← Mad Money w/ Jim Cramer
Mad Money w/ Jim Cramer
Mad Money w/ Jim Cramer 3/20/25
00:43:07
Listen to Jim Cramer’s personal guide through the confusing jungle of Wall Street investing, navigating through opportunities and pitfalls with one goal in mind - to help you make money. Mad Money Disclaimer
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- [00:00]
Unknown Host
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- [01:23]
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 a very special Las Vegas edition of Bad Money. Welcome to Kramer America. Other people want to make friends. I'm just trying to make you some money. My job is not just entertain, but to teach you. So call me at 1-800-743-CBC. Tweet me at Jim Cramer today. It's about the batteries, stupid. Oh, sure, I can talk about all the things that everyone else is talking about. All the things that are beyond our control. The endless trumpet of tariffs equals inflation. Equals higher interest rates equals recession. There. Okay, we've all memorized this equation of Whoa. And it's what's ruling the averages even on a mostly sedate day like today, where The Dow declined 11 points. S&P dip point to 2%. Yes, of course. The Nasdaq shed.33%. So what do you do when you're confronted with endless Negativity wherever you turn. And isn't that the case? I think it's a tremendous opportunity to have a little extra cash. Because the market's unlikely to power higher anytime soon, it's probably more likely to drop lower. Meaning this is a good moment to keep some cash on the sidelines while you watch and learn. What do I mean by learning? Today we find ourselves at the Home Depot annual store manager meeting in Las Vegas talking to the top brands, including CEO Ted Decker. In a moment. Home Depot is an amazing company, both by the numbers with a total compound annual return of 25.5% since its IPO and by the culture as few companies give more to charity, especially for veterans, and few take care of their own like Home Depot does. It's easy to talk cash. Mild speed bump here or higher interest rates. Not as important to Home Depot as the positives from higher housing prices. As for the pervasive gloom coming from all the uncertainty, well, that is a little bit harder to figure out. But for me, when I know things are bad, what I like to do a little different, I like to hunker down. I like to learn. So today I learned about how battery technology is replacing gasoline technology for power source drills, mowers. Now listen, this is a big change. Billions of dollars. It's happening right now as the rechargeables are at last more powerful than the gas guzzling brethren. I know that may not be the needle mover for retailers largest Home Depot, but you always need longer term reasons to stay the course. See we own Home Depot for the Chapel Trust and when you walk the aisles you have to have more than just good, good previous growth which they have. I say you keep your eyes open and you listen to what can drive new sales. You always need replacement cycles of the appliances in this case, whether it be the drills, whether it be the power saws. One of the things the company's banking on the radical improvement in the power of electric motors over gasoline motors. Keep in mind there are huge numbers of outdoor appliances that still run on gasoline, which is dirty and dangerous. But people stick with them because they are thorough thought to offer superior performance. Hey look, that used to be true. But you know what I did today? I watched a head to head power saw contest here and the electric was much more powerful. Now that replacement cycle won't change Home Depot's next quarter. But that's not the point people. At this moment everybody's given up on so many stocks I hear. Oh, especially technology. If we're going to own anything through this environment, we need something that increases our odds of winning. I file the rise of electric outdoor appliances away. So when Home Depot stock gets hit, and it will get hit by the pervasive negativity, we got one more reason to feel comfortable owning and of course have been drops more buying it for the Chapel Trust. See, this is something I learned during the Great Recession. Back then, I stuck with Home Depot when everyone told me to sell, sell, sell, because homes were losing value for the first time since the Depression. Of course, the company ended up buying back a huge amount of stock during that period. Ended up in incredible shape versus the competitors, many of which went by the wayside. At the time, this stock was an $18 stock and it felt like the world was ending. Now it's a $355 stock out and it feels like the world's ending. You know what? Home Depot stock is still cheap and it's well off its highs even though the underlying company is doing incredibly well. Now, you may be skeptical, thinking that higher interest rates, tariffs are more important than everything I just said. More important. The specifics of this home improvement chain or what they tell me, I disagree. To me, this is when you keep the faith. And if the stock of Home Depot drops, well, guess what. Bye, bye, bye. But don't take it from me. Earlier today we checked in with Ted Deckard, the chairman, president, CEO of Home Depot. I want you to take a look. We do have a lot of negativity. I feel the country people are worried about what they can't understand. They're worried about tariffs. Now you have equipment that is going to be tariff. I am starting to take the view that it is going to be a little bit more transitory than people realize. There could be a spike momentarily, but you'll do everything they can, you can to keep cost down for the consumer because that's the way Home Depot is already done.
- [06:28]
Ted Decker
That's what we do. And let me start by saying you just had our founder, Ken Langone on your show. Yes. Just start by saying we're all bullish on America and there's a lot going on, but this is the greatest country in the world.
- [06:42]
Jim Cramer
Thank you.
- [06:42]
Ted Decker
And as Ken said, there's so much optimism. We feel it in Home Depot and whatever would happen, we're going to work through it. You know, we had tariffs. 2017, we had. I mean, when, when did we have, you know, customs house in all our ports? We've had tariffs forever. We will manage through it and come out the other side better than anyone. So it's not something we worry about.
