John Holmes (4:50)

Leisure.

Jim Cramer (4:51)

It's not just the storage companies. The banks have come in with a full head of steam. They're simply picking up where they left off in 2025. The lucid regulations coupled the rise of M and a equity issuance can explain these remarkable runs here. I'm thinking about the gains in Goldman Sachs, Capital One, Citigroup. I know they seem excessive, but you have to recognize that the financials have been punished for almost two decades for the Great Recession. Lots of banks had price earnings multiples that were actually like a lot of other stocks, the s and P500. But valuations collapsed as bank failures dominate the headlines. And then securities regulations tamped down the growth of the group to prevent another financial crisis. That's all changing now. So the banks are seeing the price journeys multiples expand. They still have a lot to grow before they become fully valued. Then there are the hopes bring eternal buyers. I see a bunch of these stories and I'm involved in some of them for the Chabot Trust. Stocks like Nike, like Starbucks, which are seeing their share, their share prices just obliterated by the poor performance of previous CEOs. I see green shoots in both these companies and their strength, I've got to tell you, the strength this year so far reflects a real rebound. The three insider buyers of Nike, the CEO, a board member, was the former CEO of Intel, and of course Tim Cook, CEO of Apple, all signal that the business is indeed turning. Remember, insiders might sell for a lot of reasons, but they only buy because they think a stock's headed higher. Longer term, they can't flip. As for Starbucks, I think this is the year it comes back. But I have to tell you that it's been a tough run for CEO Brian Nicholl, late of Chipotle, as it seems like the Seattle based coffee chain was far more broken than anyone realized. Lots of poorly performing stores, many of them are enclosed. Big execution issues. Those are being fixed. Miserable throughput that's already been fixed. I think everything is changing for the better. I'm also seeing rebounds in some underperforming industrial stocks that are not part of the data center business, which therefore made them uninvestable. In 2025. These were beaten down because they lacked AI related momentum. I'm here, I'm talking about a Honeywell or Dover. Two conglomerates with one Honeywell currently undergoing a breakup. They've been hapless performers. But hope springs eternal, even for me, that they'll get these these right this time. That's why we're approaching a positive attitude for the Chapel Trust. Finally, there are stocks that never should have underperformed to begin with. Now these were cases of what I call mistaken identity. Chief among them is the stock of Amazon. This hyperscaler, one of the greatest companies in history, saw its stock pull up barely more than 5% a year where the S&P was up 16%. Nasdaq rallied 20% when last Amazon reported the stock soared from $222 to $254. Oh, it was a used move, but it then proceeded to give up the entire game and became a laggard again. The stock convinced people the stock not to come. The stock's decline given to people there must be something terribly wrong with the business. But it sure wasn't from its incredibly lucrative Amazon Web Services business, which has started to reaccelerate. It wasn't from its retail business, which was amazingly strong. The advertising business, total gravy. Exceptional. So what went wrong? I've looked and I've looked and I've looked in the reread, the conference call in the last quarter, saw all the contemporary research notes before I came out today. And I am telling you there was absolutely nothing wrong. Nothing except perhaps an expectation on the part of some analysts that retail sales might be weak, which they weren't. So now Amazon's playing catch up based on the mistaken identity that it was a loser, it never was. Of the three categories, you should know I prefer the mistaken identity investments to the momentum stocks and the resuscitation stocks. But this market likes a wet January, not a dry one. I expect the emotional trading could last a bit as a little bit more as the year just started. Here's the bottom line. We've seen these trends last as long as 10 trading days into the new year before we've gotten even a sharp correction. It wouldn't surprise me if that happens again. So if you have big gains, say in the Seagate or Western Digital or Sandisk, please don't be so greedy. It's time to ring the register tomorrow morning on part of your position. Meanwhile, I say hold on to the turnaround stocks and buy the mistaken identities because they're the ones that should keep running as we go further into the new year, let's take calls. Let's go to Ian in North Carolina. Ian.

Caller (8:53)

Jimbo. How are we feeling? Happy New Year.

Jim Cramer (8:56)

Good. Happy New Year to you, Ian. What's going on?

Caller (8:59)

Nothing. My Hoosiers are playing in the Peach Bowl. Tough to beat it.

Jim Cramer (9:03)

No, it is really fantastic. Congratulations to Mark Cuban, who was with us as a guest when we went to Indiana for such a great school tour. How can I help you now?

Caller (9:13)

Yes, sir. Well, Cheniere Energy has been sliding for about a year now. Is it a good time to pick up some or will the slide continue?

