← Mad Money w/ Jim Cramer
Mad Money w/ Jim Cramer
Mad Money w/ Jim Cramer 11/3/25
00:43:52
Listen to Jim Cramer’s personal guide through the confusing jungle of Wall Street investing, navigating through opportunities and pitfalls with one goal in mind - to help you make money. Mad Money Disclaimer
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Hey, I'm Kramer. Welcome to Mad Money. Welcome to Kramer Do My friends, I'm just trying to make a little money. My job is not just entertain, but to teach you. So call me 173cbc. Tweet me at Jim Cramer. When you read about how we have such an extreme concentration of market capitalization and barely more than a handful of companies, there's a natural tendency to want to avoid that. Who wants to own stocks like the Magnificent Seven? They've had such huge runs, you can probably get something cheaper, right? But today, like so many other days, you just feel like such a chump when you deviate from these seven stocks Alphabet, Amazon, Apple Matter, Microsoft, Nvidia and Tesla. And as we head toward the end of the year, with the Dow dipping 226points today, S&P advancing 0.17% and the Nasdaq gaining.4.6%, I think we may just have to accept that nothing's going to change between here and 2026. Winners tend to keep winning in the last two months of the year because money managers want to show their investors that they own these smart things. They might sell the Mag 7 come January, but not before then. Otherwise they'll look like morons. So when these stocks come down, they will be bought by institutions that have lagged the ad. They are the best investments and the best ways to the next two months on any weakness. So let's consider the case of Amazon. A week ago, despite tremendous derision, I defended owning Amazon on this show, a stock that had fallen behind the other six names in the MAG7, Amazon's Web Services division, was widely seen as losing share in revenues to Microsoft's cloud business, growing at about a 17.5% clip versus almost 40% from Microsoft Azure. Now, some of that alleged slowing was said to be happening because Amazon wasn't spending enough on web services. But then we got this one and then two punch for the ages. First Amazon reported an incredible quarter huge uptick in the web services business where the growth rate jumped from 17.5% to 20% off a much larger base than Microsoft. And for the second punch, if you were worried that Amazon wasn't investing enough in the web services biz. But well, today we learn that's not the case at all. Amazon Web Services inked a multi year strategic partnership with Open Air, the one that Microsoft does all the business with, to provide infrastructure for OpenAI's advanced artificial intelligence workloads. Under this $38 billion agreement, open air is quote accessing US compute comprising hundreds of thousands of state of the ART and video GPUs. The result, in just a few days time, the gigantic company now $2.7 trillion dol trillion bolts from $222 to $254. And the stock goes from being unchanged for the year to nearly up 16%. A loser? Nah, a winner. House of pleasure. That's monumental. Not only that, but in video, which it stood still for a few days, rallies more than $4 and goes deeper into the $5 trillion zone. Now, I don't bring up this incredible Amazon gain to brag that I own the stock for the Chapel Trust, despite constant chiding and endless criticism from the bears who seem to be everywhere. No. Although I do love to say I told you so never gets old, but no. I bring this up to refute the worries about the dangers of concentration that I heard literally that this is what's going to cause the market to go down and hurt these stocks the most. It's all the usual arguments like I talked about this weekend in that CNBC Investing Club Think piece that I put out every Sunday that I thought was really one of my best ever. And you should get it first. Can we just accept that these stocks are not just not joined at the hip? I mean really, they're joined together, but they're joined together not by the data center. They're joined by their growth. Despite their size, they're putting up some of the best growth out there. Growth. It's growth that matters to stock investors, not the data center, not accelerated computing, not even artificial intelligence. Growth is what the Magnificent Seven have in common and growth is what the market always loves. We just don't talk about it enough. In my new book, how to Make Money in Any Market, I write that you need to be in Growth stocks, no matter what, that only growth stocks can measure up regardless of what happens with the real economy. These are the companies that simply aren't part of that Fed rate cut scrum. Growth stocks are the only safety stocks these days. These are the stocks that took off when the rest of the market got crushed during the mini banking crisis of 2023. They're the stocks that bounced right back after Covid. And they did that because growth is the ultimate protection in the stock business. When you realize that these are seven companies tied together relative by relatively high growth rates, not by what they do for a living, you can see that there's no real worry about concentration of gains. You get their growth, you get their size. The reason why this market gravitated to Amazon last week is that it's the most valuable unit. Amazon Web Services has accelerated growth. It went from 17.5% growth, not too shabby, to 20% growth, which is rather remarkable given the law of large numbers. 