- [07:05]
Jim Cramer
And you have been a great fighter of inflation. I think people don't realize in Washington there are some companies that have said, you know what, we're drawing the line, we're not taking that price increase. You're one of.
- [07:15]
Ted Decker
We are all about being the advocate for value for the consumer. Our business is built on providing value and great quality and customer service. We call it our three legged stool. So we want the best of assortment, we want the best value and we want the best customer service all under one roof. So bought value has always been part of our equation. And we want to sell product, we want to move volume. We're a big box retailer at the end of the day and now increasingly wholesale distribution. We need to sell product. We're not out here to milk margin. We are here to provide value and drive units for our suppliers and our customers.
- [07:57]
Jim Cramer
Now how important are interest rates? We had a big Fed meeting. People are concerned that that rates have not come down enough versus the appreciation of your home since 2019. How do you balance it?
- [08:10]
Ted Decker
Well, we focus on the appreciation of the home. I mean, you know these numbers, Jim. Since the end of 19, US home values have gone up over 50%. The US home is the single greatest asset class in the world. We think it's something like $45 trillion of value in US housing. So interest rates may come and go on different rates. We had some historically low rates. We're working our way down from what was a shorter term spike in rates, but home values going up 50%. The store of wealth. We think there's something like a $13 trillion increase in equity in American homeowners home value since the end of 2019.
- [08:55]
Jim Cramer
Well, what that says to me is that if I improve my home, it's a, it's not an expense, it's a capital investment. Very different mindset.
- [09:05]
Ted Decker
Yes. And that's the way we think about it. So you do an investment in your home. You do and make an addition. You put in a new kitchen, a new master bedroom, you freshen it up. That is an investment in your home.
- [09:16]
Jim Cramer
Now one of the things that also should help you, it's not like the housing stock is brand new, it's been aging for a long time.
- [09:23]
Ted Decker
We. Well, as, as you'd imagine, our housing stock is the oldest it's ever been and that would be obvious, but with the lack of building, we are anywhere between 2 and 5 million housing units short of demand. So since we haven't been building that much, you're actually Aging more than you normally would. So well over half the houses in this country are now over 40 years old. So the amount of work and upkeep you need to make on those houses, they've gained in value, but they need a lot of work. And we're the place to go to help people do that.
- [09:56]
Jim Cramer
One of the things we know, if you've got an asset of that great worth, where you could damage it the most, is having a leaky roof. And you've really taken care of that.
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Ted Decker
With that with our friends at srs. Absolutely.
- [10:08]
Jim Cramer
And those who have a pool, unfortunately, I know it. That if it gets rusty, it's done. And it's a. It's a. It may be your most expensive asset. If you do have one, it can't. And you can't put it off.
- [10:18]
Ted Decker
Well, you know, desalinators and in pumps, they tend to go. And we're there for you.
- [10:25]
Jim Cramer
So what categories are doing well right now?
- [10:27]
Ted Decker
Well, garden, as you can see, this is our season. We've had had tremendous success with our decorative holiday programs. Our Christmas programs are unbelievable. And then the Halloween program with our giant skelly, which I'm sure you've seen here in the distance, that is just taking. Taking America by storm. But someone asked me the other night, they said, where. You know who's coming to visit the show? They said, where should I spend my time? Where's the most excitement? Where's the most innovation? I said, literally, there's 600,000 square feet of innovation. You can go booth by booth, bay by bay. There is innovation at the Home Depot.
- [11:05]
Jim Cramer
Yeah. And I wanted to ask you, you did a survey of what are the top priorities? People, that's new. You just release. What are the top priorities for your. For your customers?
- [11:16]
Ted Decker
Well, our customers, you know, the wear and tear on the home.
- [11:20]
Jim Cramer
So we need.
- [11:20]
Unknown Speaker
We need.
- [11:21]
Ted Decker
You need to maintain. There's so much to do. Leaky faucets, as you mentioned, leaky roofs. A lot of people painted in 2000, the early days of COVID I think everyone painted some room in their house. Well, now that's five years old. So the scuff marks and the dog prints and all the rest. It's time to repaint. Bullish on painting again.
- [11:43]
Jim Cramer
Any of these things that can. Can preserve the value of your home, your greatest asset. Now, I wanted to ask you of any impact on, say, immigration. We need workers. We just came back from a conference for Nvidia. What did they talk about? Without immigration, we don't have enough workers at the same Time, Obviously, we have a balance. We want borders. What's your take on the issue?