Jim Cramer (9:22)

Well, you know, I've got to tell you, it's. It's not. It's not my favorite right here. I prefer, as I say, in, in, in how to make money any market I much more prefer the higher yielding ones. I think one Oak is better and I really like enterprise product partners here. I think those are better. More growth, better yield. Let's go to Preston in Maryland. Preston.

Caller (9:44)

Hey Jim. Happy New Year.

Jim Cramer (9:46)

Same to you Preston. How can I help?

Caller (9:49)

Well, at your recommendation, a couple years ago I took a small position in a company which is now down over 50%. So I wondered if I should hold it, sell it or buy more. And if sell it. Do you have any good recommendation? My company is sweet green.

Jim Cramer (10:09)

Okay. Sweetgreen has decent revenue growth but it just can't seem to turn it into a profit. They've got to start making money. I gotta tell you or else I think it is gonna go even lower. The one that we like, it's very hard group, just so you know. But we like Texas Roadhouse which has been coming back big and if we get any break in cattle that thing, cattle's going up. That thing could go to 200. 177 up $2.64 say. And I like that one much more than one year in. Alright. Please don't be greedy. This is a good time to ring the register and anything that has shot up gigantically, particularly the storage place and maybe put that money to work in a stock that could make a big turnaround this year. Oh man. Money. Tonight as we step into a new year, I'm giving you my review of the magnificent seven stocks starting with the top two performers that I think can keep tracking higher. Then I'm taking a look at the other five which actually underperformed the broader market. Are they still winners or is it time to cut them loose on the reveal? My take and with aerospace likely becoming a more dominant theme this year, I'm sitting down with the CEO of full service aviation player AAR which reported this evening to find out more about the company's trajectory. So stay with Kramer.

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Jim Cramer (13:20)

Now that we've turned the page of the calendar to 2026, I want to talk about the Magnificent Seven. Like it or not, Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla weigh in at roughly 35% of the S&P 500. For three years now, these stocks have been the entire ballgame for most people, even if some of them occasionally fail to please the trading oriented hedge fund managers. In 2025, the MAG7 still rallied 22% on average despite rolling over near the end of the year. Not as good as the past, but still better than the s and P gain 16%. Of course, that's down from 111% gain in 2023 and a 60% average gain in 2024. At the same time, we're finally starting to see a little divergence in the individual performance this year. Last year, for instance, Alphabet shot up 65%, but Amazon, as I mentioned, the top of the show only gave you a paltry 5% gain. In fact, the outperformance here entirely came from Alphabet, and in video, the other five members in Magnificent Seven lagged the S&P 500. Pretty amazing, is it? What's so magnificent about that? So let's take them one by one because this feels like 2026 will be another year where whole where individual stock picking is really going to start mattering. Remember, this is my big theme. Alphabet Nvidia, I think are going to be two huge outperformers just like 2025. Alphabet, the parent of Google, is now the third largest company in the world with a $3.79 trillion market capitalization that's a little bit bigger than Microsoft and a little smaller than Apple. Nobody comes close to video in the number one spot at $4.55 trillion. I got to tell you, it does hurt me to see Outfit as the best performing MAG7 stock last year because like an idiot, I sold it for the Chapel Trust. We throw in the towel last spring. At the time I look, you know, it looked like that this company was in big trouble. The consensus out there was the Google search would be eaten alive by these new generative AI platforms of other companies. And more important, these guys had lost a big, big antitrust case the previous summer with a judge ruling it out, but was a monopolist in the search advertising industry. Another judge made the same finding last April in a separate case. This time it was about the ad tech market. The stock kept getting hammered and I just couldn't take the heat because I knew that justice was gunning for more than just a breakup here. It wanted to hobble Alphabet like Kathy Bates does to James Caan in the Kramer Fade movie Misery. And that's the real reason why the trust bailed. But I spent the rest of the year regretting that move. First, it turned out that the antitrust rulings were much less of an issue than anyone anticipated. The same judge that called Google monopolist in search decided that upon further review, the judgment was wrong. And not only that, but the company could keep paying Apple about $20 billion per year to be the default search engine on the iPhone. That was kind of a linchpin of the antitrust case. Alphabet didn't even have to sell Chrome, their web browser. I thought the judiciary was going to tear this company to pieces. Yet that simply didn't happen. No misery here. How about those I worries? Turns out you didn't need to be worried at all. You didn't meet afraid of general they are when you got the best platform. And that's what Google has with Gemini. Plus, there was never going to be any cannibalization here because Google just slapped their AI overview right on top of their search results page. Brilliant. They decided to make it to great taste. That tastes great together. And hey, being the default generative AI platform for Google search is a huge advantage. Who knows, maybe they're going to pay Apple and do it for that too. Finally, in November, as the rest of the complex tried to roll over, output surged higher because that's when they released the latest version of Gemini Gemini 3 which was almost instantly recognized as the best in the business. I use it constantly. Other companies even want to buy their in house TPU chips that they develop with Broadcom a stock by the way that is down big after an excellent quarter and I think should be right here and look that's just search and I Alpha's got a lot more going for YouTube may be the most important and of course watch force and media I love I love the NFL on YouTube just kind of assertion there way most the undisputed leader in robotaxis. These guys even made some big advances in quantum computing. And don't forget about Google Cloud. That's their thriving cloud infrastructure business that that competes with Amazon Web Services and Microsoft Azure and many people think does better than both. Of course the one thing you can't say about Alphabet anymore is that the stock is cheap. For a while last year it was trading at a discount, the S&P 500, but it now sells for a nice premium. Still, the Stock's not that pricey 28 times this year's earnings estimates when you consider the growth rate given everything out but is going for it. I think that's reasonable, which is why we bought the stock for the Chapel Trust. We bought it back again near the end of the year. I intend to make it a big position. I bet it keeps climbing. 20:26 I was tempted to buy some even today for the trust, when the stock was down almost five points, it closed down $2.20. The second best performing Magnificent Seven last year and the only other member to outperform The S&P 500 was Nvidia, which rallied 39% even as the stock mostly traded sideways for the final few months of the year. This was a big step down from Nvidia's 200% plus gain in 2023 and the over 100% gain it posted in 2024. Despite being the largest company in the world, Nvidia somehow still feels underappreciated. To me, all four of the company's earnings reports last year were excellent, even if the magnitude of Nvidia's earnings beats have shrunk versus the last couple of years simply because Wall Street's no longer underestimating this company like it used to. That's where a lot of big performance boost came from. At the same time, Nvidia remains firmly at the center of the ecosystem with the best chips that money can buy and a software mode that makes it very hard for other semiconductor players, including Google, including amd, to compete today, Nvidia stock struggled again. It finished down 88 cents after CEO Jensen Wong gave what I thought was spectacular keynote address at last night's ces. That's the old consumer Electronics show where he said that demand remains extraordinarily high and his next generation Vera Rubin chips are ahead of schedule. It's all on, yes, YouTube. These things have entered full production with shipments scheduled to start in the second half of the year. Jensen also devoted lots of time last night to discuss physical, I think robots think self driving cars, which is a market that's rapidly growing. So yes, I still like Nvidia very much. Entering 2026. Own it, don't trade it. And that is the way we handle it for of course for the Chapel Trust. Plus, as the calendar flips the new year, the stock doesn't look particularly expensive at all. Nvidia currently trades at less than 25 times this year's earnings estimates. Wall street anticipating nearly 40% earnings growth. That's a cheap stock. From the perspective of a growth oriented hedge fund manager, it's insanely cheap. And if the past few years are any guide, Nvidia will once again beat the estimates, maybe trouncing. Meaning the stock will look a lot cheaper in retrospect 12 months from now, as is often the case in video in the last decade. It's confusing if the stock couldn't rally in since this excellent keynote speech at CES yesterday. But like I said about Amazon last year, some stocks just don't react the way they should. And you need to have enough confidence in your own work to say that the market is wrong. Here's the bottom line. I think the two outperformers, the Magnificent Seven Alphabet Nvidia will keep winning in 2026. I buy them both right here. As for the underperformers, well, stick around after the break. I'll give you my prognosis that money's back after the break.

Announcer (20:45)

Coming up, Kramer's turning to the five members of the Magnificent Seven that failed to outperform the market in 2025. And giving his take on how they look entering 2026.

Jim Cramer (20:57)

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Huh, that sounds easier than I thought.

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Jim Cramer (21:15)

You? Yeah, I do. Now, where did I put my keys?

