very much, Jim. Thank you very much.

[Nikesh Arora]

Mad Money is back after the break. Today, Stanley, Black and Decker, the iconic power tool maker held an investor event here at the New York Stock Exchange where they laid out some exciting long term targets for the business. Okay. It's been a difficult stock to own, I know over the past couple of months, something we know because we own it. For the Chapel Trust daily, Black and Decker roared into the Fed's first rate cut because historically when the Fed cuts short rates while long rates come down, mortgages get cheaper, people spend more on anything housing related. But this time the bond, the bond market didn't play ball and long rates are actually up from when the Fed first moved. Plus, when Stanley Black and Decker reports most recent quarter, management did talk about headwinds, understood persisting into 2025 and of course we're worried about the impact of potential trade war and tariffs. So in less than two months, the stock went from 110 to 85 and change. I still think it works over the long term as I would certainly would wouldn't own the stock. But let's check in with Don Allen. He's the president CEO of Stanley Black and Decker. Get a better sense of where the company's headed. Mr. Alan, welcome back to Mad Money.

[Stanley Black & Decker]

It's great to be here, Jim.

[Nikesh Arora]

All right, so you had a big Big meeting and you talked about a lot of very exciting long term goals. And I think it's pretty across the board that you want to make things, let's say, bigger and better. So why don't you give us a sense of some of the things you talked about because over the long term I think things are going to go very well here.

[Stanley Black & Decker]

Yeah. So we spent about three hours with our key investors and a variety of other analysts that were either in person or on virtually. And we focused on really making sure that folks understood how we were going to finish the supply chain transformation, but more importantly, what we were going to do to drive more value at Stanley, Black and Decker and get our EBITDA initially up to 2.5 billion by 2027. And then we see opportunity to go beyond that after 2027. And it's really going to be driven by, we think will be, you know, probably a modest growth story in the short term, but over time gaining more market share in DeWalt, gaining market share in Stanley branded products and Craftsman and then driving more opportunities in the supply chain around product platforming, better strategic sourcing, et cetera, et cetera. So we were really excited about telling that story today. That allowed us to really get people to focus on a longer period of time versus just the next 12 months.

[Nikesh Arora]

Let's talk about the brand. So I really want to focus on tools and outdoor for a moment. You know, it's dewalt, Craftsman, Stanley, Black and Decker, Cup Cadet, which I know personally, these are unbelievable brands. And a lot of times we think, and I know, I am definitely of this opinion, these brands are bigger than the company's stock price, so to speak. You know, they're. There are remarkable brands that everybody knows and could you explain to people like how important they are? I mean, on the Lowe's call they talked about the wallpaper and they're being biggest products and that somehow things get lost in translation. We start talking about tariffs, we talk about rates. We don't talk about the brands which are the best in the industry. How do we can we jive the two, so to speak?

[Stanley Black & Decker]

The portfolio of brands that we've created, Jim, is the best in the industry. So we start with our DeWalt brand, which is the pro brand for the construction industry. It is the best professional construction brand out there today. And then we have the Stanley brand which is for trades and professional construction and occasionally the do it Yourselfer, which is more oriented around hand tools versus DeWalt's more power tool oriented. And then Craftsman is kind of the do it yourself enthusiast. The person that works in their garage, works around their lawn. And these three brands fit incredibly well together in a strategy. And there's nobody in our industry that has the power of these three brands. And when you look at these other brands here, like Lenox, Irwin, Black Decker and Cub Cadet, they're what we call specialty brands that allow us to be targeted in certain niches, certain markets. They're not as broad as the three big brands, but they're very unique and they're very specialized and they differentiate themselves as well.

[Nikesh Arora]

It is how hard to outrun the story of how rates didn't come down. Housing note, it's the worst housing market for turnover in 30 years. And we also don't understand exactly what is going to happen with tariffs. You can't necessarily go blow things out if those things aren't working in your favor.

[Stanley Black & Decker]

That's exactly right. And I think that, I think we all agree that long term, this is a great industry. Interest rates will eventually come down to a level where mortgages are closer to 5%, which I think is an important hurdle for us to get to, which will free up more repair and remodel, It'll free up more home sales, new home construction and housing starts. That will really allow this industry to get back in a much stronger place than it has been.

[Nikesh Arora]

All right, now let's talk about one that's strong and one that's not. You've got some incredible things going in in fasteners in Arrow, but you also have auto and auto slow. You can't give away. At one point, I just said, oh, why isn't Don just get rid of the auto? But you don't want to sell that at a trough. And Arrow is just terrific. But I kind of feel like the great nature of it gets lost in the shuffle of the brands. I don't know.

[Stanley Black & Decker]

Yeah, the auto fastener business is very much a B business. So when it goes down, it goes down hard. Right when it recovers, which actually, interesting enough, I think what's going to make this business recover is lower, lower interest rates because it's affecting car purchases as well. So as that changes, then I think you're going to start to see a V recovery where the business goes up fast. And if you look at the previous recessions for that business, that's exactly what they experienced.