20% growth of $132 billion revenue run with a 34% gross operating margin forever sake. That's some of those profitable growth the world has ever seen. Now I want you to contrast that with Kimberly Clark. Great companies saw its stock get clobbered today after the company announced was buying Can View. That's the maker of Tylenol, Band aids, nitrogen, among other brands. We'll learn more in a second. At one time, like so many other household names, Kimberly Clark went from being a largely domestic company to a worldwide colossus. As Western Europe, then Eastern Europe, then South America and Asia, China, they all discovered what we knew. That gold standard was Kleenex. Kimberly Clark's growth rate got better and better and better in this stock was juggernaut. But once Kimberly Clark had expanded everywhere and began to face more competition from Procter Gamble and Unilever all over the globe, as well as the local brands that caught up to their winning formula, well, the growth rate plummeted. It got to the point that Kimberly had a 2.5% organic growth rate when reported last week. And believe it or not, that was actually a pretty good number. That's simply not enough growth though to attract the new buyers that are interested in Mag 7. No wonder the company felt compelled to buy Can View, even as it owns the very controversial Tylenol. With all of its baggage strewn by the Secretary of Health and Human Services, RFK Jr. A company with a good deal of 4.9% with Kimberly with staples that are the products that are staples. Well, didn't that used to be the ultimate safety stock. Right. But as I explained in how to Make Money in Any Market, that era is over. A safety stock does not go down 22% in one year. Of course, not all growth stocks are created equal. The questionable stocks these days are the ones that are in the data storage business. Sandra Seagate, Western Digital. They're now shortage stocks, meaning not enough people saw the demand for data storage coming. So they have super growth because they've got these storage machines and their stocks are roaring higher. I like them, but I know you have to sell them at a certain point because eventually they'll pump out enough new supply to sate the demand. I am looking for stocks. You don't have a buy and a sell, you just own them. I waffle in the build of data centers too. I think they may have secular growth, meaning growth that doesn't depend upon the health of the broader economy. That's the kind of growth I'm looking for. I just don't know if they have enough of it. I feel the same way about Nucor. Got a large data center steel business even as other customers desperately need lower interest rates. So that means Nucor's hostage to the Fed's next move and we don't know if we're going to get a rate cut in their next meeting. I don't want to be hostage to anything. No. My growth is pure bottom line. When you look at Magnificent Seven, what they have in common is not artificial intelligence, the data center, accelerated computing. It's that they all have pure fantastic worldwide growth. And that's why professional money managers just can't quit these stocks. At the end of the day, the executives who run the Mag 7 know what we want and they just keep giving it to us. What more can we ask for? Let's go to Venus in Michigan. Venus. Hey Mr. Kramer. This is Venus from Kramerica, Michigan. How you doing? I am doing great Venus, how are you doing? I'm doing awesome. Hey, you're the goat. So I got to ask you about this stuff. Recently had the bomb earnings report and I want to know how far you think it can go. It is so fi. Okay. Sofi I think is an amazing company. I think it is run terrifically by Anthony Noto, a very old friend of now more than 30 years. I think it's resting right here and then it's going to go up again. It and Affirm are my 2 favorite so called fintechs because they do far more than what people think they do. The Magnificent Seven all have one thing in common, and that is that they have incredible growth. That's why money managers and retail investors can't quit these names. Not tech, but growth. On May Money tonight, Kimberly Clark announced its intention Acquired Tylenol maker can be an almost $50 billion deal, but Wall street didn't seem to care for it. I'm going straight to the source with Kimberly Clark to learn more about what a combined company with brands like Huggies and Band Aid would look like. Then we learned a lot about the state of the hyperscalers in last week's earnings gauntlet. I'm detailing my key. Then we thought, what if you wanted to invest in a company that isn't spending copious amounts of money on the AI build out? I'll reveal the names I'm watching, so stay with Kramer.
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Don't miss a second of Mad Money. Follow imkramer on X have a question? Tweet Kramer madmentions Send Jim an email to madmoneynbc.com or give us a call at 1-800-743-CNBC. Miss something? Head to madmoney.cnbc.com.
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This morning, Kimberly Clark, but you know, is the maker of Kleenex, Huggies, Cotton and all sorts of other paper products. Now since buying can do that's change old over the counter business for just over $40 billion you know can do is Tylenol, Neutrogena, Listerine, band Aids, Benadryl and of course Johnson's among other host of other brands. Kim is paying a 46% premium to create the second largest consumer packaged goods company on Earth. Second, keep that in mind. But Wall street skeptical about the deal. Stock plunged more than 14% today in response, going to its lowest level since 2018. It was not a surprise though. So what's the argument for this takeover? Let's go straight to the source of Mike Shoe. He's the chairman and CEO of Kimberly Clark to find out.
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Jim, thanks for having me on today.
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Okay, so why don't you give us the rationale. I know you and I talk before and you know how much I like the deal, but I want other people to know how significant it really is.