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Jim Cramer (22:42)

Now that 2026 has arrived, can the Magnificent Seven get their mojo back? Like I told you before the break, only Alphabet Nvidia managed to outperform the SB 500 last year. The other five underperformers? Ouch. Let's talk about what happened in each the third best performer in the mag 7 last year Microsoft was humming until late July peaked it 555 bucks. Then it started getting hit and failed to regain its old highs, finishing the year up just under 15%. Now more than 60 bucks. These are Watch it go down Every day is crushing me, I think. Look, I think Microsoft's doing fine. But when they reported in late October their guidance for Azure, which is their cloud infrastructure business, came in light, possibly because of supply constraints, which would be good. Plus, after previously saying that capital expenditures growth would be lower in 2026, match reversed course and told us that that would no longer be the case, which was just plain bad. At the same time, the stock was also held back by Marshall's heavy involvement with OpenAI. Now they own 27% of its for profit business, which could be worth More than $100 billion. Maybe more than that. Top that Open Air is committed to spend 250 billion bucks with Microsoft's Azure over the next several years. But lately a lot of people are worried that OpenAI might not be able to pay its bills, which would be a real problem for Mr. Softie going forward, I still feel pretty good about Microsoft, especially if OpenAI can raise money at a valuation that's close to the $8 billion number that's been rumored. Now I have to tell you, as opposed to the end of last year, I am growing more and more confident each day that that will be the case that Open Air will not be a problem. It will not be the Achilles heel. Plus I love it if their Azure business can outperform the recently lower guidance look, if Azure can put up growth closer to 3940% and 35 then this stock could really roar. I am a believer in Microsoft which is why we are in it for the CNBC investing club. It is really a long long standing position. Next is Meta platforms. Yes it gained less than 30% last year. Wow. Now this is another company looked on a sale board for most of 2025 but pulled back hard after its latest quarter in late October. Just like Microsoft, Meta stock rolled over management's forecast for higher investments spending did it. They're still shelling out fortunes for AI. Their capex budget for last year last year should come, next year should come in at 70 to 70. 72 billion and CFO Susan Lee said the capex dollar growth will be notably larger this year. So maybe 7072 goes to 100 on top of that matter doesn't have to me a clear AI strategy. They don't have a leading generative AI platform that can compete with Google's Gemini or OpenAI's ChatGPT. They don't have a cloud infrastructure business that can rival Amazon, Microsoft, Google or even Oracle. Now it doesn't matter. I am a big believer in this technology, but it would be great to have more clarity on what Met is doing with it beyond making better targeted ads which they are the best at in the world. Of course Met is still dominant in digital advertising. In between Instagram, Facebook and then don't forget WhatsApp. They have a massive user base which gives them a gigantic advantage. Plus I have a ton of confidence in Mark Zuckerberg. That is why we still own it for the Chapel Trust. Big position. Oh and to be sure, I don't think better will have to spend all that much than what people think think it will because I think it's be hard to spend that much. I think Zuckerberg will blunt any inroads open I might be making on social. He can crush them. But there's a power gated. I call it power gating. It's just really hard to spend as much as you'd like because you can't build as much as you want labor materials. So I think you'll be constrained. I think it's going to be positive for you if you own the stock. In fifth place was Tesla, which was all over the map last year, but only used a late year rally to finish 202025 up over 11%. Tesla remains an enigma. The core electric car business, I'm calling it awful. Down for the second straight year. Earnings are down about 60% from their peak in 2022. But you know what? It doesn't matter. Playing that almost feels like a waste of breath because the investors in Tesla, they do not care. CEO Elon Musk is a great business person and even better sense of showmanship. So he gets got everyone focused on the future opportunities in robo taxis and humanoid robots. Those cars are on the road in Austin, Texas. And by the way, those are the cars we care more about than the sedans you might buy. In the end, Musk needs to make progress on both these fronts to keep shareholders base happy. Although it sure wouldn't hurt if he can stabilize Tesla's auto business. But it won't matter to some of these bulls who know that Musk's robot initiative may be the best thing going in that space. Apple's next up. It's less than 9%. It only went up about 9% last year. This one's different. Apple stock was beaten down in early 2025 because of the same worries we always hear about. Can their growth accelerate? Will iPhone sales be weak? Will the China business ever turn around? And of course last year we also got the tariff worries with President Trump going after their two key sources of manufacturing, China and India. Ultimately, Apple took those tariff concerns off the table by announcing a massive domestic investment agenda that won the company some key exemptions and won over the President. The stock came roaring back. Apple also helped itself by posting several strong quarters with sales growth accelerating over the course of the year. But what really got this stock going this fall was the iPhone 17 launch. We all heard it was going to be weak from Wall street over and over and over again. It was a huge hit. Plus when Wall street decided to start worrying about all the spending on data centers, the guys at Apple look like Jesus for not getting involved in this game. Remember, people thought they were doofuses before this. You know where I come down on Apple? As always, I say own it, don't trade it like we do for the CNBC investing club. I think this strong iPhone Cycle can continue. And it wouldn't surprise me if Apple can sign a big deal to get billions of dollars in exchange for making some generative AI platform the default on the iPhone. Hey, maybe it's Alpha. Gemini makes a lot of sense. Stock has quietly pulled back over 9% from its early December all time highs, currently trading at 32 times this year's earnings estimate. And not cheap, but I think Apple deserves a premium multiple given how great it is. Finally, there's Amazon, another Chapel Trust name which I talked about earlier in the show. It finished last year up just over 5%. Here too muted overall performance missed some very positive things. When Amazon reported its latest quarter at the end of October, that was a major positive catalyst as their web service business put up terrific numbers. I was what I was worried about growth accelerating to more than 20%, the highest level since the third quarter 2022. I feel very good about that business after speaking with Amazon Web Services CEO Matt Gorman about a month ago. I don't know if you heard him when he was on the show. He was terrific. On top of that, Amazon made a big investment in Anthropic, one of my absolute favors. They're already using AI and robotics to enhance the retail business. I was on Rufus maybe 20 times in the last three days. Rufus has really improved and I got to tell you, Anthropic is great. It's a business to business service. It's going to be wildly profitable very soon. The retail business continues to do well with double digit growth both domestically and internationally for the past two quarters. Yes, Amazon still spending heavily on infrastructure like many of the Magnificent Seven compadres. But it's very clear how these investments can directly make them money. So to me that spending is easier to swallow. I'm looking for Amazon to put up much bigger gains in 2026 and it seems like I'm not alone because I mentioned at the top of the show the stocks were nearly 5% over the past three sessions and it's been magnificent. Here's the bottom line. Even the laggards, the Magnificent Seven have a lot going for them, which is why we own six of the seven for the Chapel Trust. As I say in my new book, how to Make Money Any Market, they are still the best companies our nation has to offer. Gary in Missouri.

Caller (30:05)

Gary, how are you? Jim, this is Gary from St. Louis. My question to have you is what what happened to Oracle? Sounds like it just seems like Oracle, the bottom fell out of it.

Jim Cramer (30:18)

Okay, well this is actually involved with the debt side of Oracle. They had to borrow a lot of money to be able to build out all these data centers they want to. Then people got increasingly worried that maybe one of its largest clients, OpenAI won't be able to pay for that. I now I'm taking that off the table. I don't want to buy Oracle because I'm not really sure about their business model. But I am not. I would take off the table that they're that the stock sees 26 times earnings. If it got down a little bit more, I would just tell you to buy it. Let's go to Craig in Missouri. Craig.

Caller (30:47)

Hi Jim. Just got a question on a company that I think is just amazing. It's not only a tech company, it's a manufacturing company. I believe they will do more for energy and addressing the energy concerns in the next five years than anyone else in the planet with their 2 nanometer chips. And they're just going to get smaller, more powerful and use less energy. The company I question about is Taiwan Semiconductor Manufacturing Corporation. Thanks, Jim.

Jim Cramer (31:22)

I get up at 2am to listen to their conference call. It's magnificent. They really know what they're doing. Why do I not own it for the Chapel Trust? Well, frankly, it's because we own Nvidia, which is is one of the largest clients, probably arguably the largest. And I don't think there's a need to own both of them. But Taiwan Semi is a very good company. Nvidia's got the same Taiwan risk, actually 170 to some degree, although obviously once located in Taiwan. All right, yes, the maintenance of 7 has its laggers, but I think even they can be winners. Which is why we own six of the seven. For the charitable trust. You can always look up what we have and join the club. I hope you do. People like it. Now there's much more man money ahead, including my exclusive with A R Corp. As aerospace takes off. I'm sitting down with the CEO fresh off of what looks like some Dynamite earnings. Could 2026 finally bring us a turnaround in the consumer? Packaged good stocks. There's one way for them to be more than good in this environment. I'm revealing how they can become great. And all your calls rapid fire. Tonight's edition of the Lighting Round. So stay with Kramer. Aerospace. It's become one of the hottest themes in this market because neither Boeing nor Airbus can make new planes fast enough. The airlines need to spend big to maintain their existing fleets. Which brings me to an old friend of mine, AAR Corp. An independent provider of aftermarket Parts and services for both commercial and aviation government customers to these guys reported after the close they delivered higher than expected sales. 15 cent earnings beat off a $3 basis. Management also raised its full year organic sales growth. That's the one I really care about. So let's take a closer look with John Holmes. He's the Chairman, President and CEO of Arcorp. To learn more. Mr. Holmes, welcome back to Mad Money.

John Holmes (33:14)

Thank you, Jim. It's awesome to be here and thanks so much for having me back.

Jim Cramer (33:17)

Well, I'm thrilled you're here just once again, thank you. Delivering fantastic numbers. Can you quantify the demand environment that's allowing you to get really great sales? Because I know how great you are with trying to convert those sales into, into free cash flow. So did maybe just give us a rundown of where we are right now?

John Holmes (33:37)

Absolutely. And thanks again for having me. And just to remind everybody, we, we operate in the aviation aftermarket, as you said. And we do three things. We sell parts, both new and used. We offer maintenance services to maintain individual aircraft parts as well as whole aircraft. And we also sell software that lasts, that allows over 100 airlines around the world to buy and plan for the parts and maintenance that we offer. And that's all working together and help deliver the results you just, you just mentioned. But the demand environment for what we do is great right now because what we want to see are lots of aircraft flying and we see lots of aircraft flying operated by our airline customers and as well as the government customers. And since we sell parts and repair and since when aircraft operate, they use a lot of parts and they require a lot of maintenance, that's what's driving our business in addition to tremendous execution by our team.

Jim Cramer (34:28)

Now I want to talk about the software for a second, then we can go back. The software is very exciting to me. Track software. Yeah, I want to dig a little deeper in this because it looks like the revenue is growing pretty rapidly and that may be the third leg of the stool that's probably the most exciting for our viewers.

John Holmes (34:44)

Yes, and I appreciate you mentioning that. We've been at this software strategy since we acquired this company called Trax, which is a software company that provides maintenance ERP systems to airlines. We made the acquisition in 2023, but we had been thinking about the acquisition for over 10 years prior to that. In fact, I personally spent time with the owners almost two or three times a year for 10 years leading up to the acquisition to get them to finally sell the company to us. And what we see is this Harmony between the software that they provide and the hardware, if you will, that we provide, selling parts and repairs. And what a maintenance ERP system does for an airline is it runs every single element of an airline's maintenance operation, every single piece of inventory that's on the shelf, every single piece of inventory that's on an aircraft where it's repaired, what it does. All of that is managed through Trax. And trax has over 100 airline customers around the world. And we've been helping Trax to grow since we made the acquisition in 2023. We've gotten them into Singapore Airlines, we've gotten them into Cathay Airlines. We just announced yesterday they're in Thai Airways. We got them into Virgin Atlantic. And we announced in June that Delta Airlines selected Trax to be their maintenance operating system, which is the biggest win yet for the business. So we're helping to grow the business itself. But over time, we want to bring that synergy between the software that tracks provides as well as the hardware that we provide, and the synergy between software allowing airline customers to purchase the parts and repairs that we sell.

Jim Cramer (36:12)

Okay, so how much of the recent margin expansion is, is into software? Because software can be such a great higher margin business than just, say, providing services? As much as I love services, yes.

John Holmes (36:25)

We're in the early days, so it is, it is the highest margin business inside of ar, but it is still a relatively small contributor. We've doubled the revenue since we acquired the company. We see a clear, clear line of sight to continue to drive that revenue growth. And that's just the software business itself. We also see synergy over time where the software allows us to develop a proprietary channel for parts and repairs. Sales also.

Jim Cramer (36:49)

All right, talk to me about defense. Defense is very important to you. Some people felt it at one point that with Doge, we'd be cutting back. That's clearly not happening. If anything, we're expanding. Are you expanding along with it?

John Holmes (37:01)

We are. In fact, our sales, our defense sales, our government sales were up 23% this quarter, which a great quarter of growth for, for government. And we over time. And air has been around for 70 years. We really like the balance between the commercial and the government because each of those in each of those markets will go through its own cycle.

Homes.com Advertiser (37:21)

And.

John Holmes (37:22)

But over time, and that's another unique element of ar over time, that balance has served us very, very well as they kind of hedge each other. But again, much in the same way as I described, what we want to see in terms of aircraft operating and driving needs for parts and maintenance. We want to see the same thing in the government. We want the government to be operating aircraft, increasing its operational tempo and that again drives demand for our service to go full circle.

Jim Cramer (37:47)

We know that Boeing can't produce enough planes. Airbuses could strain too, which means that you have to keep these planes in the service. I think a lot of people don't realize how long a plane can last provided it has air helping them. John, what are some of the ages of some of the planes? What's the average age of the fleet and, and how much longer can they go with it with the parts and service you provide?

John Holmes (38:09)

Air aircraft could last for decades. They can last for decades. And as long as they're properly maintained by companies like ours, they can last for decades. And that, that dynamic that you just described where demand is exceeding supply out of Airbus and Boeing is expected to continue at least and through the end of the decade. So this environment which is very, very good for us because our core market is the current generation fleet, that is a, that is a great dynamic and it's expected to continue. Having said that, we are already doing work on the next generation of aircraft, the 737 Max, the A320neo, the Leap engine, their accessories. We're already transitioning services to support those fleet, to support that fleet as it gains critical mass. But in the meantime, the dynamics that exist, the fact that the current generation fleet is operating longer than anyone expected, that's a good thing for us.

Jim Cramer (39:01)

Well, look, I got to congratulate you and once again this is a company that is about as clockwork as you're going to get in a very tough space, frankly because we know that as much as I do like Boeing's strategy member of the travel trust, it can be up and down, but that's not the. And I don't mean that as a joke, but that is not the case with aar. I want to thank John Holmes, Chairman CEO of ar was still another great quarter. John, thank you for coming on the show.

John Holmes (39:25)

Thank you Jim. It's great to see you.

Jim Cramer (39:26)

Oh fantastic. That money's back everybody.

Announcer (39:30)

Coming up, Kramer takes your calls and the sky's the limit. It's a fast fire lightning round.

Jim Cramer (39:36)

Next. It is time to talk to the white round queen. First of all you say in the stock center. Bye bye bye. So to be to the court sweater from a stamp of Bristol Square. You implant itself and then the lighting round is over. Are you ready? Ski tag time for the light round climbers start with Dave in illinois. Dave.

Caller (40:02)

Hey, Dr. Kramer. Sorry about taking away your bird's number two seed NFC bid.

Jim Cramer (40:11)

Yeah. How about missing the game because. How about missing the game because now I'm going out to the J.P. morgan Healthcare Conference. I'm missing the game. But you know what? It hasn't come up at all. My house. It hasn't bothered me. Anyway, what's going on, Dave?

Caller (40:26)

Jim, this 38 billion dollar company designs, develops and manufactures automated test systems and robotics worldwide. Last year Teradyne Stock appreciated some 70% and is up almost 20% on this year.

Jim Cramer (40:43)

Jim, your thoughts on T. You know what, Dave? This is a tough one. The stock is capturing too much enthusiasm. But I've got to tell you, it is one hell of a company. It is one really, really great and I would not step away from it. Would I buy it up here? I don't know if it pulls back. I'm still a buyer, Dave. It's that good a company. And thank you so much and good luck to the Bears. Let's go to Matt. New York. Matt. Good evening Jim.

John Holmes (41:09)

How are you?

Jim Cramer (41:10)

I am good. How are you, Matt? What's going on?

Caller (41:13)

Good, sir.

John Holmes (41:15)

All right, so I think this company.

Caller (41:17)

Is pretty well positioned position due to its strategic focus on building a domestic.

John Holmes (41:21)

Rare earth supply chain.

Caller (41:23)

What do you think about us, AR.

Jim Cramer (41:26)

See, I think that's one of those year of magical investing stocks. And that year ended, I. I can't bless it. Losing too much money. Let's go to Isaac in Nevada. Isaac.

Caller (41:36)

Happy New Year, Jim.

Jim Cramer (41:37)

How's it going? It's going well, Isaac, how about you?

Caller (41:41)

I'm going great.

Jim Cramer (41:43)

I'm great.

Caller (41:45)

I'm calling about a stock here that they approved the merger today. It's FITB 5th.

Jim Cramer (41:53)

Yeah, FITB. This is a good combination. I've wanted it. They are going to bring some, they will bring some discipline to Comerica. I think it's a buy. Let's go to KT in Massachusetts. Kt.

Caller (42:07)

Hey Jimmy, thank you for your hard work.

Jim Cramer (42:09)

You're the best. Oh, thank you, Jim. I'm interested in a medical device company. The market cap is 873 million and Needham has called it its top pick for 2026. The name of the company is Si Bone. The ticker is S I B N. Yeah. Okay, so you have to understand this is a great, great speculation. I mean terrific. And I'm glad you brought it to our viewers attention. I myself, I'm going to huddle with research director Ben Stodo and we are going to get to the bottom because I keep hearing this company's name over and over and over again. Now we're going to go to Daryl in Tennessee. Daryl.

Caller (42:55)

Hey, Jim.

Jim Cramer (42:57)

My stock is a is Fortune Brands. I wanted to get your input on.

John Holmes (43:00)

Okay.

Jim Cramer (43:01)

The problem is, no matter how good Pink. Look, Nick Fink is terrific, but no, it doesn't matter how much he does. It's still a housing play. That's why we own Home Depot. I think it's a better way to own it. And Home Depot has historically went up ahead of when the Fed cuts. So I like the in that one more than I would like to be in Fortune Brands. And that, ladies, is the conclusion of the Lightning Round.

Announcer (43:24)

The Lightning Round is sponsored by by Charles Schwab. Coming up, consumer packaged goods stocks were stuck in the mud in 2025. So what can they do to rebound this year? Kramer's giving his advice on how they could return to the top shelf.

Jim Cramer (43:41)

Next. Is there anything the consumer packaged goods companies can do to get their group back? When I look at PepsiCo or General Mills or J.M. smucker, I see companies with good market share, steady management, dividend yields north of 4%. ConAgra yields more than 8%. It's good holding freezer aisle, but it just doesn't. These companies are caught in the crosshairs of a Health and Human Human Services secretary, Robert F. Kennedy Jr. Who hates junk food and the incredibly popular GOP. Just one one weight loss drugs that make junk food much less appealing and appetizing. Are the odds here insurmountable? Yes. If these companies keep doing the same old thing. The only way to change the trajectory, I believe, is to break up and sell parts of the businesses after demonstrating you can put up some decent, even if unexciting growth. Now, I know that sounds hard, but take a look at what Steve Kalane did with Keller a little over two years ago. After years of stagnant earnings, Steve recognized he had to split up the companies into two entities. A snack food play made of Pringles, Cheez, its Pop Tarts and egg and waffles. Hey, hardly. Kennedy's his first choice. But you know what? This thing, Kellanova, it started doing well. And then a traditional North American cereal company that became the new W.K. kellogg. This put into effect on October 2, 2023. W.K. kellogg started trading at $13.8. It fell to 1335 that first day, giving a valuation of roughly 1.1 billion. Kellanova started trading at 5570 and dropped at 5250 that first day call called an $18 billion market cap. So both had really disappointing first days. Steve stayed on to captain the Kellanova stack business. But from the beginning I was worried that the breakup might be a bust because of how poorly the pieces traded right out of the gate. That judgment was wrong. Less than a year later, the privately held candy company Morgan Mars bid 83,50 per share or just under 36 billion for Kello Nova. Then last year, Ferraro, a gigantic Italian chocolate company, paid $23 per share for W.K. kellogg. That's $3.1 billion. Both deals closed late last year. From their closing prices in that disappointing first day, you got a 72% return on W.K. kellogg and a 59% return on Kello Nova in roughly two years time. This from a salty and sugary snack company and some heavily sugared cereals. Precisely the kind of businesses that are supposed to be the most vulnerable to the gop. Dash once. Why did this happen? Because of the CEO. He thought the two laser focused companies would be much more desirable than one company that was spread too thin over too many areas. And he was dead right. Maybe it's time for these other packaged food company CEOs to recognize that there might be private buyers for their businesses, but only if they're willing to break them up in digestible pieces. Interestingly, Steve just started CEO at another underperforming food company, Kraft Heinz January 1st. Nobody seems to care. Just like no one cared when he took over Kellogg. People have written off Kraft Heinz repeatedly, which is supposed to split into two companies in the second half of the year. Now I'm not sure Steve wants to go with that breakup. What I do know is that he is the right guy to orchestrate this given how much value he created by breaking up Kellogg despite what's supposed to be a very tough environment. Now I have my doubts when Kellogg we when Steve Kim won the show and announced the split. But my doubts were, let's say, ill advised. Maybe you can prove me wrong again on Kraft Heinz. One thing certain. The current packaged food group can't stay like this. They need to try to bring out some value with Trump's antitrust department. They can merge with impunity private companies by gobble up the pieces. Don't. Regulators will give it a second thought. The untenable performance of these stocks demand action. Demand it now. It would be a real shame if only Steve recognizes that the others should make some moves where the 4% yielders will see their stocks fall to the yield of 5% and the 8 percenters will go to 9. Stasis doesn't work anymore. It is time for action. Like I said, as always, bull markets on my promise. I find just for you right here man Money. I'm Jim Cramer. See you tomorrow.

Disclaimer Narrator (47:46)

All opinions expressed by Jim Cramer on this podcast are solely Kramer's opinions and do not reflect the opinions of CNBC or its 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 Kramer 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 struggling to fall asleep?

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