[Nikesh Arora]

All right, so tell me as a shareholder, and I've told many people in the club, this is the best stock for the long term. What do you say for people right now who are saying, you know what? I don't know. I mean, I didn't hear anything that says that next year is going to be a breakout year. 20, 27 maybe, but, but it's worth holding. I mean, what do we say?

[Stanley Black & Decker]

Well, I think one of the things that we tried to get across to people today is that there's the power of the cash flow of this company that, that we've kind of really brought back to the last two years. I'm going to continue to do that next year and beyond, which allows us to get our leverage where we want it to be and eventually buy back our stock. So that's an important part of the strategy that we'll be focused on. The other thing is that, yeah, there's going to be some short term things like tariffs to navigate $200 million headwind, which is a big headwind. But you know what? You know, we think we have a plan that we can execute on. We've already started to talk to some of our customers about price increases. I've spent a lot of time in D.C. talking to the new administration and really making sure that we have a voice at the table around the tariff process. I completely understand what President Trump's trying to do with tariffs, but I wonder if it's really something that shouldn't be broad based but more specific to certain industries where Chinese products are more challenging coming into the US Market. That's not necessarily our case. And where power tools and hand tools and those types of, types of things. 50% of what we sell in the US we make in the US and 25% of what we make in or what we sell in the US we make in Mexico. And the remaining portion comes from China and Asia.

[Nikesh Arora]

Well, it's much different from the way it used to be. Shoring has been important and you've been working on this for a long time. To me, I, look, it's, I think that all of these things are momentary and we have to think longer term and that's why we're going to stick with the stock.

[Stanley Black & Decker]

Excellent.

[Nikesh Arora]

Thank you so much to Don Allen, President CEO of Stanley, Black and Decker. You know their brands, you've all used them, you know how good they are. They have money back in. It is time. It's time for the White Mountain. And then the lightning round is over. Are you ready skiing daddy? Time for the light round CLAMORS let's start with Jeff in California. Jeff.

[Chuck]

Hey, Jimmy, Chill. Thank you so much for telling us to buy Nvidia because I bought a boatload in fact, I've got about $235,000 worth of Nvidia and NVDL. But Jimmy, I did a. No, no. It just might become a yes, yes, yes sir. I actually almost stopped diversifying about eight months ago and I bought a whole bunch of Nvidia and my account is doing incredibly well. It's kind of like being a basketball owner and owning LeBron James. But let's switch gears. My stock is Lunar L U N R which is Intuitive Machines.

[Nikesh Arora]

Right, Right. Well, I'll tell you, you did switch gears. Now that stock is up a great deal. It does not. It's kind of the polar opposite of Nvidia and it makes no money. Matter of fact it lose a lot of money. That said, look, I know a hot stock when I see it. I'm not going to fight the speculation for space anymore because everybody wants a piece of what Musk has for space but he doesn't have it yet. So I'm not going to. I'm not going to bless it, but I'm not going to fight. Let's go to Jeff in New York.

[Chuck]

Jeff, hello Mr. Kramer, this is Jeff from Sodus, New York in the Finger Lakes region where the Buffalo Bills are making everybody very excited up here.

[Nikesh Arora]

I love the Bills, what can I say? There are my sister team AFC, what's happening.

[Chuck]

Not so exciting is how bad PepsiCo has been doing this year. 52 week low yesterday it has a 3 1/2% yield. But I'm down 20% in the stock. Should I buy more?

[Nikesh Arora]

You know, I think Ramon McGuire is doing such a good job. But it just, the odds are just right now we got the. If you have the Fed cutting rates, you shouldn't own the stock. If you have the GOP debt ones, you shouldn't own the stock. If you have people saying that junk food is not good for you, you can't own the stock. And it's just become just too darn hard. So even though it's got a three and a half percent yield, I do think it goes. Unfortunately I have to say I think it goes lower. Let's go to Jane in Texas. Jane. Hey Jim.

[Don Allen]

Hi. So nice to hear your voice. I want you to know I'm a first time caller and I haven't been listening to your show all that long but I really enjoyed and I value what you have to say.

[Nikesh Arora]

So thank you and I really want.

[Don Allen]

To hear what you have to say about Accidental Petroleum.

[Nikesh Arora]

I think it's okay. I think Vicky will help us on an okay Job. Look, it's Warren Buffett's oil. I don't know why he anointed this one, but he's anointed it. He got a very good preferred deal. Look, Kotara is the way I like to do this thing Ctrl and by the way, they are not climate deniers. All right. Kotara is drawn by Tom Jordan. The stock is really on a tear late because people realize the last acquisition, the acquisition he gave really brought him a lot more oil so that the portfolio between oil and natural gas is much more balanced. It's a buy. Let's go to Michael and Alabama. Michael Booyah.

[Cash Aurora]

And World.

[Chuck]

Thomas Kramer, long time viewer. My stock is Globe Life.

[Nikesh Arora]

Well, it's kind of a interesting Medical Medicare supplement insurance company. Nothing wrong. It sells at 8 times earnings. I'm going to tell you it's fine. It's not exciting, it's not boring, it's just fine. Let's go to Gentry Gentry in North Carolina. Gentry, Booyah.

[Chuck]

Jim from the Tar Heel State. First time caller, thank you for.

[Nikesh Arora]

All right, all right, let's go to work.

[Chuck]

I'm getting some heartburn. Jim. I invested in a company that actually supposed to help last spring and I can't fathom where all my earnings went after a great summer on Ph A T.

[Nikesh Arora]

Fat man. I'm thin on fat. I gotta do some work on this one. I have fat. Anybody know fat? I mean the. No, I'm going to use. I'm going to study it. I don't know it. I'd rather not cuff it. You deserve a good answer and I'll get it for you. And that ladies and gentlemen, conclusion of the lady round. Is it time for a Marlboro Friday in retail? Now there are probably only a few people on earth who remember Marlboro Friday back on April 2nd of 1993. I don't even talk about cigarette stocks these days and I certainly would never recommend because I got scruples. But back in 1993 when I was a hedge fund manager, I was a lot less into scruples if it meant giving up on stocks with good value. I remember I was my home office in Bucks County, Pennsylvania. On that bright beautiful spring day I trade out of that house in a little converted garden shed. Most of the time was incredible fun. I guess I was an early work from Homer. But I wasn't happy camper on April 2nd of 1993 that was the data Philip Morris decided unprovoked to reduce the price of cigarettes by 20% taking a huge hit to its Earnings, I mean crushing them. The Stock dropped almost 30% in response and it took down all the branded consumer packaged goods placed with it. Why did Philip Morris do such a silly thing? Because it saw the writing on the wall. Generic cigarettes were eating their lunch. Big Mo knew that there was no loyalty to tobacco. Sure, for all I know you could taste the difference. I don't know. I never smoked, never saw the appeal. But the people running Philip Morris didn't want their company to go the way of its competitors with their endlessly sinking stocks. It took a couple of years for Philip Morris recover from Marlboro Friday, but it did recover much stronger than any of its competitors. Not only that, it only came out on top of one of the most lucrative rolling breakups in history. Selling off its craft subsidiary, then splitting the tobacco business into Philip Morris International, leaving domestic business to Altria, which remains a prosperous high yielding company. Even though Big Tobacco has lost its luster in recent years, Altia still dominates the market here in the US. I'm thinking about Marlboro Friday because I actually see a similar situation developing in retail in this country where someone just has to blink. Someone must do it. Someone other than Wal Mart or Costco. The bricks and mortars that already have ultra low price. One of these competitors needs to pull off a Marlboro Friday by staking out a must shop proposition. Maybe it should be the dollar stores which are dollar stores only in name because most of the goods goods now cost a bucket change at least. Maybe it's a Kroger, maybe it's a Kohl's, or maybe most obviously after today it's a Target. It's simple. They don't have to mark down the whole store. But they need to roll back prices for an important good in each aisle. Roll back to 2019, maybe before pre pandemic levels. I don't care if they lose money on the transaction. Transaction maybe seem better that they lose money the transaction as long as it brings in traffic and wins them customer or wins back the customer loyalty. I don't know if many people from this current crop of retail execs remember Marlboro Friday. Maybe they've never even heard of it. But the lesson was clear. You want to engender loyalty, you want to be the market leader. Then you have to take a beating on price when the consumer is desperate for value, more accurately, the shareholders have to take a beating. At least in the short term. Them beating belongs to the shareholders. You have to be willing to do the one thing we're all told you're never supposed to do you have to crater your own stock? One time only. Rip off the band aid. Who'll do it? I don't know, but whoever slashes prices aggressively enough will be able to make a comeback from the dustbin of also retailers. Those who don't escape from the dustbin are headed right for the dumpster. Retail execs, the choice is yours. You either pull off a marble Friday, oh, go Google it, chatgpt it, or you become irrelevant. I like to say there's always a bull market somewhere and I promise try to find it just for you. Right here on Mad Money. I'm Jim Cramer. See you tomorrow.

[Jim Cramer]

All opinions expressed by Jim Cramer on this podcast are solely Kramer's opinions and do not reflect the opinions of cnbc, NBC Universal, or their parent company or affiliates, and may have been previously disseminated by Kramer on television, radio, Internet or another medium. You should not treat any opinion expressed by Jim Cramer as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. Kramer's opinions are based upon information he considers reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Mad Money disclaimer, please visit cnbc.com madmoneydisclaimer the first ever Kia K4 seamlessly combines bold style and advanced tech. With striking starmap, LED headlights and an available panoramic display, the Kia K4 delivers design and function. The available Surround View and Blind Spot View monitors can help provide added confidence. Plus SiriusXM comes standard, bringing you closer to what you love. The Kia K4 balances aesthetics and innovation. Learn more at kia.com K4 surround view and Blind Spot View monitors may not detect all objects around or behind the vehicle.