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Yeah, Jim, we're really excited today. This may be the second most important day in our company's history. Course, Founders Day is the most important. But this is really about two great iconic American companies joining forces to what? To create what we think is the preeminent global health and wellness leader. And so that's really what we're trying to build.
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Now you've got two kinds of synergies. It's a good word. But you've got both cost synergies and revenue synergies. Can you explain what both will mean? Because I think at the heart of this deal is the idea that you can boost revenues and cut costs.
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Yeah, well, here what I'll say Jim, is I think this is probably the single, single largest shareholder value creation opportunity that I'll ever experience in my career. Right. And so, you know, we think there's tens of billions in value creation opportunity of which a lot of that is driven by the synergies that you're asking about. Certainly on the cost side, you know, I think the, the history is, you know, we having operate in lower margin categories, we run very, very lean. And so generally our, our overhead costs tend to be in the top quartile of the industry. I think, I think can view in our discussions with their management, they coming out of a higher margin pharma business, their costs are a little bit higher. And so we really believe that, you know, we can operate efficiently with the cost structure that we have and we can get can view closer to our, our cost structure and operate effectively as.
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Well at the same time. What I thought the thing that I felt most attractive was in a bizarre way, you're best in certain parts of the world and they're best in others and they tend to be a perfect fit.
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Yes. Some directors would say the unique feature of this transaction is the complementarity of both the category portfolio and the geographic portfolio. And what I mean category is, hey, if you think baby, like we're coming at baby from two ends, we make diapers, they make Destiny X and baby shampoo and baby lotion. Aveeno baby so and so, you know, we've invested a lot of effort to create a long time, long term digital relationship with consumers. And we think it's a pretty unique competitive advantage for us. We think there's an opportunity to bring other brands along that ride around along that journey.
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Go ahead.
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I'm sorry, on the geographic side side also, they happen to be, as you just mentioned, really strong in markets where we've struggled to drive penetration. That would be India, where they have a very big business. They're in 3.1 million stores in India and we've had a tough time building that, that brick and mortar penetration. They're really big in Western Europe. Multibillion dollar business there and we have almost no sales in West.
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Well, I mean Procter had won, so you had thrown up the white flag. I remember when that happened, we all cheered. But that's not what you can do now. You need every inch.
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Well, they have great distribution in Western Europe. They're especially strong in the pharma channel, which matters in our categories as well. They're great in the doctor medical channels as well. And so we think there's a great opportunity to kind of expand there. And then on our side we are strong in markets like Indonesia, South Korea, Mexico and where they're more lightly penetrated. And so we really think there's a big growth opportunity.
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Now. Do you want to get to the reservations the people especially. But there was one I met can be almost instantly when they came, when they were spun off and very nice people and they're from Summit where I, where I live. But what struck me as I asked them what their club strategy was and their Internet strategy was and they didn't have one for either, which shocked me and made me say I got to tell people to stop sell this stock.
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Yeah.
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You have tremendous in both cases. Isn't that just a great opportunity for you both club and Internet channel development.
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Globally, Huge opportunity for both companies or for both of us together. We tend to be very strong in both the channels that you talk about, certainly in club in the United States. Globally though I would say online sales is accounting for 100% of our growth in North America this year. Right. And because we're, and we're over relatively.
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Over shared, I was surprised. No analysis that they just don't know the companies as well as they should.
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Our online shares are 7 points higher, 700 basis points higher than our offline shares. And so we've made a big investment to develop great relationships, a great offering and then great interesting for the retailers. What they love about us is our data analytical capability. And that's, that's what we're really good at.
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Second and none. Okay. So now the first thing I heard from people was okay, look, they don't really understand what they're buying with. When they get to Tylenol, they've got a health and Human services secretary against them. They have an FDA administrator who says listen, there's, there's conclusive data. They have women who are pregnant who if anything goes wrong, they are naturally able to sue you and win as we know that. Unfortunately, it's so tragic. They will win if they sue. Now all these things you went through through. And yet you still went through with this.
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Yeah, certainly those, those concerns are reasonable for anyone. I will say they came out in the middle of our detailed due diligence process. And I would say we, we, we conducted a very robust due diligence process. I would say our board ensured that we, we brought them an analysis from the world's foremost experts and in regulatory affairs, science, medicine and the legal aspects and so, you know, we've, we've met several times as a board, you know, plowing through every one of those areas and a lot of the cases. And so what I would say, Jim, is, you know, we're aware of the situation, very aware of the situation. And we're very confident that we will create, you know, great shareholder value through this transaction.
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Now, at the same time, Texas filed a suit, which was a threatening suit and saying that Johnson Johnson tried to get around its obligations by its offloading can be. They knew, had all these problems. Again, that I presume that that will just, they'll just loop you in now.
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Yeah, we're well aware of that too. And we are a proud Texas company. And, and so we're aware of that situation and we're prepared to work through that.
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Now, J and J gave the international talc claims to can view. I know the legal system is different internationally in terms of jackpot justice, but what did you come up with about the possibility of having to fight all these different lawsuits individually rather than settle? And what do you think when you discuss it with your board is the liability here?
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Yeah, similarly, we conducted detailed analysis of the UK talk situation as that also came up during, during the due diligence process. And so we're well aware of that and have factored in that into our thinking as well.
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How sales been for Tylenol since RFK Jr got his job.
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I'd say they have seen a little bit of impact, but less than you would think. And so I think the brand has been very resilient. It is, you know, even today, while I'm still getting into it. So I'm no expert on Tylenol, but I'm told it's a very effective and safe pain reliever. And so I think the consumers respond accordingly.
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Johnson Johnson is, after trying to work with the plaintiffs bar repeatedly for years in a reasonable fashion, decide the heck with it. We're going to fight them one by one. It has been working. Their stock went up $40. Since they've done that, would you be willing to say, you know what, we're not going to get rolled. We've looked at the science. We know there's no problems. We're not saying come and get us, but we are saying it won't be so easy for you to make money from us.
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Well, you know, and again, we are one step further remove that. We've met intensively during the due diligence process with Kirk and the leadership team at Ken View and you know, and review reviewed some Documentation, we'd say, hey, the science is sound and we've gotten that from our external experts as well. And so while I won't really discuss maybe the legal strategy, but I would say, hey, we're confident in the approach and we believe in this.
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Well, there's no doubt that it's been, it's been tried many, many times before and found in the plaintiffs bar has not had great luck because it's, it's the state of play. It was, that it was over. I just, it's just been resurrected because of this acquisition. Yeah. Now tell me about, Can I just.
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Say though, you know, coming from the company we come from, you know, we're very, you know, our focus, you know, we're entrusted with like parents most precious thing in the world, which is their baby. And so throughout our history we've always been fully, you know, fully focused on taking care of our consumers. And so we would never put profits or sales ahead of the safety of, of our consumers. And so, you know, I just wanted to assure you that.
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Of course. Now Mike, I know that there have been a time maybe in the previous administration where two large consumer packaged companies getting together might have a trip, tremendous antitrust scrutiny. Do you think that this administration might just say, you know what, you need to have a powerful competitor, Procter and Gamble, which is the way that a lot of people feel that ultimately the, the Google suit came down, even though that was from a judge.
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Yeah, well, I think this, this transaction in addition to the big value creation is really about two great iconic American companies coming together, creating a better future for the consumers that we serve, the employees that make us, the communities that we operate in, the partners that we work with and the shareholders that own us. And so that's what we're really focused on. And I, and I'm hopeful and believe that the administration across multiple countries will recognize that.
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B
Okay, now you've got some fantastic billion dollar brands. 1, 2, 3, got 10 of them. Do you think there's a possibility of 15, 20 or do you want to just make these even bigger? Maybe the strategy should that each of these be much larger because the names are known throughout the world.
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Yeah, fantastic portfolio brands. I guess I'm, I'm, I have high aspirations so I would want to make these bigger and add more. And that's kind of what the strategy is going to dictate. And we think, you know, we think there's tremendous growth opportunity ahead for us.
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Do you think that consumer is willing to pay for brand names still or do they want to go for as you know. Well, because you've looked at it very closely. They want Kirkland signature or do they are they want these brand names that we know from our parents and grandparents.
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Here's what's interesting. This, this is a challenging economy and I think you've heard whatever phrase barbell economy, bifurcation, whatever it is. We posted a fairly strong third quarter, Jim. And I think what drove that and we had volume mix growth. That's our seventh consecutive quarter of volume mix. Solid, you know, solid volume mix growth. I think what's driving that is, you know one on the premium end we continue to bring great innovation and, and consumers that have the spending power are continue to invest in and better for your products. Better products.
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B
Right.
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At the same time we saw this change in the environment especially in the US coming two years ago. And so when you, when you saw the stimulus payments running out and then, and then the impact of some of the inflation that's happening to consumers, we recognize that spending power is going to be more limited. And so what we did was we aggressively moved to bring a lot of the benefits that we have in our premium tiers into our value tiers. And that's why we're growing this year, notably in the U.S. in our, in our mid. Mid tier diaper snug and dry on Huggies and in our mid tier in China.
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B
But the innovation that you brought has made it, I felt so that that they're not equal. The generic is simply not equal because of the, of what you're able to do in terms of absorption. Yeah. What should be able to do in terms of things that people as they get older are somewhat embarrassed to be embarrassed.
- [25:48]
A
Yeah. Whether you talk about let's say your word generics or, or low cost value players and like in China, there's a lot of low cost Chinese brands out there. Our approach and it's the mantra which is we, we are the best product and we're going to have the lowest cost. And so we want both those and I think that strategies work.
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B
I think that's going to be something that can be very much needs and I know you're the man to do it. I want to thank Mike Shoes, the chairman and CEO of Kimberly park can be and yes, I think this is a terrific deal because you're getting the growth you need. And as far as the lawsuits go, I've looked at them very closely too. It, it's kind of been litigated and you can ask the people from J and J and I think they'd say the same thing. Their money's back in.
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A
Coming up, Big Tech is going on a spending spree. Kramer's breaking down the latest capex on AI and the data center Next.
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Get threat ready with comcast business@comcastbusiness.com flash cybersecurity so far this earnings season, we've heard a lot about the AI data center boom, especially last week when we got results from five members of Magnificent Seven. Despite all the hammering from AI skeptics who insisted these companies are wasting their money, the fact is that spending on the data center hasn't slowed down at all. In fact, it's accelerating. The largest companies on earth are ramping up their AI investments and indicating that they'll spend even more next year. At this point, though, Wall Street's no longer willing to look past these massive spending commitments. Which is why I want to walk you through them, because they are so important. I'm a big believer in artificial intelligence as the fourth Industrial Revolution, and I'm an even bigger believer in the executives who run these companies. They wouldn't light their money on fire, for heaven's sake. They're spending forces to build data centers because as they see it, they can't afford not to. I'm not going to question them. Let's start with better platforms. Last week met a stock up pulverized after the current reported very strong quarter, mainly because they raised their capital expenditures forecast dramatically. Previously these guys played a shell at 66 to 72 billion dollars on CapEx this year. Now they say it's going to be 70 to 72. But more importantly on the conference call, CFO Susan Lee, very straight shooter, said, our current expectation is the capex dollar growth will be notably larger than in 2026 and 2025. People were shocked at that. While total expenses will grow at a quote, significantly faster percentage rate, end quote, next year, mostly due to incremental cloud expenses and higher compensation costs because they're trying to poach a lot of top talent and AI. And that's why Met A stock got crushed and continues to get hit. On the other hand, Output also raised its 2025 capital expenditures forecast from 85 billion all the way up to 91 to $93 billion range. Much bigger increase than we saw from that. Yet Alphabet stock did not get punished. Why? Wall street seems more willing to give them the benefit of the doubt. Even though cfo, not Ashkenazi said that the company expects, quote, a significant increase in capex next year. People just said fine. Meanwhile, Microsoft shelled out nearly $35 billion capital expenditure last quarter alone. Last quarter not year, much higher than the $30 billion plus number they guided for July. On Microsoft's conference call, CFO Amy Hood said that they're ramping up spending on graphics processor units or GPUs, the kind of chips that Nvidia makes. Hood explained that quote, total spend will increase sequentially and we now expect the fiscal 2026 growth rate to be higher than fiscal 2025, end quote. Three months ago, Microsoft had indicated that their capital expenditure growth might Moderate in the 2026 fiscal year, which has already begun. But that's clearly no longer the case. Finally, Amazon raised its full year CapEx guidance for 2025 from 118 billion all the way up to 125 billion. And CFO Brian Olafsky said told us, listen, the amount is going to increase next year too. So even though only Meta stocks sold off hard on heightened spending, the truth is everybody's doing it. This morning Ben Wright sees that brilliant tech ed and analyst out of Malius Research on an often quote he put on a note saying that 2025 capex estimates for the top four hyperscalers. The four companies I just mentioned had risen 6% after last week. And he raised his 2026 capex estimates for these four companies from 403 billion up to 486 billion. That's nation state money. Hey, throwing Oracle and Core Weave, two major more major data center builders. And now he's expecting $551 billion in capital expenditures next year and $733 billion in 2027. Again, that's just six companies. That's not even including Open Air Elon Musk which can use going to go through a lot of money itself. How do you play it? Okay, look, the most obvious answer is the same thing I've been saying for years. You just buy the stock Of Nvidia, the lion's share of the spending bonanza will go to hardware. Last week Nvidia held a very bullish GTC event in Washington D.C. where CEO Jensen Huang said he has quote, visibility into a more than half a trillion dollar cumulative revenue from the company's current AI chips. That's the next generation Vera Rubin chips and all the associated networking equipment. There's a reason Nvidia shot up nearly 9% last week and it rallied another 2% today. And that's without any hope of Chinese sales, which were never in the numbers anyway. Again though, I'm bringing this up because Metta was harshly punished for this capex forecast with its stock plunging 12% last week. Now I think they got singled out because these numbers are giving investors flashbacks to CEO Mark Zuckerberg's expensive Metaverse dalliance just a few years ago. That was before we got religion cost controls in 2023. Now look, I think it's possible that Zuckerberg rolled out that number to show what he's willing to spend to prevent open AI from competing with him on his social turf. If Open Air doesn't make a move into social media next year, I say he can always cut back the spend. And guess what will happen then. Stock Source Microsoft initially rallied huge in after hours trading last Wednesday because they report a monster top and bottom line beat. But when Microsoft raised their capex forecast the conference call, the stock gave up its gains, actually finishing the week down 1%. Of course, Amazon now but both rallied more than 8% last week despite raising their capital expenditure guidance for the current year. So clearly Wall street hasn't completely turned against heightened spending. What's the difference here? Simple. I think Amazon now both did a much better job of explaining why they need to shell out all that money. For example, during Amazon's conference call, CEO Adjass he laid it out for you. Listen to this quote. You're going to see us continue to be very aggressive investing in capacity because we see the demand. As fast as we're adding capacity right now, we're monetizing it. End quote. Hey, that makes you feel like they aren't just spending a few extra billion purely for the sake of lighting their money on fire. Then again, a cynic might argue that Amazon now but got away with their higher capital spending plans because they simply didn't go into as much detail as Matt and Microsoft did. I'm not buying that. I mean, the latter laid out numbers for next year's capex while Amazon Output really said they'd be spending more. But I love what the the fact that they have the demand. That's all I care about. All in all, though, there's a lot to learn here. Obviously these huge spending plans are great news for Nvidia and its fellow suppliers of datacenter equipment. On the other hand, the fact that Meta sold off so hard on the news of its spending plans might make you want to take a little more cautious approach the industry as a WHO whole. I am not worried about the data center boom, but I do think that the tech titans who don't need to spend as much on AI could be in better shape in this environment. Think of that. Here's the bottom line. While many of the tech titans are spending fortunes on the data center build out, there are other companies that can be major winners without having to spend ungodly amounts to buy money. Money on spending for Nvidia and building out data centers and paying for electricity to keep the stuff running. Stay tuned and I'm going to walk you through the ones that are the real winners for 2026. Let's go to Jay in Florida. Jay, AJ I mean, I'm sorry. Hey Jim, Good afternoon. I love the show. Good afternoon. Thank you. Thank you, buddy. My question is about intc. Is it too late to go in? Is it a buy still? It's too late. Money's been made. Let's just be very careful. Stocks had a gigantic move. There are many people who say that there's still so much work to do. You're going up against some very big companies. It's been a huge run. Lip Bhutan has done a terrific job. If I were him, I would raise as much money as possible because there was still so much damage to that balance sheet. The problems aren't over yet. Look, I am not too concerned about the data center boom, but I do think the tech titans that are spending less on AI could be in a little better shape right here. Or at least they can explain it better. They'll be in great shape. Much more money covering those stocks that could benefit or even soar from AI. Without the massive capex bet, then I think the consumer mercury can spend some three words and reveal them later. And all your calls, Rapid Fire, Tonight's edition of the Lightning round. So stay with Kraper. Before the break, I pointed out that Wall Street's finally started pushing back against some of the hyperscalers for their massive capital spending commitments towards building out data centers for artificial intelligence. Meta stock got obliterated. Microsoft initially roared in response to a great quarter, but then gave it all back when people freaked out about their capex budget. But there's a group of companies that can benefit from the rise of AI without having to spend borderline psychotic amounts of money on infrastructure in this environment, these may be the ones you want to write down. These may be the safest Take Apple the other members of the banknives have been reported last week the only one I didn't dig in before the break. Metta and Microsoft and Amazon and Alphabet spend fortunes on data centers in order to win the AI race. Apple's looking better and better because they opted out. They're not trying to build the best chat bot though. They are working on improvements to Siri that should arrive by next spring, but going to make it a little more personalized. But overall, as far as I can see, this strategy is to do the same thing they did with search. Why not just let somebody else build it and then pay Apple for the privilege of being the default on all their devices? Google reported pays them $20 billion per year to the go to to be the go to search engine, which we now know is held up in court as a payment that was totally legit. I bet they can even get more from that from one of the hyperscalers that wants to be the go to generative AI platform. There's not that much difference between them. It would really help if they had Apple at times over the past couple of years, Apple's come under fire for not really seeming to have an AI strategy. But as I said repeatedly, they don't need a they don't need one because they have an installed base of over 2.35 billion active devices and any of the hyperscalers would happily pay up for access to that user base. Still, one more reason why I always say Apple own it, don't trade. It doesn't hurt that these guys reported magnificent quarter, yet the stock ultimately didn't get much credit for it, but it did run up in advance of the report. Who else can make a fortune from AI without much upfront investment? Here's one you haven't thought about at all and it's Reddit. That's the online message board platform that's become a major force in digital advertising, offering some of the best ad rates in the most targeted audience. It's still growing by leaps and bounds after Reddit reported blowout numbers. We had co founder and CEO Steve Huffman on the show last Thursday. Not only did Reddit put up nearly 70% revenue growth, their margins have soared. That a 91% gross margin, 40% adjusted EBITDA margin. That's very impressive for a company that's barely profitable. When it came public, a lot people thought it would never be profitable. There's a reason the stock jumped 7.5% last Friday, though it did give back a bit of that today. The other number that stood out to me for rabbits on Reddit's report was the company's capital expenditures. Figures came in at 2.1 million in the third quarter. Yes, that is the million with it. Here's how Hoffman put it when he came on the show.
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Look, that, that's, that's the aim of Reddit.
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High margin, high efficiency, very low capex. And you know our aim and what we've learned so far is, is we.
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Can be an AI winner without the AI cost.
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See, Reddit's partnering with the chat bot solutions its data because that data is essential for training generative AI models. Keep that word in mind. Companies like OpenAI and Google already pay Reddit to license its data. And though this is still relatively small portion of the business, I think you can grow very big over time.
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Why?
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Because many of the other generative AI companies are allegedly using Reddit's data without paying them a dime. So far this year, Reddit's filed a couple of lawsuits against companies. Again throughput perplexity, deep pocketed for using their data without permission. I expect off to make some kind of deal which will be pure profit. Keep in mind most of these chat bots rely on Wikipedia and Reddit. Take those data sets away and they become even less reliable than they already are. And they are reliable enough to use without double checking. Who else can make out like a bandit by licensing their data to the big a farmer to the big platforms? How about the New York Times? That's the paper of record, for heaven's sake. The New York Times has already begun to make some of these deals as well. In May they announced a multi year licensing agreement with Amazon that would allow Amazon to use their articles to train up a models. I don't know how much you're getting, but the great lady doesn't need to spend an extra cent to make that money. They're just licensing out what already exists. And they're real smart. And I read their briefs. I like their case. Plus, the Times has this ongoing lawsuit against Open Air which they originally brought almost two years ago. If they win, then the company could be looking at a significant new revenue stream, not just from Open Air, but from every other AI platform that we Forced to pay up to train their models. On the paper of record, I think they had a very strong case. That said, the New York Times reports on Wednesday, I have no idea how the quarter is going to be. Okay, maybe bottom weakness finally. Let me give you one more potential winner. It doesn't need to spend much money, more money to get there, but it's really been moving up a lot. And that's company called Cloudflare, the cybersecurity company slash content delivery network looks that looks to be like an enforcer for all the content content publishers. They're basically getting their data stolen by generative AI platforms. This past summer, Cloudflare announced that it was the first Internet infrastructure provider to block AI crawlers from accessing content without permission. In August, when we last had CEO Matthew Prince on the show and he sounded earnest about wanting to help smaller publishers that are getting ripped off by companies, he told me that as the world transitions from search engines to answer engines, these publishers are getting hosed because unlike search engines, AI platforms don't send them traffic. That's why Cloudflare is helping their customers protect themselves from AI data scraping. Without that protection, they cannot get paid. Now we don't know how much Cloudflare could make from this business, but man, they reported one excellent set of numbers last week which is why the stock jumped almost 14% on Friday. One of my favorite stocks. Throw in the anti dated scraping opportunity and they're only going to get more profitable. So here's the bottom line. If Wall street finally balking at the big spending for hyperscalers selling out fortunes for data center build out. Maybe you want to own a company that can profit from artificial intelligence without spending much at all. Apple, Reddit, the New York Times, Cloudflare. All which stand to benefit from the rise of AI without having to pony up billions of dollars they have. Money's back after the break.
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Coming up, Kramer takes your calls and the sky's the limit. It's a fast fire lightning round Next.
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It is time come back by myself since we of course had to come my staff Prince. We're playing a sound and then the lighting round is over. Are you ready? Ski day Time for the light round crash. Let's start with Joe in Colorado. Joe. Booyah Jim. Booyah. Joe, what's up? Awesome. Hey, thanks for taking my call. I'm a first time caller but I've been listening to you for 20 years man. You're awesome. Thank you so much for all you do. Thank you very much. Thank you. Absolutely. Hey, I'm calling about the saic. It's a stock I've had for several years and I like it. I like it. I've known it for a very, very long time. It's an inexpensive stock and I think it's a fine. Let's go to Joanna in Pennsylvania. Joanna. Hello, Mr. Kramer. Thank you for taking my call. Of course. I have a stock here that's just got me confounded. Terra Wolf. Yeah, it's a bitcoin mining stock that people think is going to do far more than just bitcoin. And I've got to tell you, I'm a believer. I, I, I. It's pure spec, but I am a believer. Let's go to Donovan and Maryland. Donovan. Hey, Jim, how are you? I am good. How are you, Donovan? I'm good. I want to start by saying shout out to Mr. Marks and Mr. Farah at Stephen Decatur High School. Absolutely fantastic. So fantastic. I'm a, I'm a big risk taker and like the gamble, shout out rainbet. But the company, company I was looking at is Nebbys Group. I was working. Nebbys is a huge look. It's Nebbys, IRN and Corweave. Those are the three. They're gonna keep getting contracts. If you're in on the day when the stock is down, they get a contract. You're gonna make money. What can I say? And that, ladies and gentlemen, conclusion of the lightning round.
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The lightning round is sponsored by Charles Schwab. Coming up, are corporate earnings finally starting to reveal cracks in the consumer? Kramer is taking a closer look at.
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The state of spending next. Nickel and dime. That's how I think the American consumer feels right now. Everywhere she goes, she feels like she's being charged too much. The problem though is that the input costs for so many things have gone to haywire and it's hard to figure out how to get those costs back down. Right now, virtually any stock that relies on consumer spending is doing terribly. Many are deep in bear markets. Doesn't matter how well the CEO says the business is doing. If the consumer has to pay for it and the price has gone up, then the consumer feels like she's been hot. Last week, for example, Royal Caribbean, a cruise line that's done incredibly well since the pandemic reported a quarter look good, but the market judged it harshly anyway because the reservation book didn't fill up fast enough. That's supposedly a sign that consumers getting tired of taking cruises. I know Disney has powerful pricing power as its parks are full. But Wall street doesn't trust that their pricing can hold up either. On the Comcast conference call last week, there was plenty of buzz about price in the consumer. Abbvie stock is still falling after Matron talked about slowing medical aesthetic sales. Botox for the face may have finally hit a wall even though this business had been booming because so many people didn't like their slacken faces after they lost so much weight taking the GOP test ones, I found the abbey call particularly jarring because the weaker numbers indicate that rich people aren't spending to keep their faces wrinkle free. Maybe you can be too thin after all. Oh, and how about those liquor stocks? Constellation brands, Maker Model and Corona can't seem to get out of their own way. Stocks falling from from 200221 to 130 this year. Walston? Coors? How about 57 to 43? Diageo 127 to 93 so much for those different Johnny Walkers. Unfortunately, very few execs seem willing to admit that the simple truth that prices have simply gotten too high for so many. And that's why I found it refreshing to read an article in Las Vegas Review Journal last week, which my writing partner Matt Horween shared with me. But some of the execs in Las Vegas think things have gotten out of hand. Bill Hornbuckle, the CEO of mgm, told the paper, quote, when we think about pricing and things that got everyone's attention, whether it be the infamous $26 bottle of water or Starbucks coffee that cost $12, shame on us. End quote. He said his organization is course corrected and suggests that all Vegas needs to follow in his footsteps because tourism has been on the decline. That's the biggest shake up in Vegas since Bugsy Siegel got assassinated. Maybe everybody who deals directly with the consumer needs to cut price, but not every retailer or restaurateur can handle that because their input costs have gone up to One thing's for certain, Wall street isn't willing to wait for a cost correction. These two groups are filled with stocks that are in plain old bear markets. It doesn't matter for restaurant chains doing well like restaurant brands or garden or doing poorly like Wendy's, it's proving hard for their stocks to find a bottom Now. I don't want to give up on two entire industries. I'm guessing that after tomorrow's election either the Democrats or the Republicans will cave in in the budget negotiations and the government will be able to reopen. If that happens, then maybe some of the consumer facing stocks can come back to to life. Right now, though, it's important to recognize that things have simply gotten too expensive for many, to the point where the consumer constantly does feel nickel and dime. At some point, Wall street will care about which companies are doing a better job of handling the situation. But for the moment, everybody who deals with the consumer is being painted with the same broad brush. I don't want to abandon the good ones, but the pain may be too hard for most to take. I like to say there's always a more market somewhere. I promise I'd find it just for you right here. Here on Man Money. I'm Jim Cramer. See you tomorrow.
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All opinions expressed by Jim Cramer on this podcast are solely Kramer's opinions and do not reflect the opinions of CNBC, NBCUniversal 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 Think of your.
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