'Mad Money w/ Jim Cramer 5/12/26

Summary

Mad Money w/ Jim Cramer 5/12/26 — Detailed Summary

Episode Overview

This episode of Mad Money with Jim Cramer is a special on-location broadcast from the FedEx World Hub in Memphis, Tennessee. Cramer dives deep into the state of the US and global economy, examines inflation, retail, and tech stock trends, and features an extensive interview with FedEx CEO Raj Subramanian. The focus is on real-economy signals vs. market sentiment, FedEx's transformation, the impact of AI, and actionable investing strategies, especially around high-profile stocks like Shopify and data center plays. The episode also features the signature Lightning Round, where Cramer gives rapid-fire takes on caller stock picks.

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Key Discussion Points and Insights

1. State of the Market & Inflation Concerns

[01:01-09:03]

• Interest Rates & CPI:
  The market is challenged by rising interest rates—the 30-year Treasury yield is over 5%—due to a higher-than-expected CPI, up 3.8% year-over-year.

  "When you get this kind of inflation, it really cuts back on your opportunities." — Jim Cramer [03:45]

• War & Oil Prices:
  Geopolitical uncertainties, especially regarding Iran, are pushing oil prices higher, rippling through sectors like shelter, services, cars, and food.

  "We're getting the ripple effect from higher oil and it's coursing through the entire economy." — Jim Cramer [02:45]

• Consumer Strength:
  Despite inflation and oil, some retail stocks (Costco, Walmart) are resilient, buoyed by strong value propositions.
  • "The classic hot dog combo still sells for a buck fifty…and you can actually choose water now." — Jim Cramer [05:20]

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2. FedEx World Hub: Boots-on-the-Ground View of the Economy

[11:30-34:59]

FedEx & The Pulse of Global Trade

• FedEx’s Reach & Data:
  FedEx operates in 220 countries, handling 1.5 million packages nightly through Memphis.

  "We move $2 trillion of commerce through our system every year." — Raj Subramanian [17:27]

• Re-globalization:
  There’s a shift in global trade: US imports are down, but exports and domestic shipments are up. Growth is also seen in regions like Latin America, India, and Vietnam.

  "I've been doing this for 35 years and I haven't seen change like that happen in the last year… I coined the term 're-globalization.'" — Raj Subramanian [13:23]

Artificial Intelligence & Jobs

• AI as Differentiator, Not Job Killer:
  AI is leveraged to optimize FedEx’s network and customer service, not to replace human workers.

  "Have you seen AI delivering package yet?" — Raj Subramanian [14:34]

  • FedEx added 29,000 US jobs last year.
• Building a 'Digital Twin':
  The company’s focus is on making its vast network smart and predictive, using data engineering to enable AI applications for logistics and customer services.

  "The trick to winning in AI is making sure that you have data organized and engineered." — Raj Subramanian [17:27]

Competition & Business Model

• FedEx vs. Amazon:
  Amazon’s logistics ambitions don’t threaten FedEx’s unique global network.

  "FedEx is a true end-to-end global network… that’s not what was announced at all." — Raj Subramanian [19:07]

• Third Party Logistics:
  FedEx’s 3PL (third-party logistics) business is only a small part ($2B) and coexists even with customers like Amazon.

Evolution & Turnaround

• Transformation Success:
  FedEx took out $5B in structural costs during a long slowdown, not just through cuts but by digitizing and optimizing the network.

  "The story is that we also began a significant period of transformation... that’s now powering us towards growth." — Raj Subramanian [27:23]

• Network & Digital Transformation:
  FedEx is spinning off FedEx Freight and merging two networks into one, combining physical scale with digital and organizational upgrades.

Sector Focus

• Healthcare, Automotive, Data Centers, Aerospace:
  FedEx is targeting high-growth verticals where supply chains and speed are essential, e.g., chips for data centers and healthcare deliveries.

  "You gotta follow the money... especially in data center and AI, there are billions if not trillions of dollars." — Raj Subramanian [29:19]

Density and Efficiency

• ‘Density is Destiny’:
  Operational innovation like increasing shipment density—filling planes more efficiently—lets FedEx handle more volume using fewer resources.

  "The answer is a single word called density. And density is destiny for FedEx." — Raj Subramanian [31:35]

• Grounded Fleet Returns:
  Resumption of grounded MD11 cargo planes will optimize network and recoup ~$150-180M in efficiency.

  "As these airplanes come back into service, they just go back to our more optimal routing." — Raj Subramanian [31:05]

Economic Insights for Policymakers

• FedEx as an Indicator:
  Subramanian believes FedEx provides daily, bottom-up data on global supply chains—potentially more instructive than traditional economic reports.

  "We are a daily referendum on supply chains." — Raj Subramanian [33:25]

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3. Cramer’s Stock Evaluations

Shopify: Not a Sell—A Buy on Weakness

[35:26-42:06]

• AI Worries Overblown:
  Shopify’s sell-off is driven by general fears about AI-driven disruption in software, despite strong business fundamentals.
• Strong Growth Numbers:
  Gross merchandise volume up 35% YoY, revenue up 34% YoY, and recurring revenue up 17% YoY—even as EPS was technically negative due to unrealized investment losses.
• Brand Expansion:
  Shopify is winning luxury and big-brand clients, showing platform stickiness.
• Valuation Context:
  At 55x earnings with 29% EPS growth, it's no longer excessive in this market; historical context shows similar multiples marked bottoms.

  "To me, this is a textbook example of a stock that keeps getting cheaper, not more expensive, as it goes lower… down here below $100, I think Shopify is a steal." — Jim Cramer [41:35]

• Buy Strategy:
  Cramer urges long-term investors to buy more if Shopify drops further.

Data Center Stock Rally Cooldown

[45:40-48:45]

• Relentless Rally Ends:
  Data center stocks experienced a much-needed correction after a parabolic run.
• Speculation Warning:
  Quick, momentum-driven trading had pushed these stocks into 'greater fool' territory.

  "That rally got to the point where it was pure greater fool theory." — Jim Cramer [47:09]

• Healthy Pullback:
  Cramer welcomes the shakeout, advising patience and noting cycles in sector leadership.
  • "The data center will be back, no doubt… you need to let these stocks turn and burn before they get rolling again." — Jim Cramer [48:15]

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4. Lightning Round Highlights

[42:24-45:13] Jim Cramer gives rapid-fire answers to caller questions—memorable advice includes:

• Chevron (CVX):
  Attractive due to high oil prices, yield, and strong cash flow.

  "I'm going to say pull the trigger. I like it." — Jim Cramer [43:38]

• Vertiv (VRT):
  A buy for exposure to AI/data center cooling, but be cautious on timing.
• Sterling Infrastructure (STRL):
  Too extended after a big run—wait for a pullback.

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Notable Quotes & Memorable Moments

• "There’s always a bull market somewhere, and I promise to help you find it." – Jim Cramer [01:01]
• "Have you seen AI delivering package yet?" — Raj Subramanian [14:34]
• "Density is destiny for FedEx." — Raj Subramanian [31:35]
• "To me, this is a textbook example of a stock that keeps getting cheaper, not more expensive, as it goes lower… down here below $100, I think Shopify is a steal." — Jim Cramer [41:35]
• "That rally got to the point where it was pure greater fool theory." — Jim Cramer [47:09]

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Key Timestamps

• [01:01] — Show intro, overview of markets, inflation, and retail signals
• [11:30] — FedEx World Hub intro, background and data scale
• [12:48] — Raj Subramanian interview begins (background, growth, AI use)
• [25:07] — FedEx transformation, cost-cutting and network changes
• [29:12] — Focus on growth sectors: healthcare, data centers, automotive
• [31:35] — "Density is Destiny" — operational and environmental efficiency
• [33:02] — FedEx as a real-time economic indicator
• [35:26] — Shopify deep-dive: analysis and buy recommendation
• [42:24] — Lightning Round: rapid stock Q&A
• [45:40] — Data center sector pullback & investing psychology

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Summary Takeaways

• FedEx’s Innovation & Transformation:
  The company is thriving by actively embracing AI for optimization, pursuing operational efficiencies, and capitalizing on big shifts in global trade while adding jobs, not cutting them.
• Economic Signals:
  Insights from FedEx suggest the real economy—particularly US exports and advanced logistics—is strong, even amid inflation and international instability.
• Stock Actionable Advice:
  Cramer remains bullish on companies with solid fundamentals, like Shopify, even when market panic sets in, and is glad to see frothy areas like data centers pausing for valuation resets.
• Dn’t Chase Parabolic Moves:
  Multiple cautions against chasing overheated momentum names—wait for stabilization and buy value during fear.

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This episode delivered rich, real-world insight on the mechanics of the global economy, the importance of innovation in legacy industries, and practical investing wisdom in a volatile market climate.

Transcript

[Jim Cramer]

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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. Man, money starts now. Hey, I'm Kramer. Welcome to a special edition of Mad Money. Tonight, we're boots on the ground in Memphis, Tennessee, at a place where you can actually see the economy moving in real time. The FedEx World Hub where innovation, infrastructure and American industry intersect. Other people make friends. I'm just trying to make you some money. My job, not just to entertain, but to educate. Do some taste. You call me at 1-873-CIBC or or tweet me Imkramer. The market gods. They must be listening. They sent down the data center. Stocks really punished them. And some other stocks finally got some lift. Costco and Walmart and retail. Lillian Johnson and Johnson and Pharma, Humana and Centennial Healthcare. Those cross currents actually led to the Dow gaining 56 points. Yes, drifting lower by 1 point by 0.16% and the tech heavy NASDAQ dropping by 0.71. That's what you call a solid market. Especially considering that interest rates shot up because of a plug ugly. Consumer price index up 3.8% year over year. That sent the pontificators into a tizzy. But then again, they love being in a tizzy. Without tizzies. What the heck would they talk about? I don't know if these markets deities can help us here at the hangar at the biggest transport hub in the world, the home of FedEx down in Memphis. This monument to American ingenuity, artificial intelligence and a remarkable worldwide supply chain. 220 countries, bet you can't name half of them. This behemoth of transport company has more knowledge than any 10 economists or fed heads, including the Chieftain. So we've come to learn what we can from FedEx CEO Raj Subramanian, who because of his company's monster scale has the ability to make quality projections. Right now the projections are still positive despite the war. And not just because he's got a fuel surcharge to offset that high price of oil. We got a powerful reminder that the economy is indeed bigger than the data center and it's worth investing in. Today was the perfect lesson. Because we saw that these high flyers can plummet hundreds of points while JJ doesn't give up anything that could blow a hole in Europe portfolio. Now before we get carried away, let me tell you the same thing I told you yesterday. There are things that are just plain going wrong in this market. There are and I'm worried. First, oil is back to levels where it's a nemesis to our society. You just can't have oil go up another four bucks and offset that with the removal of an 18.4 cent federal gas tax. That's nothing. We're getting the ripple effect from higher oil and it's coursing through the entire economy. Shelter ran high, services cost more, new cars, food, apparel way up. And all on top of that huge jump in gasoline. Hate them or like them. President Trump really didn't seem to think through the consequences of a long war with Iran. I think he figured it would kind of just like the toppling of the Venezuelan dictator Nicolas Maduro. We capture him, then cut a very favorable deal with the remaining regime practically overnight. Venezuela didn't get a chance to factor into the cpi cuz it happened so fast. No one could raise problems. Iran much longer. Timetable with no end of sight. So it's having a real impact. Now you may want the war, quite a few people did. But you have to recognize that the war's doing something even the tariffs couldn't do. Raising prices across the board for the average American. I'm aware that Amazon actually lowered prices versus last year. CEO Andy Jassy made that clear in his sharehold letter. He told us personally too. Walmart's not going to let us down. Neither is Costco, the keeper of that low priced club bargain. It even has cheaper gasoline. The classic hot dog combo still sells for a buck fifty. And you can actually choose water now instead of that 20 ounce soda. But that's got free refills. That's no longer enough though, at least according to the all powerful bond market, the judge, the yield on the 30 year treasury is now over 5%. Okay, that in itself isn't terrible. Those of us who bought homes or traded treasuries in the 80s and 90s, as I did, know that these levels have been breached before. And you know what? We live to play again. This show however, is not mortgage money, it's man money. And I'm trying to help you make a profit from the stock market. When you get this kind of inflation, it really cuts back on your opportunities. Sure, we had some nice bounce backs today. If you bought stocks, any stocks, in the depths of despair that we saw, you're up. Hey, terrific. But without the bond market on your side, you might just be up on a trade. Here's an example. One of the more boneheaded things I've done for the Travel Trust, we bought some Home Depot. I did it because the despot has augmented the do it yourself business with some steady earnings earners, the suppliers, the home builders. I thought that if inflation were doing nothing and new Fed chief Kevin Marsh comes in, we can get rate cuts galore. I mean, it could be terrific. And I figured it would send Home Depot up 100 points. Look, it's still possible, but it'll make 100 points from much lower level. This was a loss plan and simple. I bought the stock because I thought it had made sense as a hedge to lower rates. And the hedge has backfired. Now when you have a portfolio of some big tech winners and you trim those up on the end so you could actually say you booked some gains, then having some losers too won't wreck your performance. But that's not the point. The market's healthier now that many beaten down groups have rallied today. I like that. But that didn't include the stock of the biggest hardware and building supply play in the country because rates went higher. That's why I'm glad I'm at FedEx today where they're using AI and their scale to keep prices lower with something called density. Don't worry, you'll find out what that means soon enough. The bottom line though, I just wish more companies could crack their own code and fast. Because the Venezuelan timeframe for the war with Iran is long going. And the new one, it's beginning to put the hurt to a lot of people that inflation real Bad news because the stock market won't be able to rally for long without the oxygen of lower interest rates. And it's very hard to cut rates with the CPI up 3.8%. Let's take some calls. Let's go to Katie in Florida. Katie. Hey, Dr. Kramer. This is Katie Jaramillo in Palm Beach Gardens, Florida. Can't beat that. My, my buddy Jeff Marsh is going to get married down there. I'm not kidding. He is. What's happening? Okay, Cor. Weave, ticker, crw. Now. Okay, now. Now, I gotta tell you, Katie, core weave is what I call a stock that's not for the squeamish. This thing is just. It's just too hot. And I can't put you in a stock that I think is so hot that you could be down 20 and up 20 and down 20. J&J was made for you, right? Look, the inflation picture has gotten more complicated and the market won't be able to keep rallying without the support of lower interest rates. We need the darn bond market. We have a big show coming up, starting with my sit down with FedEx's CEO Raj Subramanian. From the state of the consumer to the company's turnaround plans, you will not want to miss anything from our wide ranging conversations. Then I'll dig into what's behind the decline in shares of Shopify. Oh, my. It's terrible. And if now is the time to buy the e commerce giant and the relentless rally in the data center trade finally broke yesterday, I'm investigating if more weakness could be ahead for this group. So stay with Kramer.

[Jim Cramer]

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[Interviewer/Host]

As America turns 250, we're spotlighting the companies and infrastructure powering the next chapter of growth. And that brings us here to the FedEx World Hub in Memphis where logistics, technology and American industry all come together under one roof. They can process a whopping 474,000 packages per hour here. This is like the beating heart of the economy. You can see it moving in real time. So when CEO Raj Subramanian talks about the economy, you're not getting a survey or lagging government data. He's seeing the consumer demand, business shipments, industrial activity, healthcare deliveries, international trade flows and supply chain shifts as they happen. Raj is the signal. And look, we know FedEx has been thriving. The company reported spectacular quarter in March thanks to network optimization efforts. And I feel pretty darn bullish about the future here. But do not take it from me. Earlier today I got to sit down with Raj Subramanian. He's the president and CEO of FedEx Corporation. Take a look. Okay, so Raj, we are the Memphis, Tennessee FedEx World Hub. It's a larger facility of FedEx and it's also one of the more probably the most important center for transport in in the world. Tell us about what's going on here

[Raj Subramanian]

well Jim, first of all, great to see you in Memphis, Tennessee and specifically in our world air hub, something in Memphis, Tennessee. Yes, this is where the, you can see, this is our largest air hub. And you can see the global trade happened right in front of your eyes. As you know, there are more than 1.5 million packages per night that goes sorted through the system. 170 planes that come in through here. And it's a great place to see where the world in action.

[Interviewer/Host]

Well, how's the world doing? I mean you're in 220 countries. You probably have a pretty good feel for the heartbeat of the world.

[Raj Subramanian]

We do. We see these trends from the bottom up because we represent so many customers around the world. And we are in a very interesting phase here because a lot of changes have happened in the last year. So prior to this period there was 35 years, I would say of an equilibrium state of global trade in the last year. I've been doing this for 35 years and I haven't seen change like that happen in the last year. It is U.S. imports are down, U.S. exports are up, the U.S. domestic is up actually. And then there are other trends happening intra regional volume going up, Latin America inbound going up, certain economies like India and Vietnam growing and so on and so forth. All this happening at the same time. And I coined the term re globalization. But here's the important part for America, we have added 29,000 new jobs in America for last year because of the fact that US exports are growing and the fact that your US domestic growth is strong.

[Interviewer/Host]

Let me push back on that because the perception particularly from the doomers is I know you've got a ton of physical AI here. Why doesn't that mean that you have 100,000 fewer people?

[Raj Subramanian]

Well, that's because for us, I view AI as an opportunity to differentiate our service with our customers. We are using AI very intelligently to provide increasing level of predictability for our customers. What that really means is that we are taking market share because of new services, that we offer more market share, more packages. And have you seen AI delivering package yet? So, but you know that's, we have human beings delivering those packages and so that's why we're creating more jobs is simply because we have more packages.

[Interviewer/Host]

Okay, so go back to us what we're doing. Import. How much is tariff? How much is the fall of the tariff? Well, maybe you don't want to even call it a fall. Maybe it's different.

[Raj Subramanian]

I think the trade, you know, all the changes in the global trade Environment is directly impacting these changes. That's the cost. The effect is this pattern is changing. We are moving from one equilibrium state, which existed till 2024, let's call it, to another. And we are in the middle of this transition and we are nowhere near done yet. So I think it's a lot more to settle. But the good news for FedEx is because we already have a scaled global physical network. So it doesn't matter if it goes from A to B and now it's going P to Q. We are in A, B, P and Q. And so that's what we are making sure is we stay one step ahead where the market's going to grow and make sure we have the right capacity, the right place and in the right lanes to take advantage of it.

[Interviewer/Host]

Something that I want to appropriate, frankly is you have maybe the best indicator because it's two great private companies working on this. The retail. No, I'm not kidding. Come on. This is really good. The Momentum Index. How are we doing in the index?

[Raj Subramanian]

Well, so the Retail Momentum Index, something we launched yesterday, actually we're working with

[Interviewer/Host]

Darren Dun and Bradstreet use that with Mad money. Is that or walk on the street, which is going to be us?

[Raj Subramanian]

Well, I think the point about the Retail Momentum Index is the leading indicator. So definitely an application for, for, for your shows for Jim. I think that, you know, we have a lot of data that comes in on retail sales that, you know, essentially look backwards and say this is what happened. What the RMI scientists predict is what is going to happen in the next four to six to eight weeks. And we are using the data. So down on Bradsheet, there's multiple levels of data that put in here our import data plus our US domestic data. When you put all together, we have been able to predict with increasing accuracy what's going to happen a few weeks before it does. So that's what that's.

[Interviewer/Host]

So how much is again, and I want to be really clear about this. Not spreadsheet, but AI.

[Raj Subramanian]

Oh, the actual.

[Interviewer/Host]

Yeah, for when you compute things, when you try to figure out what these planes. I mean, like I'm looking at that plane is there. It just seems like the same as it was 25 years ago. It's not.

[Raj Subramanian]

Yeah, well, no, there's so much intelligence that's being developed through FedEx now. One of the great things we think about FedEx as a platform, we connect, we move $2 trillion of commerce through our system every year. We think connect two and a half million shippers to about 225 million consumers. If you think about as a platform and that we are essentially building a digital twin of this platform. Suddenly we are able to apply data AI. There's the trick to winning in AI is making sure that you have data organized and engineered. We started that journey back in 2020 not really knowing that the AI revolution is coming. But I inherently figured out that the data that we are sitting on is valuable in its own right. But then comes AI and suddenly we are using these models. Whether it's network optimization models.

[Interviewer/Host]

Did you build it yourself or are you doing it on topic.

[Raj Subramanian]

Combination. Combination of different providers. But everybody's. You know we protect our data very very carefully because that's, that's very important. So we are using AI now to make sure that our operations runs better. As I mentioned earlier, differentiating our services for our customers. And then we also now thinking of AI using AI on our data from. To create new business opportunities on. Right. So there's a whole strategy on.

[Interviewer/Host]

Okay. So we were at Amazon last week and obviously they use AI and they came out with this competition to you is what they said. And they used one of the marquee clients, Procter and Gamble which are on the board. And it looked like to me that well, look out FedEx. This is very worrisome but in reality these are two different businesses entirely.

[Raj Subramanian]

Very much so. I think last week's announcement which is what FedEx operates is completely different. FedEx is a true end to end global network. And that means if you look at the services that we offer and the word network sometimes gets misused. The true network is something you can pick up in any one part of the world and get it to any other part of the world in a couple of days. And for that you need a system like what we have here and the networks around the world. That's not what was announced at all. And they're talking about some kind of 3PL service which is a non asset play. We have a 3 PL business. Yeah. Third party logistics. Yeah. And you know our business is about $2 billion business that's you know, it's not the biggest piece of our business and we have you know, long term contracts for customers in that regard.

[Interviewer/Host]

And they're a customer. You're going to kick them out because of what they did?

[Raj Subramanian]

Not at all. They're a very valuable customer. They're. Do you think about it?

[Interviewer/Host]

That's new though. They weren't always a customer.

[Raj Subramanian]

Well, this is a recent development over the last year and we're very much a win win relationship. So they're a valuable customer to FedEx and that's fine.

[Interviewer/Host]

Well, that gives me a chance to talk about Fred, Fred Smith, your idol. My idol. What we see here was a vision that frankly shouldn't have happened. You shouldn't be here. There shouldn't be a company. Nobody ever tackles a company that's got 80% market share. Tell us about him and how he did it.

[Raj Subramanian]

Well, firstly, when the company started here, right here in 1973, it was about this vision, about actually the idea that the computer revolution was coming. It was about moving high value parts in 1973 and that we needed an integrated air ground system to move packages. That was the vision. The second part of the vision was that to do that you need a hub and spoke system that needed to come to a hub and that hub was Memphis. So that's how it started in 1973. And people confuse it as documents and things like that. No, it was always the vision was to move the high value goods of that economy and the arriving computer age. So you think about that, you know, and we started from very small, humble beginnings. You know, there were. The first day There was like 15 planes connecting 27 cities. There was 180 packages on day one of our operation.

[Interviewer/Host]

180 packages?

[Raj Subramanian]

Yes. And now we got.

[Interviewer/Host]

That's about what, one millisecond.

[Raj Subramanian]

Well, now we got 18 million. So you can just put a bunch more zeros behind that. So that's what, how we got started into this, creating an industry. Really. There was no, at that point, this was not a, not a, not a, not a thing that happened in the marketplace. But over time, at the turn of the century, you know, we also moved into the ground parcel business and we bought this company called caliber logistics in 1998, which is the roadway parcel systems. And that point FedEx had 10% market share in the ground parcel business and our competition at 80% market share. And I think we took market share for many, many, many quarters in a row. And that gap has now narrowed to single digits.

[Interviewer/Host]

And that's not. Stop it. Your goal is to make it so that it's not just 50. 50.

[Raj Subramanian]

No, we, we, yeah, we don't. We have no intention of stopping that. No, our value proposition is we are a customer centric company and we want to make sure that we serve our customers effectively and that'll hopefully give us more share.

[Interviewer/Host]

Excellent. I got to serve my advertiser. That's Raj subraman. He's President CEO of FedEx. We've back for more in a moment. Invest in America, Mad Money style. Welcome to FedEx.

[Jim Cramer]

Up next, Kramer sorting through more of FedEx's turnaround with CEO Raj Subramaniam as Mad Money continues from Memphis. Next

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[Jim Cramer]

This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information packed daily market Preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions and key results and statistics that may impact your trading. Download the latest episode and [e-mail] Market Update podcast or find Schwab Market Update wherever you get your podcasts.

[Interviewer/Host]

What made you confident that you could do something that hadn't been done before?

[Raj Subramanian]

I have no fear of failure.

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[Interviewer/Host]

my favorite pieces of advice, think about what your boss's boss needs.

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[Interviewer/Host]

Before the break, I got a chance to speak with Raj Subramanian, the president and CEO of FedEx. One of the greatest turnaround stories out there, and because it's FedEx, I got a lot more questions. So let's get right back into it. I want to talk about why I think the stock's great. Okay. One of them is I think you guys actually benefited from being able to figure out the tariffs. You figure out what it costs to get from here to there and the other guys can't. How come?

[Raj Subramanian]

Well, I think the environment, the tariff environment has completely changed, right? But for every country, to every other country, for Every commodity, we have the classification code information. And we also know historically what has worked because that's our job. That's what we did. Now interestingly, we have the data about all these things too. So now imagine we can apply things like Genai on that data and make that part of the product workflow for our customers to get it cleared through customers. I had to give you an example here. There was a company who built neon signs. $200 multiple neon signs. Senate America just googled up a classification code and said it. Nobody cared because it was less than $800 de minimis and it cleared. Now that doesn't work anymore because you need 200 different types of classification codes because of so many different types, sizes of a material, everything. That's where we can help because we now know what actually it needs to put on. So this intelligence that we have is actually what's powering up, moving things, moving across the system.

[Interviewer/Host]

I'm glad you explained that. I didn't realize that.

[Raj Subramanian]

Yes, try to ship the shirt to UK tomorrow. You will see the number of potential classification codes. How are you going to figure it out? That's where Genai can help. So this is just simply by dint of practice, I guess, or the use of our data that helps improve the process of moving through borders.

[Interviewer/Host]

Okay, when you got the job, you came and you said there's gonna be a big slowdown that happened. But you also said you're gonna take out $5 billion. And I immediately just said that was fanciful. That was one of those goals that people announced and then you'll never be held accountable and you'll get away with it. You did it.

[Raj Subramanian]

We did it. I think one of this, one of the, you know, we went through a very difficult time period because I knew the slowdown was coming. But the, especially the manufacturing sector, the slowdown lasted for more than three years. And so we had no other choice but to go through a significant structural cost reduction program. And we did it. And the FedEx team has done just an absolutely outstanding job of taking care of that. But that's not the entire story though. I think the story is that we also began a significant period of transformation. Our network transformation, our digital transformation and organizational. That's actually the true story that behind the structural cost reduction because that's what's now powering us towards growth. And when you look ahead and even in this fiscal year we are in, we are now starting to grow on that lower cost base. But the transformation effects also happening.

[Interviewer/Host]

But it might help investors to Know that because of the transformation with FedEx, with the trucking business, it's not going to be as clear this quarter you've got debt, this is a separation quarter. I mean I think that what you're saying will shine, but you have to say this is a big quarter.

[Raj Subramanian]

Well there, so there are. And as I talk about transformation, there's one is that we're spinning off FedEx Freight. I'm very excited about it because FedEx Freight is the market leader and we're now able to focus that company squarely on the LTL business from customer experience and technology perspective. John Smith, the CEO, I'm very confident in him and I think that'll take off. But there's also a transformation happening inside the FedEx company as well. And we are putting together two networks into one. We are going through a fundamental digital transformation and an organizational transformation. So both are all happening and well in progress. Well in progress.

[Interviewer/Host]

Well the other thing I hear you decide to go after healthcare, automotive, data center, vertical aerospace. Why those?

[Raj Subramanian]

Well you know, you gotta follow the money and you know you gotta see where the capex is being spent and you just see it especially in the data center and AI there are billions if not trillions of dollars.

[Interviewer/Host]

What are you like Chip Micron?

[Raj Subramanian]

Yes, absolutely. Whether it's their semiconductors, whether it's chips, by the way, a box of nails is a box of nails. We're going to move those too. And so there's a lot of that moving around. The other thing is healthcare and automotive sector, aerospace. That's what we are built for from the very get go and our infrastructure is built for purpose for these, for these kind of.

[Interviewer/Host]

Okay, so like I'm FedEx and I gotta send it to the data center that's being built in desert and Nevada and that's you.

[Raj Subramanian]

Well you know, so the, you know talk about servers moving from wherever and you know so well the construction part but really what's inside the data centers, what's you know, the servers that's coming in, the chips that's moving across the world, all that.

[Interviewer/Host]

Are you shocked at the amount, amount of demand that a data center can come in?

[Raj Subramanian]

Well I'm, you know, I'm actually positively surprised about the amount of money being spent in this regard. And I think that's the AI races on is just that that's also a knock on benefit for a business like FedEx because this is an opportunity.

[Interviewer/Host]

Your business was hurt by the grounding of an important part of your fleet that's ending. What will it mean?

[Raj Subramanian]

Well, you know, first of all, safety is above all. That's the founding philosophy of FedEx. And we've been working with FAA and the manufacturer Boeing in going through different checks and processes. Those all got cleared last week. So the test flight started over the weekend, and the revenue flights also started over the weekend from the hangar right next door.

[Interviewer/Host]

So you can do much more business, theoretically.

[Raj Subramanian]

Well, you know, the grounding of the MD11s cost us something like 150 to 180 million dollars this fiscal year. And because it just made other routes less efficient. So now as these airplanes come back into service, they just go back to our more optimal routing that we would have normally done.

[Interviewer/Host]

Okay. We're taught in economics that you can't do the following, which is continue to grow volumes while reducing net capacity and fuel usage. That's not supposed to be able to happen. How is it happening here?

[Raj Subramanian]

Well, the answer is a single word called density. And density is destiny for FedEx, because density is destiny. Yes, that's kind of like a term

[Interviewer/Host]

of art there for the trucking people.

[Raj Subramanian]

That's a term of art for us and for the airplanes, especially with airplanes, because that's the most valuable asset. Right. So we launched something we call Tricolor. And it's just simply put, when we have extra time to move something across the global system, we take that time to make sure that they're loaded with much more density into the system and they go direct. Because of that, we are actually decreasing our overall capacity, but the demand has actually gone up and we are only getting started in this. I think we can get better at this. If we look at the next two, three years, we can further improve density, which directly drops to the bottom, should

[Interviewer/Host]

I presume from demand going up, that that means the consumer's healthier than we think, both us and overseas?

[Raj Subramanian]

Well, our business is, you know, we are starting to grow this year, but specifically in this international segment, we are also looking at the premium air freight segment. That's an $80 billion market. We only have 3 to 4% of market share there. And because of the infrastructure that we have and the network reconfiguration that we have just done, we now have an opportunity to go out from the space. So, yes, the market is a little better than, you know, there are some green shoots in the market with the ISM index, but also our performance in this market is better than our competition.

[Interviewer/Host]

Okay, but let's say the new Fed chair, Kevin Warsh, were to call you and say, look, everyone's starting to Say that inflation's bad and maybe we should raise rates. What would you tell him?

[Raj Subramanian]

Well, you know, that's obviously a decision that, that they will have to make. I don't have the expertise, but I can give you.

[Interviewer/Host]

But you have more information than they

[Raj Subramanian]

do that we can provide. We can, we can, you know, we can, we can, we can talk.

[Interviewer/Host]

What would the information show?

[Raj Subramanian]

So I think, you know, we can see that the industrial sector is actually, there is a, there's a starting to see green shoots on that. So that's good news. Obviously the data center and AI business is definitely helping. And you know, the consumer spending, especially in America still is hanging on. So the decision, they have to read different tea leaves and make those decisions. But we can be of help talking about supply chain information from the bottom up on a daily basis because we are a daily referendum on supply chains.

[Interviewer/Host]

Okay. You inherited a company that was just one of the greatest companies in the world and you've moved it in a way that Fred Smith would be very proud. What do you think are the main changes you've done that he'd be proud of?

[Raj Subramanian]

Well, first and foremost I will say is that, and I'll use an old quote I can see far because I'm standing on the shoulder of a giant and what Fred did is unbelievable. To build this network from the ground up and to build a network takes a long time and effort. And it's 53 years of network building that connects every part of the world to each other. Moving small, big and large packages and shipments. So once you have that as a platform, then my job now becomes a little easier because I can use that to leverage that to create now significant more free cash flow and significant more earnings power. And that's what we are doing. And then of course use the digital intelligence that we have to create even more value. So, you know, it's, it's a, it's a real great opportunity and I'm just thankful that, that I have the opportunity to follow Fred.

[Interviewer/Host]

I am too, because it's, I think you're great for the shareholders.

[Raj Subramanian]

Thank you. Thank you.

[Interviewer/Host]

Thank you. That's Raj Subramanian. He's the president and CEO of FedEx. Thank you.

[Raj Subramanian]

Thank you very much.

[Jim Cramer]

Coming up, Shopify shares have pulled back hard. Kramer's not ready to sell out yet. He's revealing why instead he's doubling down on the stock. Next.

[Interviewer/Host]

Sometimes you get behind a beaten down stock and it just keeps going lower and lower and still lower. Take Shopify, the once high flying E commerce enabler for small and medium sized business which has spent all year getting roughed up by AI displacement worries. Last month I drew a line in the sand and said it was time to buy Shopify. Buy, buy, buy. At $115 at first that looked like a good call. Stockton jumped $137 a little over a week later. Oh, but then the stock cooled off and when Shopify reported last week, it got obliterated. It's now just under a hundred dollars. That's quite a decline. It was at $182 last October. It's down 38% for the year. That's a beat down. But you know what? I still like Shopify here. I mean, frankly, you shouldn't buy a stock if you're not prepared to buy some more as it goes lower. If it's a high quality company, then it gets cheaper as the share price sinks. And that's what's happening to Shopify at the end of the day. I don't believe believe the thesis has changed here. Shopify has become a broken stock because of these AI worries. But I simply don't think this platform is something that can be easily replaced by something like Claude. There's a huge service component to the business that I think is underappreciated. Shopify gives its customers plenty of hands on help to make themselves competitive online. Plus most of these customers are smaller businesses that don't have big IT budgets. So using AI to develop their own tools would end up being a lot more expensive than just pan Shopify. Of course, that's the argument I made a month ago. Then Shopify reported a widely panned quarter last week and the stock plunged 15% single session. But you know what? That quarter looked pretty darn good to me. I think the stock got punished because Wall street has no patience for any kind of software company that might potentially be challenged by AI at some point in the future. When you look at the numbers, Shopify beat expectations on every single key line. Gross merchandise volume grew 35% year over year. Just over 1 billion. I mean, that's just unbelievable. Revenue grew 34% to 3.17 billion. And monthly recurring revenue was up 17% year over year. Operating income shot up a whopping 88%. Free cash flow grew 31% year over year. These are extraordinary numbers. Now Shopify isn't really an earnings per share story. Investors usually look to their operating income and free cash flow to gauge profitability. All right. But I'll grant there was some noise on the earnings per share side when you look at the GAAP earnings, the most stringent Standard. Shopify lost 45% cents per share of the quarter. But that's entirely from a dollar from a $1.06 billion unrealized loss on investments. A couple of companies, a firm Klaviyo. When you strip out with the the adjusted earnings, the company delivered a 2 cent beat off a 34 cent basis of 44% 44% year over year. So the core business remains very strong beyond the numbers. I thought Shopify told a great story in the conference call. Historically this company focused on small medium sized businesses. But every quarter they keep signing up more and more brands as customers. In the latest quarter, Shopify signed three huge luxury brands as Mulberry, Balmain, lvmh. In fact they signed Rag and Bone, the Rue Guilt Group, Lands End. Then Bevmo, one of the largest liquor store chains in America brought in Shopify to run the point of sale technology at all their locations. A good reminder that the company does more than just E commerce. Orvis, the iconic outdoor brand is moving to Shopify for a unified commerce solution. How can you beat those brands? When I see all this new business, I find myself wondering how the heck so many money managers convince themselves that Shopify is some kind of market share donor at dire risk of being disrupted by custom platforms made with the help of AI on the call. President Harley Finkelstein, no stranger to this show, directly addressed the question of AI competition, which I thought was terrific. First, he pointed out that Shopify is using AI itself. It's making their people more productive, allowing them to build and ship new products and features more rapidly. Second, Finkelstein said, quote, no group benefits more from AI than entrepreneurs. End quote. Basically, AI makes it easier than ever to start a business and that creates a new crop of potential customers for Shopify. Gigantic, gigantic crop. People just want to be out on their own. So how come the stock still got obliterated this week? Well, I've searched and I thought and I come up with this. First it was Shopify's guidance for the current quarter. Company doesn't give much in the way of specific guidance, but management called for revenue to grow at a high 20s percentage rate on a year over year basis. Now that technically wasn't a disappointment. The analysts were looking for 28% revenue growth, but it does imply a deceleration from the last quarter and I'm going to give the bears that. But you see, I'm not sweating that at all. This was in line guidance. It's insane to Treat it as a huge negative. More importantly, I think Shopify's outlook is on the conservative side because these guys do practice upod or under promise and over deliver. The company's beaten revenue expectations for 15 quarters in a row. I bet they can do 16 in the end. The worst thing I can say about Shopify is that, okay, it's still fairly expensive. That's really, I think that's what we're dealing with here. It's trading at 55 times this year's earnings estimates. It's very hard to justify in a world where Wall Street's gotten very paranoid about the impact of AI on any kind of enterprise software and people regard Shopify not as a fulfillment house, but an enterprise software company. But man, Shopify's on track to grow earnings at a 29% clip this year, meaning it's trading at 1.9 times the growth rate. Okay, on the high side, but it's not unreasonable. Plus Shopify used to be a lot more expensive. Earlier this year it was selling for more than 100 times earnings. For heaven's sake. And if you look back three years, this level just below 60 times earnings has been with the stocks price earnings multiple tens to bottom. In fact, the past two times Shopify got this cheap in mid 2024, around Liberation Day last year. Those were both buying opportunities. You had to pull the trigger. Here's the bottom line. Shopify keeps getting crushed by AI displacement worries. But I don't believe it's an actual AI displacement victim. The company keeps putting up excellent numbers and not getting credit for them. To me, this is a textbook example of a stock that keeps getting cheaper, not more expensive as it goes lower down here below $100, I think Shopify is a steal. Okay, I'll grant you if it does go lower, I would buy more on a five point scale down 92, that's you know, then 87. But you know what? I cannot imagine this stock almost getting cut in half again. I don't think that's going to happen. And their money's back after the break.

[Jim Cramer]

Coming up, you've got questions. Kramer's got the answers. Get charged up for a fast fire lightning round next.

[Interviewer/Host]

It is time. It's time to wide. Welcome to Raptor stock shouted by myself since declared new course head of time my steppers and Griffins. But you plan to sound and then the lightning round is over. Are you ready, Steve Dads on live record as well. Let's go with Mike and Massachusetts Mike Rapide. Booyah. Jim Mad Mike from East Boston. How are you? Good to have you. What's going on? I think Wall Street's asleep at the switch after the last beat and raised guidance from gdrx. What do you think? Well, I don't know, man. Look, you know what? I'm gonna. I'm gonna grant you that spec. I'm gonna say that there's limited downside, but you just should be glad that stocks stop at zero. Let's go to Michael in Illinois, please. Michael. Booyah. Always a pleasure to speak with you, Professor Kramer. Hey, when you get up to Chicago to do some shows, bro, I'd love to say no. They chained me to the desk here in Memphis. I'm chained to the desk. All right, we look forward. All right, so first of all, your staff is incredible. They're amazing with the. Yes, amazing. So with the work going on in Iran, I want to take a position up in Chevron, but I'm not quite sure when to pull the trigger. No, you're absolutely right to do Chevron. The one thing I would tell you is the last time that oil was at these prices, Chevron was dramatically higher. But you do get a 3.8 through Brazil and they got great cash flow and Mike Wirth is running it. And I'm going to say pull the trigger. I like it. I'm not done. Let's go to Rizal in California. Rizal. Booyah. Jim, I'm calling about Vertiv. I know they're cooling the red hot AI data center sector. What do you think of that? Okay, here's what I want you to do with Vernon. I think they've got great orders. I think if you want to put a position on you buy half and then you wait for decline. If it doesn't decline, that's too bad because the stock is just. It is just a tiger right now. And I don't want you to get burned. Let's go to Dennis, New Jersey. Dennis. