Mad Money w/ Jim Cramer 1/6/25

Summary

Mad Money with Jim Cramer – Episode Summary (January 6, 2025)

Host: Jim Cramer
Producer: CNBC
Release Date: January 7, 2025

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Market Overview: The Great Selective Bear Market

Jim Cramer opens the episode by dissecting the current market dynamics, coining the term “great selective bear market of 24/25.” He highlights a divergent performance across sectors, with technology leading the charge while traditional sectors like consumer staples, energy, healthcare, and materials face significant downturns.

• Tech Resilience: Despite a prolonged bear sentiment, technology stocks, particularly semiconductors and software firms leveraging artificial intelligence and accelerated computing, continue to buoy market averages. “These tech plays are so strong that they end up buoying the averages,” Cramer notes (04:25).

• Sector Weakness: In stark contrast, sectors such as consumer staples and healthcare are underperforming. Cramer attributes this to rising long-term interest rates and a stronger dollar, which particularly hurt dividend-paying stocks. “Why isn't stock of Procter Gamble down another 2.7% today? That's a great company,” he questions (06:15).

Key Factors Driving Market Movements

1. Interest Rates and Dividend Stocks: Cramer explains that rising long-term interest rates have a detrimental effect on dividend-paying stocks. As bond yields increase, these stocks become less attractive, especially when bond prices fall due to new Treasury auctions. “As these bonds go down in price and up in yield, things get worse for the dividend stocks,” he states (07:30).

2. Strengthening Dollar Impact: A robust dollar negatively impacts consumer staples companies with significant overseas operations. Even domestically focused companies like Clorox aren't immune due to sector-wide pressure. “Sector ETFs are like gravity. They pull all their subjects down,” Cramer asserts (08:00).

3. Pricing Pressures from Retailers: Cramer discusses how major retailers like Amazon, Costco, and Walmart are forcing consumer goods companies to slash prices, squeezing profit margins. “Maybe the consumers had it will no longer tolerate Covid era high prices,” he speculates (08:45).

Deep Dive: The Defense Sector under Scrutiny

The defense sector is experiencing a significant downturn, with companies like Lockheed Martin and Northrop Grumman experiencing stock declines of up to 25%. Cramer connects this trend to potential political shifts with the incoming Trump administration and increased criticism from influential figures like Elon Musk.

• Impact of Political Changes: Cramer highlights Elon Musk's criticism of the F35 program, calling it “broken at the requirements level” and arguing for a shift towards drone technology. This has created uncertainty among defense contractors about future procurement processes and budgets. “Lockheed Martin CEO responded that drones cannot fully replace manned fighter jets,” Cramer recounts a recent panel discussion (15:20).

• Wall Street’s Response: Analysts at Barclays have expressed concerns over budget risks and fiscal realities, advising caution with defense stocks. “They don’t see disproportionate budget Doge risk,” he quotes Barclays’ 2025 outlook (16:50).

• Cramer's Stance: While acknowledging the sector's challenges, Cramer advises a wait-and-see approach. “For the pure plays, we've just got to wait a bit to see if Trump must. Doge and the rest administration are truly serious about making meaningful cuts to defense spend,” he concludes (20:10).

Caller Interactions: Stock Recommendations and Insights

Throughout the episode, Jim engages with callers seeking advice on various stocks:

1. Frank from Texas on Netflix:

   • Position: Owns Netflix shares with a cost basis of $892.
   • Cramer's Advice: “I buy more. I think they are still the national water cooler stock,” he recommends, despite concerns over recent stock rollbacks (09:50).

2. Dan from Illinois on Lyft:

   • Position: Successful with Lyft shares and praises driverless car initiatives.
   • Cramer's Advice: “You bet I am. I think it looks really terrific here,” affirming a bullish stance on Lyft (29:30).

3. Another Frank on Carvana:

   • Position: Significant investment in Carvana with shares soaring.
   • Cramer's Advice: Suggests managing investment by adjusting cost basis and potentially leveraging gains, emphasizing caution with high-flying stocks (30:16).

In-Depth Analysis: Uber Technologies

A substantial portion of the episode is dedicated to dissecting Uber's stock performance, presenting both bullish and bearish perspectives:

• Bear Case – JMP Securities:

  • Concerns: Autonomous vehicles (AVs) from Waymo and Tesla pose threats to Uber’s ride-sharing dominance.
  • Recommendation: J.P. Morgan has downgraded Uber from “outperform” to “market perform,” citing potential regulatory challenges favoring Tesla (28:50).

• Bull Case – Goldman Sachs:

  • Growth Potential: Strong mobility bookings growth, expansion into less dense geographies, and diversified services like Uber for Business.
  • Strategic Partnerships: Collaborations with Waymo for AV integration in Atlanta and Austin cities.
  • Financial Health: Consistent free cash flow generation and an accelerated $1.5 billion buyback program announced (29:00).

• Cramer's Verdict: Balancing both perspectives, Cramer leans bullish, highlighting Uber’s expansion and strategic initiatives as key drivers. “Despite the sell-off, there were some huge positives in this quarter,” he concludes, recommending Uber as a buy at discounted prices (43:00).

Lightning Round: Rapid Stock Picks and Insights

In the high-paced Lightning Round segment, Jim addresses quick stock inquiries:

1. Lincoln Electric Holdings:

   • Issue: Revenue misses have dragged shares from the high $260s to $180s.
   • Cramer's Take: “It's a great manufacturer... I think you can buy,” suggesting a buy-on-dip strategy (40:40).

2. Caesars Entertainment:

   • Issue: Operating amidst a turbulent gambling sector.
   • Cramer's Take: “I'm not that high on the gambling stocks right now,” indicating a cautious stance (41:37).

3. CRISPR Therapeutics:

   • Issue: Despite strong technological advancements, the stock struggles.
   • Cramer's Take: Advocates for reducing cost basis and maintaining positions, emphasizing long-term potential (42:14).

4. Seagate Technology:

   • Issue: Historically a value trap with stagnant performance.
   • Cramer's Take: Labels it a value trap, advising skepticism (43:07).

Spotlight: CERN's AI Partnership with Nvidia

Cramer interviews Brian Krasanich, CEO of CERN's AI division, discussing the company's strategic partnership with Nvidia to enhance AI-driven automotive technologies.

• Innovative Solutions: CERN is developing advanced large language models (LLMs) tailored for the automotive sector, enabling more natural and proactive human-car interactions.

• Strategic Partnerships: Collaborations with Microsoft and Nvidia are pivotal in refining performance and expanding OEM partnerships.

• Future Roadmap: Upcoming releases of Gen 2 agents promise more intuitive and responsive in-car experiences, positioning CERN as a forward-thinking player in automotive AI (33:08).

Final Thoughts: Tesla and Palantir – Double-Edged Swords

As the episode wraps up, Cramer delves into the polarizing stocks of Tesla and Palantir:

• Tesla:

  • Performance: Continues to defy traditional valuation metrics by being viewed as a tech company rather than just an automotive firm.
  • Political Leverage: Strong ties with prominent political figures like Trump bolster its strategic positioning in the evolving self-driving landscape.

• Palantir:

  • Valuation Concerns: Despite strong execution in AI and data analytics, Palantir's stock remains highly valued with high premium multiples.
  • Investor Behavior: Compares Palantir’s retail investor enthusiasm to that of a “cult,” but emphasizes its real growth potential through robust contracts and technological advancements (43:50).

• Cramer's Stance: Advises caution for regular portfolios, suggesting these stocks are better suited for hedge fund strategies focused on momentum trading rather than long-term holds (44:30).

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Conclusion

Jim Cramer's January 6, 2025 episode of "Mad Money" provides a comprehensive analysis of the current market landscape, highlighting the resilience of the tech sector amidst broader bearish trends. He offers insightful commentary on sector-specific challenges, strategic company partnerships, and navigates through investor inquiries with a balanced perspective. Notably, Cramer emphasizes the importance of strategic wait-and-see approaches in volatile sectors like defense and advocates for informed, research-backed investment decisions in high-growth areas such as autonomous vehicles and AI-driven technologies.

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Notable Quotes:

• “These tech plays are so strong that they end up buoying the averages.” – Jim Cramer (04:25)

• “Why isn't stock of Procter Gamble down another 2.7% today? That's a great company.” – Jim Cramer (06:15)

• “Sector ETFs are like gravity. They pull all their subjects down.” – Jim Cramer (08:00)

• “Lockheed Martin CEO responded that drones cannot fully replace manned fighter jets.” – Jim Cramer (15:20)

• “Despite the sell-off, there were some huge positives in this quarter.” – Jim Cramer (43:00)

• “It's a great opportunity to really showcase what Sarin can do with you today.” – Brian Krasanich, CEO of CERN's AI (33:12)

• “No price is too high for the buyers of Palantir.” – Jim Cramer (43:50)

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This summary captures the essence of the January 6, 2025 episode of "Mad Money with Jim Cramer." For full details and in-depth analysis, listeners are encouraged to tune into the episode.

Transcript

[Jim Cramer]

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[Jim Cramer]

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[Jim Cramer]

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 now. Hey, I'm Kramer. Welcome to mad. Welcome to Cramerga. I'll do my friends. You know I'm just trying to make you money. My job is not just entertain, but I'm putting this in context, explaining it. So call me 1-800-7-for3 CBC. We meet you Kramer. The great bear market continues. But you only know that if you're first. By the way, for days on end, stocks have been going down and down and down. Just not the great semi software data center companies with the wind at their backs, riding the tremendous themes of our time, accelerated computing and artificial intelligence. These tech plays are so strong that they end up buoying the averages, including today. Which is why the tech light Dow Jones industrial average actually dropped 26 points while the S& Pierce 0.55%. A lot of that now that the tech stuff and the tech heavy NASDAQ filled with semis and software gained 1.24%. And that's what people are looking at. Even though you might not know it from the averages. Today was one of the worst days of what I am starting to call the great selective bear market of 24, 25. The bear has been Rolled around all sorts of areas, mauling the consumer staples, the energy sector, health care, the material stocks. All groups that have underperformed dramatically last year doing it again. Now I understand the hyperbole here. I'm simply pointing out that these sectors, important swaps in the market are an anchor to leeward. That leeward they spent last year hurting the market. And this year already many are in the red. It's not just a continuation, people. It's actually an acceleration. Why does it happen? Why isn't stock of Procter gamble down another 2.7% today? That's a great company. Why is Colgate toothpaste dog food? Why is Colgate down 2.9%? How about Clorox? It got pummeled. It's down 3.3% today alone. All right, so let's go over the reasons. One, maybe the biggest reason someone would say interest rates. When long term interest rates spike, as they've been doing ever since the Fed started cutting short rates, these stocks have been hammered. That's what happens. The dividends, by the way, are supposed to offer some protection, right? But they become a source of vulnerability when bond yields, the main competition, dividend stocks, keep marching higher. And they might do that all week because long rates are rising thanks to supply. The Treasury Department sold three year notes today and the auction fell flat on its face. Tomorrow The treasury sells 10 year paper. And Wednesday, I don't know if the market is prepped for 30 year paper, but there's a ton coming. As these bonds go down in price and up in yield, things get worse and worse for the dividend stocks, even if there's actually nothing wrong at the companies. Which brings me to the second reason this group has just been hammered. The dollar's gotten too strong. These consumer packaged goods companies tend to be very big overseas. That's not the case with Clorox, which is largely domestic. But you know how our stock market works. The consumer staples all trade together. If the dollar hurts a big international company like Procter and Gamble as it is, it's going to reverberate even into a Clorox. Because they're all in the same sector. And sector ETFs are like gravity. They pull all their subjects down, even the ones that should. Now then there's the most insidious problem wall, the one that no one is talking about. Let's, let's open the discussion. Pricing. Now, have you noticed that when you buy consumer products on Amazon, they're discounting heavily, Particularly the stuff you see at a drugstore have you seen the pressure being put on companies by Costco where it's like a different world but those prices, they're crazy low. I know that Walgreens is trying to keep up offering their own outrageously lower prices on their website, but probably don't go to their website now. It is true that profitability may be pinched at some of these retailers. Walgreens, Dollar General, Dollar Tree, Target, all of which sell these goods and they've all seen their stocks just get cr, Wal Mart, Costco and Amazon have more scale and get you better prices for many daily average needs. But if the retailers are being squeezed in their suppliers definitely going to be squeezed too. Maybe these companies have had so much of a run, so much price flexibility post Covid that they are finally losing it. Maybe the consumers had it will no longer tolerate Covid era high prices from the likes of a Proctor or a Colgate. Maybe the stocks are saying prices will indeed be rolled back. Sell, sell sell sell sell sell. The stock of Procter Gamble is. It's tempting, it's tempting. But as long as bonds go down in price, as long as the dollar stays high or goes higher and until we see the earnings find out there really is some price pressure that I'm sensing it's too risky to buy. Now look at this counterintuitive situation. I know it sounds crazy to call Procter and Gamble and Clorox, Colgate risky. These were safety stocks for most of my life. But there's nothing safe about their stocks anymore. This is a market rewards growth regardless of price. So people will pay up for tech growth which real demand and pricing power. And they're avoiding companies that have lost pricing power and offer yields that are too low to compete with Treasuries. I don't expect that dynamic to change anytime soon. Next bear market. Oh my. It's in health care as this group's off 20% from its highs. Next week I'm going to the JP Morgan Health Care conference, find out what the heck is going on in this group and I am aghast. These stocks are just hideous. You managed down 43% from size. HCA the hospital coming off 29%. That one's been a winner for years. Signal off 25% well run. Centi down 23% percent a wasteland of burned out companies. Look at the biotechs. Whoa. Vertex off 23% from its size. That's a great company. Amgen dow stock down 25%. Regeneron for Evans say Biogen off huge. Moderna down a hideous 75%. Remember when they were strong that are heinous now. Food group just taking it on the chin. Hormel, great company down 17% from its smucker, General Mills. ConAgra off 19%. Hershey, Campbell's, Kraft Heights and the Mondelez all down the low 20s. That's incredible. Same script. Higher rates, stronger dollar pricing pressure. But let's throw in the gop. That's one weight loss. Drugs too. We know these companies are loath to admit that GOP dash ones have anything to do with their weakness. But that Cornell Business school study I referenced last week, it talked about a 6% decline in grocery spend for people who take drugs. The GOP Dash 1 drugs. Processed foods are designed in part to be craved. But when you're getting these GOP just one injections, you crave nothing. Maybe the sales decline is just beginning. Maybe that's what the stocks are saying. What else? Real estate wasteland. Just today we saw Federal Realty and Kimco's chopping center and a strip mall come and get crushed. More stocks do. The worst stocks in the S and P. Now, this is highly unusual. These companies are linked with interest rates and the spike in long rates has all hurt them. But the actual businesses, they're terrific. It doesn't matter to the stocks, though. What matters is interest rates. Oh, hey, listen. As bad as those are because I just said about rates, the bear has really rolled. Housing stocks declines are staggering. Lenore trading at 193in September, down 135. Tolls going from 169 to 126. Polti 149 to 109. Dr. Horton, 199 to 139 and no time flat. What do you think it says? I think the home prices are going lower, maybe much lower. Something at no one is thinking about. But nothing's as bad as the materials. Mining, minerals. When you look at the stocks in this group, and I'm talking about plastic, I'm talking about wood, it's almost enough. Steel, it's almost enough. There's got to be something going on. If you didn't know any better, you think there's a recession. The chemicals, the papers, the coppers, the steels, they are factory in a definite recession. No other way to explain a decline. How? Nuclear stocks down 41% for the top new mining down 36%. Freeport, the copper coming down 30%. Cleveland Cliffs has punched from 22 to $9. And how about the oils? They're all horrid too. Which brings me To a thesis that's not talked about much when we see all these Federal Reserve officials telling us how inflation is not being brought to heel. It's true, there is plenty of inflation supermarket. But the bottom line, when you look at these super underperforming stocks, all I can say is maybe the Fed had better be careful what it wishes for. Companies that represent a gigantic chunk of the real economy have seen their stock swoon. Could their earnings be that far behind? And could inflation be running its course a lot faster than expected? Considering the stocks that are going down in the magnitude of the declines, I'll tell you. Sure wouldn't surprise me. I'm going to Frank in Texas. Frank.

[Caller Frank]

Hey, Jim. A hardy Philadelphia Eagle. Booyah to you.

[Jim Cramer]

You bet. Let's hope that Hertz is okay. Booyah. What's going on?

[Caller Frank]

Well, first of all, a hearty thanks to you for all you've done for my wife and I. You made a major difference in our life. Thank you. Don't ever retire.

[Jim Cramer]

Yes. Well, I'll tell you, I think that my wife wants to hear that. She wants to hear people say that because I've been. I know that she feels like I'm a little long in the tooth, but I like being here. What's going on?

[Caller Frank]

Well, Jim, I have a position in Netflix at a cost basis of 892. And I want. And I've been buying on dips. And I'm wondering if I should buy more. Hold or sell.

[Jim Cramer]

I buy more. I know the chart looks like it's rolling over. Maybe you wait till like 800, but I would buy more. I think that they are still the national water cooler stock. It's very unusual to have something like it. Look, spoiler alert. I just have to say this. My wife stopped watching mid show the final squid games. And I just want to point that out because there are a lot of people who might be in who might be a little more sensitive. That's not a spoiler. It's just. I'm just saying. And she walked away. It's pretty, pretty dazzling. We watch everything together. Anyway, companies that represent major parts of the economy have seen their stocks swing lately. The big question is whether their earnings will follow. Oh, my money tonight. What's behind the decline in some defense stocks? I'm taking a closer look at this cohort and how the incoming White House could affect the space. People aren't talking. Then I'm bringing you another bull versus Bear analyst duel. This time it's on Uber. I'll break down where I stand and later sirens I have you seen that crazy thing? It's already soaring higher than New Year. I'm going to check in with the CEO. You've seen him before to hear what's behind the big run up. I want you to stay with Kramer.

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[Jim Cramer]

While the many stocks are doing pretty well these days, they are mostly tech. Beyond tech, there are some real pockets of weakness out there. As we describe the top of the show, just take a look at the pure play defense contractors like Lockheed Martin, Northrop Grumman, General Dynamics and L3Harris. They were all trading at 52 week highs in October, November and now they're down anywhere from 11% to 25%. These levels is pretty shocking. So we have to ask what went wrong with the defense contractor? Simple. There's a widespread sense that the new Trump administration may not be a good friend to the traditional military industrial complex. Instead, they've butted up to an alternative military industrial complex. And that's why Palantir Technologies, the beloved software company with a big focus of the Pentagon, has seen its stock climb nearly 50 50% since the election. Very easy to dismiss the Palantir rally and very hard to justify the stock's valuation on a price earnings basis. More coming on that, but I don't think that will prevent it from going higher. I bring this one up because Palantir's tight with Trump and these guys have a vision for the future of the defense budget that is really dazzling. On Halloween, Palantir CTO Shyam Sanger published an article arguing that our defense industry has gotten out of date on competitive something we could get away with 10 or 20 years ago, but that's impossible just by now. China's on its way to a superpower and by the way, not a friendly one at that. With better capabilities than most think they have. Oh, this was a brilliant manifesto. I read it a couple of times. Is so smart. It's a strong indictment of the current procurement process. That's one of the things that Paltier's expert at. According to Palantir, defense contractors stick because there's no competition anymore. We used to have 51 prime defense contractors in this country, but over time they've gradually merged into just five major players, the five families. Rather than innovating, they argue that these companies are mostly focused on gaming government contracts. Of course, at the time this article was published, didn't seem like it had much of an impact on military procurement. Then less than a week later, Trump won the election and appointed Elon Musk to run his new Department of Government Efficiency. Doge Musk is very close with the co founder of Palantir. That's Peter Heal. He's a big Republican donor and power broker. They both came up together PayPal, the mafia PayPal. He certainly of the same mind as a balance your crowd including the company's accentuates co founder and CEO Alex Karp. And he's on board with the idea of radically reshaping the Pentagon's procurement process. Then maybe the defense contractors will have a real problem with a new Trump administration. At the very least, I think that that's why the defense stocks have been rolling over since the election must seem to confirm his fears when he began to openly criticize Lockheed Martin. That's a builder of the top stealth fighter jet in the world, the F35. It's revered. In November, Musk elaborated on why he doesn't like the F35 ready an expo saying, quote, the F35 design was broken at the requirements level because it was required to be too many things to too many people. This made it an expensive and complex jack of all trades, master of none. Success was never in the set of possible outcomes and manned fighter jets are obsolete in the age of drones anyway. We'll just get pilots killed. End quote. Wow, that is a mouthful. And that is a that's the indictment right there. Pilots, they're too expensive, but they're great. Now speaking with CNBC's own Morgan Brennan during a panel discussion at a defense industry conference a couple of weeks ago, Lockheed Martin CEO Jim Take that. He's been on many times. He gave a great response to his criticism systems. You can't just replace these fighter jets with drones because the enemy has fancy fighter jets of their own. Plus, Israel recently used F35s to take out Iran's entire air defense system, as well as their ballistic missile production practically overnight. That's a nice kudo. I think he made a good argument for why the US and its allies would still want some F35s in their arsenal. But after all the criticism from Elon Musk, the defense industry generally and Lockheed Martin specifically have found themselves under the microscope, certainly more than at any time I can record call in recent years. The defense budget has always been sacrosanct under both parties. Nobody wants to be accused of being weak on defense. Plus, of course they have state source. They source parts from almost every state. When you add in other considerations for the incoming Trump administration, like the fact that President Elect Trump seems, shall we say, far less interested in sending weapons to Ukraine to defend itself from Russia, investors are starting to think that the classic military contractors might actually have a serious problem with this new incoming administration, this would be a big break with the past. In fact, this thing is now making its way into formal Wall street research. Just this morning, analysts at Barclays published their 2025 outlook. They know for aerospace and defense industry where they said, quote, while defenses underperform, we think the setup remains difficult with more budget risk than thought given fiscal response realities along with Doge uncertainty, end quote. Wow, they're talking about Musk right here. They prefer the commercial aerospace side of their coverage universe. If you are to be in defense, they recommend government services companies which have previously underperformed but now Barclays likes them because they, and I'm going to quote here, don't see disproportionate budget Doge risk. Every time you see Doge, remember that's musk. So that's what's going on with the defense stocks right now. And it's a bit of a pickle for investors and people like me who try to help make sense of the market. Is the Trump administration, even with powerful allies like Musk and Doge really going to be powerful enough to dislodge the military industrial complex? Do they even want to? Frankly, I'm not sure I have my doubts. While I agree with that, the Pentagon could certainly become a heck of a lot more efficient, these defense contractors source their companies from all sorts of congressional districts as possibly possible precisely because they want to make it impossible for legislators to cut the budget. Now we'll see how serious the Trump administration really is about cutting military costs when it means cutting jobs in some GOP House members district. But I also don't think you can ignore the threat here. Even if these defense contractors are only getting more scrutiny from the White House, that still makes it harder for them to make money. Maybe they change the procurement process altogether. Which brings me to the bottom line. Even though the defense contractors have pulled back very hard, I wait. I know. I think you got to wait and see. I know that feels like I'm punting, but listen to me. This is the military industrial complex is not. It's not going to be very hard to disregard. I don't know. I don't know how you get it out. There are some names that are safer than defense. Pure plays. How about like buying some rtx which has a nice balance of commercial aerospace and defense businesses. You have to uproot the system. But for the pure plays, we've just got to wait a bit to see if Trump must. Doge and the rest administration are truly serious about making meaningful cuts to defense spend. I gotta tell you, until we find this out, I'm regarding this group as untouchable. Wow. Who'da thunk ya? Midmoney's back here for the break.

[Mad Money Show Voice]

Coming up, has Uber's rally run out of gas? Kramer's breaking down the Bull and bear cases for the name next.

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[Jim Cramer]

What do I do with the stock of Uber Technologies now that it spent the last few months in the house of Pain after miraculous run in 2023? In the bulk of 2024, this stock peaked at $87. That was back on October 11, the day after Tesla's big robotaxi event. It didn't help that Elon Musk is tight with Trump, and Trump went on to win the election a few weeks later. At the same time, Google's Waymo self driving business raised 5.6 billion in a private fundraising round. Then at the end of October, Uber reported an imperfect quarter with lighter than expected gross bookings. The stock then spent the last three months of the year getting eviscerated, finishing 2024 down 2% despite strong gains in the first three quarters. At this kind of decline, you really got to wonder, are we getting a chance to buy a high fly and grow stock at a discount or did Uber deserve to pull back like this? Wall street certainly asking on the first trading day of the year, we got a classic bull versus Bear showdown on Uber from the analyst community. Goldman Sachs added Uber to their US Conviction list, but JNP Downgraded it from outperform to market form basically. But now let's start with a bear case we got from Andrew Boone. He's a jmp. There are two main reasons for his downgrade. The analyst believes Waymo. Remember that's the Google offering as a better service that will be able to take share from Uber. While Tesla's Robotaxi venture represents an ongoing risk, anything involving Musk is a risk. Basically, JMP is arguing that autonomous vehicles are a real threat to Uber as these companies start to expand across the country. Even though self driving is still in its extremely early innings. Waymo had 175,000 rides per week in November. That's up 15% from the month before. So I get why they're worried about this in theory, but it seems like a bad reason to sell Uber in practice. Even the analysts in question acknowledges that Waymo quote still too small to materially impact results. End quote for Uber. I got to tell you, I am surprised they only have 175,000 rides a week because when I was in San Francisco last year I saw them everywhere. The service is quite visible, if not ubiquitous. I think they should be doing better. But the analyst GMP argues that valuation is likely to be capped until Uber better addresses the transition to AVs. They're also worried about the Trump administration. They could adopt a regulatory framework for self driving. The heavily favors Tesla given Elon Musk close relationship with the President. Now I question this whole line of thinking. Uber is an aggregator. They don't run their own cars. They don't need to pay up to buy a huge fleet of vehicles. If Waymo or Tesla wants to build tons of robo taxis that they operate themselves, I'm betting Uber will run circles around them just like the ran circles around the old school cab companies. So how about that bull case on Uber from Eric Sheridan? I like this guy stuff for a long time. Is it Goldman? He says that Uber the most debated stock in large cap Internet. Well, he's. He's saying it is controversial. It really is. And while Charity acknowledges that the ride sharing business faces some near term headwinds from currency fluctuations and lower benefits from pricing, he still sees a lot of reasons to be bullish on the stock even as it is controversial. Specifically, Sheridan sees a path for Uber to produce mobility bookings growth in the mid to high teens in the next two to three years and further penetration mobility trips in less dense geographies both domestically and abroad. While Uber stock just got slammed in response to that latest earnings report that I talked about which generated some negative headlines. Anyone who actually sat down and listened to the conference call knows that there were still a ton of positives, especially when it comes to expanding the less popular areas. In the prepared remarks, CEO Darkos, with Ari, whom we like very much in the show, noted that in quote, in the UK and France, for example, trips outside outside of London and Paris are growing three to four times faster year over year than in those cities, end quote. With Uber already operating in 70 countries, it might seem like it doesn't have much room left for expansion. But those who listen to call know that's simply not the case. And this is why I always stress the homework part of buy in homework. Although not everyone has access to Wall street research conference calls, they're publicly available and they often contain fantastic information. The same information that Goldman Sachs is using to put Uber on their conviction bilots. You can have it too. When it comes to autonomous driving worries, Goldman also sees a path to profitability for Uber alongside autonomous vehicles. Besides, they say the adoption of self driving and with a quote is likely to play out over an extended duration of at least several years with a long tail of possible possible outcomes, implying muted near medium term concerns, end quote. Hey, makes sense to me. There's no doubt that Elon Musk is great at creating value, but when it comes to strictly following deadlines, let's say he's got a little room to improve. Similar to the bear case from jmp, the analysts at Goldman see the ride sharing industry evolving towards a hybrid network, a mix of human drivers and autonomous vehicles tactically service the growing demand for personal transportation. Uber already has a partnership with Waymo to launch in Atlanta and Austin early this year. For heaven's sake, why the heck is anybody worry about Waymo hurting their business? It makes no sense to me. Additionally, Goldman sees rapid growth for Uber's new mobility services like Reserve U4B, that's Uber for business and two or three wheelers. They also talk about greater cross platform usage which includes the user1 subscription. That thing has more than 25 million members. That's up 70% year over year. That's very bullish. Bullish. At the same time, Goldman's betting on delivery bookings. They think it can produce growth in the mid teens as monthly customers order more frequently. That's a great sidelight there. It doesn't hurt that they're expanding. They're expanding their offerings beyond fresh food and into grocery and retail delivery. While a bit more on the technical side, Goldman likes that Uber's Got free cash flow, they generate a ton of it. And that enables the company consistent return cash to shareholders. Also investing back in the business to maintain an edge versus the competition. Hey, that ended up being pretty good call because Uber announced a $1.5 billion accelerated buyback program just this very morning. And that's why the stock value 2%. You know, I thought it was a very bullish development. So when I was up talking with Carl Quintanilla this morning, squawking the shows. Wow, that's pretty impressive. So where do I come out in this tug of war? Look, the longer term impacts of Waymo and Tesla's Robotaxi aspirations, they're worth keeping an eye on. Absolutely. But I think there's a lot of handwriting bringing about the distant future when we know Uber's prospects look great. Right now I'm discounting it. Bottom line, despite the sell off we got last quarter, there were some huge positives in this quarter. If you listen to the commercial. Not if you didn't. Although Uber stock has started rebounding the new year. IT stock, it's still darn cheap versus its growth rate. And I think you're getting a great chance to buy it at a discount. That's right. The stock of Uber is a buy. I'm gonna go to Frank in New York. Frank?

[Caller Frank]

Oh yeah. Jimbo.

[Jim Cramer]

Yo, what's up, Frank?

[Caller Frank]

Happy New Year to you and your great staff.

[Jim Cramer]

Our staff is amazing and it's one of the reasons why I still love coming to work every single day. Thank you.

[Caller Frank]

That's great. My stock is Lyft. I've done pretty well with it. I rang the register, but I've kept some money in it. I'm a customer there that love to pick up times in the pricing. The CEO is great. I saw the interview with him and now they signed up, mobilized for the driverless cars. Are you still bullish on this?

[Jim Cramer]

You bet I am. You know, and we had David Rich from recently and every time I speak to David, I am so impressed. I think you stay long it. And I've got to tell you, if it comes down to any more, I would pull the trigger and buy more. I think it looks really terrific here and I think David is a great CEO. Dan in Illinois. Dan.

[Caller Frank]

Hey, Jim. Booyah.

[Jim Cramer]

Booyah. Dan.

[Caller Frank]

Hey, I gotta thank you for helping ordinary people make a lot of money.

[Jim Cramer]

I saw this ordinary guy outside the show. Okay. I saw a guy, he was a. So he was right, right in front of the building and he wanted his picture with me. And I was like me. But I got to talk to him. He was a construction worker and he loves the show. And I gotta tell you, it made me so darn happy. So, yes, I do do. I like to help regular people. I like to think I'm a regular people. And I get a kick out of talking to them and being with them. How can I help you?

[Caller Frank]

Oh, man. I got a big question. I started watching this stock when it was $3. I watched it triple to nine. I bought a boatload at nine. It went to $260 a share. It's one of your darlings, Carvana.

[Jim Cramer]

Okay, Carvana, look, I read Nate's piece, Hindenburg Research. I think it raised a lot of good, a lot of good things that you really want to know before you own a stock. And this stock has had a very good run. Why don't you do this? Why don't you take out your cost basis and then play with the house's money? I think that you will never have to worry about anything that Hindenburg says or anybody else and just go ride it with the Garcias. Remember again, the concerns are always worth considering when you have a stock that is up as much as that stock. And thank you for your consideration and caring. Now Uber's been rebounding this year, but I think there's still time to get in a good price. There's still lots of gas in tank for this stock, not much more money. Including Mike Susan, the CEO of a software stock called Sarenence AI that's been red hot. Then two key market stories have seen pullbacks after monster 2024. I'm going to give you my take on their valuations and all your calls. Rapid fire tonight, the lightning round. So stay with Kramer. You want to see the definition of a hot stock right now, check out Surge, which makes AI enabled technology for the auto industry. Half a billion cars already have the product installed after soared 139 during the speculative bull market in 2021. This thing got obliterated, only bottoming at $2 and change in August of last year. Since then, the stocks fall to 20 bucks. That's more than a 750% gain and most of it has come in the past two months. In fact, CERNs has rallied more than 150% over the past two trading days because last Friday the company announced a new partnership with Nvidia. They're cooperating on some of CERN's eyes models for the auto industry. Of course, the stock's still well off its 2021 highs. But this is a huge move, one that's been spirited by new CEO Brian Cruzanich. He's the one time CEO of Intel, later served as CEO of CDK Global, that's a software company for auto dealers for taking his current job three months ago right before the stock took off. So what's driving this move? More important concerns keep running. Let's check in with someone who's been on the show a great number of times is Brian Crusaders, the new CEO of CERN's AI to find out what's happening. Mr. Welcome back to money.

[Brian Krasanich]

Hey Mike, it's great to be here. So to be here.

[Jim Cramer]

So Brian, we know you for cdk. We know you from intel, we need to know you from Search. It used to be Search you've added. I give us a sense of why you took the job because it is a smaller cap company and what you can do to make it a bigger company.

[Brian Krasanich]

Thanks Jim. First, just it's a great opportunity to really showcase what Saris can do with you today. You know I took this job because Sarina was a really a good company with just great technology and I really looked at it as a chance to really make it a great company with great technology by expanding its partnerships and expanding even beyond the automotive space over time with its large language models and generative AI. And we really have a clear vision for how we're going to continue to grow this company.

[Jim Cramer]

Well now you do say in your last conference call, interesting quiet period, but we can refer to your previous conference school that you talk about the big guys and how you can be a better competitor than the big guys. Now the big guys have a lot of money. How do you do that?

[Brian Krasanich]

You know, because we're really focused on the automotive. Take a look at this company that's been in automotive for years and years and so we have a lot of automotive experience. We understand what the OEMs want, we have relationships with the OEMs. And so when you look at our large language models, for example in the automotive space to drive the car, There are over 23,000 unique phrases that we have to build into our large language model that open windows and charging ports and doors and everything else, seat heating that's all specialized around the automotive space. The other thing is Jim, we offer not only a cloud based solution in large language models but an embedded version as well because of the OEMs need a single supplier that can supply both cloud and embedded as many Geos and even some just models they're not connected to the cloud. And so they need to have an embedded large language model which is a lot of engineering work.

[Jim Cramer]

So what do you think Nvidia can bring to the party? Research. Really kind of doing the right thing for a long time.

[Brian Krasanich]

Well, you know we've announced over the last few weeks partnerships with Microsoft and now as you mentioned Nvidia and what both those companies are doing is really helping us continue to improve our models. They have tools, they have capabilities that again they're, they're the big guys. And Nvidia specifically is helping us cloud based models to improve performance, lower latency. The difference between 200 millisecond response and 250 millisecond response may not seem like much, but when you're in your car and you're looking for directions, that's important security, all of these kinds of improvements. Nvidia is really helping us with those and their tools and they're a great partner because we can bring them into the OEMs as well as hardware providers as well.

[Jim Cramer]

Now you had great experiences, CDK made a lot of money and you also got to know auto dealers. Now we have the fort unfortunately we're, we're well off enough to have the highest in BMW and we have that great system. We, but all we ever do is we know we can talk to it and send messages. How do you get people to know what CERNs can bring? Because without someone schooled in what it can do, frankly we think soreness isn't any better than anybody else.

[Brian Krasanich]

Yeah, that's, you know, again, as we move forward Jim, this capability we're really moving from is large language models like you see today where you can do simple instructions but what's nice about them right is you don't have to use like my wife's Mercedes. She doesn't have to say, you know, turn on seat heat, she can say hey, my seat is cold or crack the window, open the porch. So it allows you to use a local common language. The future is what I call agents and that's what we're releasing later this year with our Gen 2. And what that is is now it's going to allow you to really interact with your car as if it's a person, as if it's an agent on the other side. And so you're going to be able to get into your car and say hey, route me to my house by the way, route me to the Starbucks that's nearest my route. As I go home the system is going to come and talk to you and says okay, I've rallied you home and I found the nearest Starbucks. Is this one good? And you could interrupt it midterm and say, you know, I don't want Starbucks, I want Pete's or Duncan's or whatever and it's going to be able to just interact and work with you. And what we're going to do to overcome that exact topic you talked about is we're going to offer, you know what we're going to call a proactive. The car is going to help you as you, it's going to know you as you enter, it's going to say hi Jim, I notice it's 5pm you're at your workplace. Do you want me to route you to your house? And so it's going to start interacting with you up front and now you're going to go oh wow, I can just talk to this and it's going to keep me going.

[Jim Cramer]

Well that's how we try to look. But that does sound like something. If I had a full self driving I would want, I mean I want to say take that one time I was in a waymo years ago I said take that me to the best pizza place and you know, way more wasn't that bright and didn't know how to do that. Are we looking at a system where I will be able to do that ultimately with Sarin's car I get to BMW. Take me my usual Italian place, it might know that.

[Brian Krasanich]

Absolutely. We're working with the OEMs as they start to look at autonomous driving and we're working with some of the companies, you know there's some out there that are solely autonomous and we're starting to work with them as well. Because you're right that the user needs to be able. There is no car driver and it needs, you need to be able to as a passenger interact with the car directly and the car needs to talk to you back. And so our technology and these large language model agents are exactly where you need to go to really facilitate that.

[Jim Cramer]

I don't know Brian, this sounds pretty darn great. I've got to tell you. I know you wouldn't have taken the job if you didn't think it was special and Nvidia wouldn't have picked you unless you are special. So I want to thank you for coming on. I think it's really very cool stuff.

[Brian Krasanich]

It's great Jim. And you know this isn't far off in the future. Like I said, you can today. The cars we're shipping today have these first gen large language models. Those second gen are coming out in cars at the end of 25, the beginning of 26. So this isn't far off in the future. This is now. It's been great talking to you.

[Jim Cramer]

Okay. But it's really great to have you back on the show. Brian Krasanichio, Absurance. Thank you so much. Great to see you again. Say hello to your family. Okay.

[Brian Krasanich]

All right.

[Jim Cramer]

Absolutely. May have money's back here for the break.

[Mad Money Show Voice]

Coming up, Kramer takes your calls. And the sky's the limit. It's a fast fire. Lightning round next.

[Jim Cramer]

It is time. Hi. It's time for the lightning round. Coach at raffle Saving this dog's head above my biceps has just been real close to prison plan itself. And then the lightning round is over. Are you ready, Steve? Daddy tough. For the lightning round Crashers round, we'll start with Jim in Ohio. Jim.

[Caller Frank]

First time caller and thank you for your help.

[Jim Cramer]

Oh, sure, Jim, how can I help you?

[Caller Frank]

Why is the Lincoln Electric holdings in the past nine months gone from a high of 2 60s to the current 1 80s when the market has done so well? Is there a problem with this company?

[Jim Cramer]

It did miss. It missed the revenues. Okay. But you know what? This is a company that is so down from where it was. It's down 80 points. I think you can buy. I like the company's got welding and Welding is it. There are very few welders around. But that isn't. That is a great manufacturer. I need to go to Gary in Maryland. Gary.

[Caller Frank]

Hello, Jim. Booyah. Jim, it's great to watch your show. I watch it.

[Jim Cramer]

Thank you. I'm ready to get a kick out of it. Appreciate that. Thank you.

[Caller Frank]

Jim, I got this stock I paid 57 out of 33 or something. And they open new casinos up and they have a big sports book and they got a big Caesar's Super Dome and Caesars Entertainment. What is your think about that stuff?

[Jim Cramer]

Yeah, I'm not that high on the gambling stocks right now. It feels like there's too many of them and we need a consolidation. The one that I like is DraftKings, but that's come down quite a bit too. It's not been a good group. Let's go to Corey in Massachusetts.

[Caller Frank]

Corey, Dr. Kramer, the OG himself. How are you doing, my friend?

[Jim Cramer]

I wish I were, but thank you so much. Let's go to work.

[Caller Frank]

Well, listen, I fear I have a dog on my hands. I walk by the US office nearly every day, shout out to the great city of southeast South Boston. In the age of speculation and Quantum and AI. Where is the love for the future of medicine? Crsp, CRISPR Therapeutics.

[Jim Cramer]

You know, I want to own. I want to own crispr because I keep seeing their name come up in all the science papers that I read, and I read quite a bit of them, but, boy, the stock's been a tough own. Let's put some away, and then if it goes lower, we'll buy more. But understand, how could that company keep losing money like this? It is just. It's moderna like, and it's in the money they throw in the chimney. Let's go to Paul in Ohio. Paul.

[Caller Frank]

Hey, a big Buckeye Booyah to you.

[Jim Cramer]

Jim Cramer. Holy cow. Absolutely. Tom Holovas. Puya. Big Buckeye fan. What's up?

[Caller Frank]

Hey, man, thanks for all you and your staff, dude.

[Jim Cramer]

Thank you.

[Caller Frank]

Appreciate it. I'm part of staff.

[Jim Cramer]

Puts up with me. It's incredible. Go ahead.

[Caller Frank]

Yeah, I'm part of the club. Looking forward to working with you this year.

[Jim Cramer]

It'll be great. We just work every day. This whole week was devoted to it. How do I help?

[Caller Frank]

Yeah, I'm calling about Seagate Technology.

[Jim Cramer]

You know, at this stock, I have to tell you, it has never, ever done well in the time that I've watched it. And it's always been cheap. I'm calling it a value trap. If you like Seagate, I say that you will love. And that, ladies and gentlemen, is the conclusion of the Lightning Round.

[Mad Money Show Voice]

The Lightning Round is sponsored by Charles Schwab. Coming up, a cause for concern. Kramer's breaking down. What to make of the latest moves in Tesla and Palantir. Next.

[Caller Frank]

Booyah, Jim, your integrity makes you the booyah saint of Wall Street.

[Jim Cramer]

Booyah, Jimmy Chill.

[Caller Frank]

Booyah, Jimmy Chill.

[Jim Cramer]

Quadruple. That's a lot of booyah. Some stocks just hurt the house. They rip out your insides and strip you of your face. Or at least that's what it feels like right now. There are two stocks that fit that painful bill. Tesla and Palantir. Both stocks defy the gods of valuation. They spurred them, laugh at the scaffold of rigor, won't let you value them using traditional metrics because they just keep roaring higher. They are true market darlings, likes of which I haven't seen in ages. They're the kind of stocks that at one point in my hedge fund career, we would buy them and then put party hats on, pound the table like a drum, and chant their names like they were players in the gridiron. I struggled with these two stocks this weekend in a think piece I sent out to CNBC investing club members and do it every Sunday. These are not the kind of stocks we want to own for the trust. I explain that, but at the same time I can tell you from experience that Palantir and tests are almost certainly headed higher. That's a great reason to buy if you're in a hedge fund chase momentum. But it's not enough reason if you're running a regular portfolio because both stocks are ridiculously expensive on traditional metrics. Now, if you're a hedge fund manager and they keep going higher, you're in fabulous shape because once they turn down, you can easily head for the hills. You never had any real reason to own them anyway other than fear of missing out their next moves. But we don't play that game with the charitable trust because it's too hard for you to do at home. Instead, we have to figure out how to justify owning the software, analytics and cybersecurity company that is balanced. This morning a very good piece of research on Palantir piece that started with a sell of all things from Morgan Stanley was entitled quote, winning the early rounds of AI but valuation premium skews risk reward, end quote. Then the analyst wrote, quote, while acknowledging strong execution and momentum, we see success more than priced in at a current multiple premium end quote. Given last year's spirit and 40% gain, they're saying enough is enough. In response, Palsier stock did fall almost 5% but as I wrote this weekend, no price is too high for the buyers of Palantir. They will be back maybe as early as tomorrow. They behave like Palantir is more of a cult than a company and Colts give premium multiples and everything. Sales margin, contract, you name it. If you look at any of the numerous videos of CEO Alex Karp, you will be mesmerized. He's got what it takes to be a cult leader, which is a surprisingly rare quality. Executives, I wish you could put a multiple and be mesmerized, but it as people discover Karp, they'll pay more and more for his stock because he wants to change the world. He is messianic in explaining how shareholders will benefit from it. He's also, by the way, a great shot. No doubt a card counter. Carp is retail investors going gaga over the stock taking it up at all hours. It's a little like Gamestop when it comes to shareholder affection. The difference being that Palantir is a real growth company with oodles of contracts that brimming with potential. Gamestop had neither sales growth nor potential and the Gamestop rally was holding brought on by an immense short squeeze. I think that could happen the Palantir too, but not yet. Morgan Stanley is way too early in the cell call, especially because the pound is brought in by must doge operation to rationalize any government agency, especially the Pentagon. They are going to make a killing. Tesla next week it went down because of disappointing vehicle sales. The next day it went up more than it went down. The stock keeps climbing ever since because Tesla is no longer a vehicle company bound by those sales anymore. It's a tech company. The stock's expensive as a car company, but it's dirt cheap as a tech company with deep political connections that could potentially become the self driving Carplay. Federal Interstate highway beckons. You know that Trump's just going to say hey, well this is what I think. Federal highway. That's the place where we can do self driving. Long story short, I think Palantir and Tesla are definitely going higher, but this is the kind of move you can only take advantage of if you're nimble enough to quickly sell them into strength. If you can't manage your portfolio like hedge fund, don't even think about it. And that's why we don't own them for the travel trust, but we respect their ability to go much higher. Like I said, as always, more markets on my palms. Just for you right here man Money. I'm Jim Cramer. See you tomorrow.

[Mad Money Disclaimer Voice]

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 Is it time.

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