- [12:07]
Ted Decker
Well, the thing that we focused on, Jim, and talked about for a long time at the Home Depot is the United States has a shortage of skilled trade workers in our industries in construction and electrical and plumbing trades. We think it's like something like 400,000 shortages of skilled trades. If you talk to builders, if you talk to large scale remodelers, they'd say one of their biggest issues is that skilled tradesperson on the job site. So we're very, very interested in partnering public, private partnership, say, how do we get more trades? We at Home depot, we committed $50 million to train 2,500 tradespeople. We're way beyond that. I think we're up to something like 5,000 tradespeople that we've trained. So when they finish the class, they're a licensed plumber, they're a licensed electrician. We're working with the military. We're actually on military bases with the Home Builder Institute, whereas service members, when they said, I'm transitioning back to civilian life, we'll go on base and we'll teach them trades so that when they come out of the military, they can go right into skilled trade. And it's a great job. These are six figure jobs. You're generally your own boss, you make your own lifestyle. And I think as a nation, John Furner and I at Walmart wrote an op ed on this last year where we said not everyone needs a four year degree. There's just technical schools and associate degrees and trade schools. It's a real need, it's a great career path and that's what Home Depot is focused on.
- [13:43]
Jim Cramer
They're telling me that we're out of time, but we're not. Because I want people to know the culture, how much money you've raised, what you've done for veterans. It's a different kind of company.
- [13:54]
Ted Decker
Well, as our founders always talked about, core value of ours is giving back. And we've always been generous and we help a lot of people, but we focus on the military. And there's so many military folks who have ptsd, who are homeless, who are not living in safe homes at the moment. So Frank Lake, initially, years ago, consolidated our giving into Veterans Affairs. We've had a series of commitments. 100 million, 200 million. We passed all those. We just announced a $750 million commitment to veteran causes.
- [14:33]
Jim Cramer
You are America.
- [14:34]
Ted Decker
Well, we love it.
- [14:35]
Jim Cramer
You are the leaders. More with Home Depot CEO Ted Decker next. Every day, thousands of Comcast engineers and technologists create connectivity solutions that change the way we work, live and play. Like Kunle, a Comcast engineer who is focused on revolutionizing the in home Wi Fi experience today and for the next generation. Kunle builds powerful Xfinity WI Fi devices that deliver a fast, reliable connection with capacity to connect hundreds of high bandwidth devices at once and next level latency for the applications of the future like augmented in virtual reality and cloud gaming. Learn more@comcastcorporation.com wi fi how will you.
- [15:19]
Ted Decker
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- [15:22]
Jim Cramer
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- [15:24]
Ted Decker
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- [15:35]
Jim Cramer
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- [15:43]
Ted Decker
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- [15:49]
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- [16:55]
Jim Cramer
Just before the break, you heard the first part of our interview with Ted Deckers, the chairman, president and CEO of Home Depot. But I didn't come all the way out to the company's annual store manager meeting in Las Vegas for just a quick conversation. Right now, I think Home Depot has its finger on the pulse of the economy, giving you a great read on housing and the broader repair and renovation space. That's why I had much more to discuss with Decker. So take a look at part two of that Home Depot interview. All right, first off, Tim, what are we doing here?
- [17:25]
Ted Decker
This is our annual store manager meeting, so every year we come out to Las Vegas. I think we have about the Largest private trade show. So 600 odd thousand square feet of product. New innovation. All our suppliers are here. We bring in 2,300 store managers. We're out here for a few days. We have some general sessions. We have some recognition of great performance from our store leaders. But most importantly, we get out here and we see product because Home and Depot is all about great product. And we have just thousands and thousands of new items out here that we introduced to the store managers. Great innovation by our great branded partners.
- [18:05]
Jim Cramer
And this is an important time. It's spring and maybe people don't realize that you basically have a second holiday season.
- [18:12]
Ted Decker
Yes. Yeah. I mean this, this is our holiday. This is our Christmas. Spring for us is the biggest time of the year and people get outside again and get planning and working on projects and we've got some live goods here behind us. Just some beautiful, beautiful product. And it's such a fun week for us out here.
- [18:30]
Jim Cramer
I don't know if people understand the scale of the brand and the scale of the company. It is huge.
- [18:36]
Ted Decker
Well, Home Depot, so we love our brand. We love our orange. You see a lot of orange around here. But there have been so many studies about the value of Home Depot. Depot, the brand itself, the intrinsic value of the brand by many. You know, look at the Gartners and Foresters. They have us as a top 20 global brand. So when you think we're not even in Europe or Asia city, all the great brands in the world, Home Depot, I've seen as high as top 18 brands. So this in and of itself, it's an American institution. And the brand is so valuable and powerful in and of itself.
- [19:14]
Jim Cramer
And under you, you keep evolving. You don't stand still. You made a great acquisition, one that you promised certain things. It's already ahead of that, just last year. It's working.
- [19:23]
Ted Decker
It's working. So the pro has always been a very important part of our business. If you look at our retail store business for years, that customer base is largely split between pro and diy. So the pros always been important, important for us. And that's why we have great pro brands. We always thought if we have great pro brands, the pros will come. It'll be a halo effect with the consumers. So brands like Milwaukee, brands like Kilz, it's a bare product. Masco Corporation just announced yesterday that Kilz, the number one by far primer, every pro is using, Kilz primer, came exclusive to the Home Depot as of yesterday. So not only do we have these great brands, they come exclusive to the Home Depot. But pro has always been a big piece of our business and what we're trying to do is build out the capability sets to get more share of wallet from those larger pros and the more complicated purchase occasions. They're all in our stores now. We just want to sell them more. So we're taking on wholesalers and we need capabilities like delivery, greater depth in breadth of assortment, house credit, account management, etc. And when we met SRS, we just fell in love with that company, with Dan Tinker and that management team and we found out not only do they have a great roofing business, they have a phenomenal pool business and landscape business. They took share all last year. They had a great year. We could not be happy with SR. They're teaching us so much on this true wholesale B2B approach to the business. Things like how they're teaching us, I mean when we, when we go to set up house credit, we're sort of negotiating our contract with Dun and Bradstreet on how we get background on these companies.
- [21:11]
Jim Cramer
They know how to do it.
- [21:12]
Ted Decker
They know how to do it. They've been doing it for years. We talk about a salesforce. We're hiring, you know, hundreds of salespeople. They have thousands of salespeople. We're starting to do private fleet and delivery again. We have hundreds of trucks on the road with our drivers, they have thousands. So they are teaching us it's been.
- [21:31]
Jim Cramer
A great relationship and they've been helping you with E comm because I don't think people know the scale of your e comm and the speed of your E comm.
- [21:39]
Ted Decker
So for us, E comm, what we like to call is interconnected retail. We're a project business. You generally are coming to Home Depot if you're fixing something or building something. We'd like to talk about how we solve problems or fulfill dreams. So it's an involved purchase journey. You're not just coming in, getting something and leaving. So Frank Blake coined interconnected retail. It isn't just e comm, it isn't omnichannel. That customer through their purchase journey is weaving through our digital assets and our physical stores, maybe getting delivery, maybe getting something installed, working with our entire asset base. And that's how we first started to build this interconnected e comm business. We also love selling things online. We're now the fifth largest retailer. Few people would say who are. I won't mention the names of the really big online retailers but you probably wouldn't think of Home Depot. Is one of those players. We're the fifth largest in pure dollar sales volume in E comm and you mentioned speed speeds everything. People expect virtually everything. Not even next day, not even same day intraday. And we have worked so hard over the last several years building out our supply chain or direct fulfillment centers which are pick pack and ship. We've built big and bulky many more market delivery operation centers. As I said, we've started investing private fleet. We have never been faster on more products than ever in our history and it's showing in our sales.
- [23:09]
Jim Cramer
Ted Decker Chairman, President and CEO, Home.
- [23:12]
Unknown Host
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- [23:45]
Ted Decker
President Austan Goolsbee first interview since the latest Fed decision. Inflation outlook, economic growth and rate policy.
- [23:52]
Jim Cramer
Stay ahead of the market squawk box tomorrow, 6am Eastern CNBC while we're at Nvidia's big GTC event earlier this week, we also got a chance to check in with some of Nvidia's key partners, companies that can help bring out the value of their high end chips. For example, Cisco announced a new AI factory architecture. They're developing something with Nvidia to help enterprise customers deploy, manage and secure their AI infrastructure. Yesterday I got a chance to speak with Jason Wang. He's the founder presidency of Nvidia along with Chuck Robbins, the chair and CEO of Cisco. About this new announcement and what it means for AI security. Take a look. Here's a treat. We have Jason Wong and from Nvidia, of course, and Chuck Robbins from Cisco. Emblematic of the partnerships that we saw, these are exploding meaningful partnerships. Jensen, what's it like to partner with with Chuck to do some of these things? I need to know how these things work.
- [24:54]
Chuck Robbins
Well, you can't partner with a nicer guy and you can't partner with a company with more might and more domain expertise. You know, there are two things that we're working on together and both of them are completely revolutionary. The first one is, as you know, we've been inventing AI for the clouds, but we want to bring AI to the world's Enterprise and AI reinvented the entire computing stack from compute, networking, storage, the operating system and the way you develop the applications on top. And yet today's IT infrastructure, enterprise IT infrastructure, is basically the same as it's been for a long time. And so Chuck and I are going to go and work on re racking that entire, entire infrastructure. And there's, you know, there's a few billion dollars worth, a few trillion dollars dollars worth of infrastructure built around the world. And we got to go reset that. That's first thing. The second thing we're working on is and, and this is an area that, that Cisco and Chuck's been in for a long time and it's new for us is telecommunications. As you know, telecommunications is also built on data centers. And that data center is about to get reinvented with 6G and AI. And so the two of us are working on a whole new stack for that.
- [26:12]
Jim Cramer
Any one of these would be a trillion dollar opportunity. I know that since you bought Splunk, you're even better at these things. So what's it like to work with Jensen and the Nvidia team? And how is it additive to Cisco and by the way to Cisco shareholders?
- [26:26]
Unknown Speaker
Well, you can't find a nicer person to partner with than Jensen. It's been fascinating. So Jensen called me probably 14 months ago and I said, you're the king of the world. Why are you calling me? And we sat down and started talking about the enterprise opportunity then. And we talked about the fact that our technology stacks are super complementary. So we have, even though he does.
- [26:48]
Jim Cramer
Have a bit of a competition. Some of your products.
- [26:51]
Unknown Speaker
Yeah, but we talked about it early on and I said if our teams are going to do it, we're going to position our networking gear. And he's like, fine, that's fine.
- [26:58]
Jim Cramer
You're a lover, not a fighter.
- [26:59]
Unknown Speaker
Well, he is.
- [27:00]
Chuck Robbins
We're both lovers. They're both lovers. And so now we're partnering on networking.
- [27:05]
Jim Cramer
Yeah, Nvidia.
- [27:07]
Unknown Speaker
The last announcement we made.
- [27:08]
Chuck Robbins
Exactly.
- [27:09]
Unknown Speaker
He validated our networking within their validated architecture. I think we're the only ones you validated. And then we agreed if a customer wanted it, we'll build an ethernet switch based on his silicon. So it's. We want to give the customers what they want.
- [27:21]
Jim Cramer
People at home who are, they're looking for business to consumer. They may understand this is actually far bigger than customers consumer. I know it hurts to say that because we have consumers watching, but it's.
- [27:31]
Unknown Speaker
True, it's much bigger. And when you, you Think about the security implications of this transition that Jensen was talking about. They're going to be huge. And when you get into just the initial AI inference applications are one thing where you're going to need all this new modern infrastructure. But the second phase is this agentic AI that we talk about and the, the need to reconstruct the underlying Internet alone logic to actually enable agents to communicate with each other in a secure way and actually achieve the vision that has been laid out for agentic AI, that it's a complete restructuring.
- [28:04]
Jim Cramer
Is the system that we have now ready for Agent Ki, or do we have to throw the system out, put an all new system in?
- [28:11]
Chuck Robbins
Well, as you know, the computers that people run AI on are the ones that we're sitting in front of. That's what it looks like. And those systems are in none of the world's companies.
- [28:21]
Jim Cramer
Well, then we have to place the whole world in this trillion. That's a 2, 3, 4 trillion dollar opportunity.
- [28:27]
Chuck Robbins
No question about that.
- [28:28]
Jim Cramer
You agree too?
- [28:29]
Chuck Robbins
Yeah, I mean it's a giant journey and we got to start it. And so that's why I called Chuck. You know, nobody knows enterprise computing better than Chuck. And so, you know, we need to go and re rack the whole world's companies.
- [28:46]
Jim Cramer
I love that term. It's very persuasive. Yeah, right.
- [28:50]
Unknown Speaker
I mean, well, you walk in these data centers, what is, it's just racks and racks of technology. And I think the, you know, we believed a year ago that the enterprise opportunity was going to dwarf what we've done in the cloud space. And I've heard you say the same thing recently. So we think this opportunity is even bigger.
- [29:08]
Jim Cramer
Put your business roundtable hat on. Where, how do we help as a country? I asked Chance this earlier. The country has to get behind you, the administration has to get behind. This is also a competitive world. How are we doing?
- [29:20]
Unknown Speaker
Oh, I think we're winning right now for sure. I mean look at this guy and what we're doing in this space. And then the ecosystem that you see all around us here, that's been built up around the AI factory notion and clearly we're winning. And I would say based on the conversations I've had with the administration, I know you've had a lot. They want to protect that lead and they want us to win. And I believe that their policies that they're going to implement will, will ensure that that happens.
- [29:49]
Jim Cramer
But if you're going to put a 25% tariff on hardware, it could end up being on hardware. That is an impediment to growth.
- [29:56]
Unknown Speaker
Well, we'll see where they land. I think that you were talking about tariffs earlier today. I think there's going to be a lot of logic behind where they end up. I think that the reality of their thinking around reciprocal tariffs and some countries that perhaps are treating us not as fairly as they should, I think that's, that's an area that they can, they should certainly go after. But I think they also want to make sure that whatever they do, that they maintain this lead that we have and make sure that we win the air race.
- [30:25]
Jim Cramer
Well, you are both leaders of the, of American tech, of course, international use, international business. Are we. Is American tech. Is the conversation as important as do people get it? Do you think the average American gets how important what we're discussing is to their lives?
- [30:48]
Chuck Robbins
Well, there's 2. There are two ways to answer that. Well, first of all, you were talking about international, Jim. I think that in no initiative and no foundational technology that I've ever known since the Internet has the world and the leaders realize the importance of artificial intelligence to them. And the reason for that is because no country wants to outsource and let somebody else advance their intelligence. And so this is really, really important to every country. And that's why the conversation is so relevant with respect to people, you know, across the country. I do think that artificial intelligence as a technology is in the forefront of almost every conversation. And so everybody knows about the technology and why it's important. I think it's impossible for them to realize the social and the economic and the industrial implications of artificial intelligence. But at this year, we're mostly talking about the industrial implementation.
- [31:56]
Jim Cramer
But at the same time, the notion of gdp, the Federal Reserve, where the economy, this, this transcends all that, that's just not as important as we used to think.
- [32:07]
Unknown Speaker
Well, five years ago that we thought 5G was super important. And this dwarfs the whole discussion around 5G. Every time I went to Washington, we were talking about 5G and open ran and all these things, and they were all worried about it. No one talks about it anymore. It's all about.
- [32:20]
Jim Cramer
It's unbelievably positive. We have to put a value judgment on it. Don't we have to decide to either believe or just think that. That the world is flat.
- [32:31]
Chuck Robbins
Everybody is so excited about it because we all see the wonderful potential of it. You know, whether it's for science or healthcare or just economic productivity. I mean, we all see. See the insane opportunity ahead of us. You know, of course there's Also the wonderment of it.
- [32:48]
Jim Cramer
Right. That's my right. You know that that's the word. Because that requires our imagination and we got to get our heads bigger. We have somehow you guys, you're the leaders. You have to explain how important this is to our country and the world because it is not. We're trapped by the four walls of our current intelligence.
- [33:09]
Unknown Speaker
Well, if you think about one of the most powerful things this partnership is we come together and we actually simplify enterprise's ability to deploy AI applications. That's when you start unlocking the benefits in healthcare. So the enterprise customers need help understanding how do I do this simply and secure and how can I do this in a way that I feel good about it and I trust it and it's secure and I'm not at risk with my employees or customers data. And that's what we're going to do together. And I think that's when you're going to see this healthcare, the thing you talk about all the time with science and health care and revolutionizing cures for diseases as an example. We need to go help them build the infrastructure that's going to allow them to do that.
- [33:55]
Chuck Robbins
To do that we need enterprise it.
- [33:57]
Unknown Speaker
That's correct. Yeah.
- [33:58]
Chuck Robbins
That's why enterprise it is such of.
- [34:00]
Unknown Speaker
Major benefits the human in the United States every day.
- [34:04]
Jim Cramer
Well, I want people to understand that. And you both of you are great communicators. Chuck Robbins who is the CEO of Cisco 400 billion in 2000 but now much bigger in terms of what you can become. Much, much bigger.
- [34:17]
Unknown Speaker
Much.
- [34:17]
Jim Cramer
And of course Jense Wong Video CEO. Gentlemen, thank you so much for being the leaders that you are coming. Thank you. They have money's back. While we're in the Bay Area for gtc, I got a chance to catch up with a true AI pioneer, OpenAI. And that's the company kicked this whole cycle off when it launched the original ChatGPT. Now over the past couple of years these guys have grown exponentially with its valuation rumored to be near 300 billion billion based on the latest financing rounds. Earlier this week I got this chance to speak with Sarah fryer. She's the CFO of OpenAI. I want you to take a look. Welcome back to May buddy.
- [35:03]
Sarah Fryer
Tim, it is always so good to be here.
- [35:05]
Jim Cramer
Thank you. Thank you. Nine months now you've been here as cfo. What's the learning curve? Where are you?
- [35:11]
Sarah Fryer
The learning curve is steep and I am still definitely on this upward bound of it because the industry changes every single day. There's so much to learn about in AI as you know, but what's your.
- [35:21]
Jim Cramer
Mandate as CFO here?
- [35:23]
Sarah Fryer
So it's a couple of things I think number one, it's about how do we make sure we are well capitalized to really get to our full ambition. As you know, with AI, it's both about investing in compute, investing in great researchers and investing in data. So that's number one. I think number two is building a strong business model where we have revenues that are coming from consumers, from enterprises, from developers. And then finally it's the stuff I love to do. I like to spend time with customers, I like to be part of helping build a team and it's been super fun so far.
- [35:54]
Jim Cramer
It's interesting you say when you talk about the capital, I was amazed to hear that you say basically we're spending at a level of a hyperscaler. But I also know that you're not making money and you just said that your job is to be sure that you have money. You are a potential $300 billion company that has to have the money for that. What are you going to do?
- [36:11]
Sarah Fryer
Yeah, so first of all, we're going to build a great business because the best way to fund any business, as you know, is with free cash flows. So our products today, 400 million people, consumers who are using ChatGPT every single day. I hope your users are all using it and of that a certain portion of them pay us a subscription fee for either plus or even Pro. $200 a month and it's taken off like.
- [36:34]
Jim Cramer
Well, it has. Even though I felt discouraged after I read the video, I didn't think I could have enough use cases for it.
- [36:40]
Sarah Fryer
Pro has been unbelievable. The fastest. So one of the anecdote of things I look at in our business is how fast a business gets to $100 million of ARR. So our enterprise business took.
- [36:50]
Jim Cramer
Yes, that's a lot of people's good job. People should know that.
- [36:53]
Sarah Fryer
Ten months, our self serve business took one month, our pro business, one week, one week to get to $100 million of ARR. That is how fast it took off because people love it. They want access to to coding, they want access to deep research which we're going to talk about in a minute. They want access to even multimodal. So more voice, more visual and so on. And $200 a month seems like nothing. You probably pay more than.
- [37:18]
Jim Cramer
I got discouraged by the very video that your company sends me to. I said I don't need this.
- [37:25]
Sarah Fryer
Well, I'm up. Our game on that, yes, you do. But a strong business model, because you asked me the question. Selling out to consumers, to enterprises and to developers, and then on top of that, bringing in investors, because we're just at the beginning of what we're doing now.
- [37:38]
Jim Cramer
Say I interview a CEO, I want to know I can pull 10 research reports, take a couple hours. Is there a better way?
- [37:45]
Sarah Fryer
A much better way. So I would start with deep research, which I was talking about earlier. Deep research is effectively an agent that goes out and takes longer than just a quick call response. It can take up to 15, 20 minutes. And you can set it a pretty sophisticated question instead of just saying, hey, I'm about to interview Sam Altman, the CEO of OpenAI. I'd say I want to interview Sam Altman, but I really want to get into this analogy he uses between the old transistor industry and the AI industry. Why are the two similar or different? And it's going to go off and use reasoning to not just go pull a bunch of sources and regurgitate what exists on the web, but it's actually going to go deeper and give you a think thoughtful answer in the way a good analyst would do it. But a good analyst, that might take days, maybe even weeks to pull that same report.
- [38:32]
Jim Cramer
This is what we've been waiting for. So it's here. And I should know that I'm glad you told me about it, because I needi can't have the days to be able to learn things. Now let's talk about money for a second. And this time for Stargate, you've got a guy who founded. Co. Founded your company, who immediately says, even before the announcement's over, they don't have the money. I find it hard to believe that this consortium put together not only doesn't have the money, but the people aren't throwing money at it.
- [38:58]
Sarah Fryer
Yes. So let's a moment of what Stargate is. So as I talked about, to build AI into what we see it to be in the future, we need a lot of compute. So Stargate is what we announced with President Trump. $500 billion invested starting here in the United States to build out 10 gigawatts of compute capacity, which is amazing. Do you know Ireland are, as you know where I'm from, uses about 7 gigawatts a year. Just for comparison. A lot of brain power, though. A lot of brain power. Yeah, good point. But we are starting out with our first couple of gigawatts here in the United States. So investing in the United States, this.
- [39:34]
Jim Cramer
Is the Abilene, Texas.
- [39:35]
Sarah Fryer
This is Abilene, Texas with Oracle. It is our work in Denton with coreweave and now starting to do greenfield sites for this endeavor. Because here's what I see. We are building a lot of intellectual property down into the data center layer because we open AI are the frontier models. Right. We know what infrastructure you're going to need to survey in the future. So just like back in the day, Amazon, when they were flying on E commerce said we have this thing called US Amazon Web Services. Right. Cloud computing. They could have outsourced it to someone else, but they didn't. Today they have 40% share of the cloud computing market at a 38% operating margin. That is the business I believe we can build today.
- [40:17]
Jim Cramer
Well, then that's a business that I want to pay more than more than a half a trillion for.
- [40:21]
Sarah Fryer
We'd be happy to take your investment.
- [40:22]
Jim Cramer
Well, that would make you the 12th largest company in America, which wouldn't be so bad. Now you are doing. You have unbelievable clients. And I think you know I'm talking about a square duolingo Canva, by the way, where when you use Canva, which I've done with Chad, I mean, I can design Accupade. I don't need an advertising agent. I don't need anybody.
- [40:44]
Sarah Fryer
Well, what's incredible is when you take that thought and move it up and down the economy. I was with a bunch of small business owners, which I know you care.
- [40:51]
Jim Cramer
About, passing the whole house, I care a lot about.
- [40:53]
Sarah Fryer
And they do not have access to an ad agency even if they wanted to.
- [40:57]
Unknown Host
Right.
- [40:57]
Sarah Fryer
And so now what we're seeing is small businesses can create an ad campaign. A busy mom can create like the meal plan for her family this week. And the CEO of Grab, Anthony, who's amazing, can build transforming outcomes for his business.
- [41:14]
Jim Cramer
Can that mom afford it?
- [41:16]
Sarah Fryer
Yes, because it's largely free. Like if you want.
- [41:19]
Jim Cramer
I like that price.
- [41:20]
Sarah Fryer
It's free. But then if she wants more, because she wants to be able to talk to the model more, do deep research, that's when she starts to pay. And so that's our model. We bring you on for free. We want to make sure AGI is available to the planet. But then if you want more, which we think people will want more, then you start to subscribe and that builds our business.
- [41:39]
Jim Cramer
We'll have much more with OpenAI CFO Sarah Fryer. Stay with Kramer. It is time. It's time for the playground. He's standing there. Bye, bye. Don't know colors. My step prepares the Crevice and the plan, the sound, and then the lightning round is over. Are you ready, Steve? Daddy. Time for the lightning round. Crazy. I'm going to start with Joel in New Jersey. Joel.
- [42:10]
Unknown Host
Hey, Kramers.
- [42:11]
Jim Cramer
Joel from New Jersey. Do you still see Waste Management as a strong buy? No. I think it is a super strong buy. A lifetime super strong buy. I'm a buyer right here, and every time I've ever sold that, it has been wrong. Let's go to Sam in Pennsylvania. Sam. Jim, listen.
- [42:28]
Ted Decker
Company Sessile called my attention with its sizzling performance. The company did 270 million in revenue.
- [42:33]
Jim Cramer
Last year and it was profitable.
- [42:34]
Unknown Speaker
Call my attention with Klarna coming up.
- [42:36]
Ted Decker
Given Klarna is valued at 15 billion sezzle with its 1.3 billion and better cash flow, think it could be a buy.
- [42:43]
Jim Cramer
What do you think? Well, I think that there's a lot of these companies and that's kind of the problem when we see so many of the companies in the same sector going to have to say, no, I don't like it right here. I want to go to Mike in Massachusetts. Mike.
- [42:56]
Ted Decker
Hey, Jim.
- [42:58]
Jim Cramer
I want to know, is it too.
- [42:59]
Sarah Fryer
Early for the Sam Altman Beck nuclear.
- [43:01]
Jim Cramer
Power startup, down 50% in the last two months? It's Opal. Oh, man. Is it too early? It is way, way too. It is mega. Too early for that one, buddy. And that, Ladies and gentlemen, conclusion of the lightning. Ladies and gentlemen, we are in a short seller's paradise. An incredible moment for anyone who wants to bet against U.S. stocks. I know that because I used to short stocks for a living as a hedge fund manager 25 years ago, Betty, against all sorts of overvalued companies when I thought the tape was going against them. And right now the shorts are practically shooting fish in a barrel. What gives them the advantage here? First, we have a tariff deadline beckoning. A frightening deadline, actually, April 2, when the big tariffs are going to kick in. That means we're headed for a moment of maximum fear as regular stock buyers either flee to the sidelines or move the money to Europe. How do I know this? Okay, put yourself in my shoes, will you? Let's say I come out here and I say, I wouldn't worry about the tariffs anymore. The markets, markets come down, so now they're priced in. If the tariffs are then met with a firestorm of resistance, very likely they'd SKIMMY Alive on YouTube and social media. If you try to go against the pervasive financial wisdom right now that things are really ugly, I'm telling you're going to get steamrolled. Second, I don't see how the White House can back down. If this administration wants to be taken seriously, they need to follow through on their promises. There's no better sign that Trump means business than his willingness to sacrifice our stock market for in order to bring the pain to our trading partners. When you're members of the administration using terms like transition, that means be afraid, be very afraid. Sell, sell, sell. Third, for years we've been conditioned to believe that everyone must do their part to get prices down because we don't want inflation to get out of control. Unfortunately, someone isn't doing it. Tariffs are inflationary, which means the Fed has to focus on them. That's how we get all this behind the scenes grumbling from some Fed officials who say there's no real hope for rate cuts if inflation spikes because of tariffs. So we're in an unholy crossroads where money managers need to sell because of Washington. And Wall street is more than happy to cut estimates based on the broad rubric of tariffs. Bad intersection. But what happens in this market after the tariffs are implemented? Maybe another month of ragli, maybe two months, maybe the whole summer. It could be real bad. So we end up with this building negative that can sink 10 ships. You saw it all. It worked. This morning, futures were down huge. Even though nothing was going on, they only bounced back. But then we had an anemic market finish that simply fund managers getting short to prepare for themselves for tomorrow's posting from the President, tomorrow's talks by administration officials prepping the tariff beach before the landing. These hedge funds figure they can't afford not to be short here because we'll hear nothing but bad news about inflation. The Fed, the President, Treasury Secretary. In that environment, you only need to know one thing, people. You must say, this too shall pass. But the shorts, as long as this is front and center, they'll be ready to profit from building negativity until we finally get over it. And we won't get over it until the President either wins or throws in the towel. In the meantime, there'll be stocks that can buck the trend. There always are. Understand, though, the short sellers aren't after individual stocks. They're after the S&P 500 futures. As long as you're steeled against their selling, you'll make it. Otherwise, don't be surprised when the futures are down all night again because I nothing. Because that's the new normal until the tariff issue resolves itself. I like to say it's always Bull Market Summer. I promise I find it just for you right here. Made Money I'm Jim Craver. See you tomorrow. All opinions expressed by Jim Cramer on this podcast are solely Kramer's opinions and do not reflect the opinions of CNBC, NBCUniversal or their parent company or affiliates and may have been previously disseminated by Kramer on television, radio, Internet or another medium. You should not treat any opinion expressed by Jim Cramer as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. Kramer's opinions are based upon information he considers reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy and it should not be relied upon as such. To view the full Mad Money disclaimer, please visit cnbc.com madmoneydisclaimer CNBC exclusive Chicago Fed President Austan Goolsbee first interview since.
- [47:27]
Ted Decker
The latest Fed decision Inflation outlook, economic.
- [47:30]
Jim Cramer
Growth and rate policy Stay ahead of the market squawk box tomorrow 6:00am Eastern, CNBC.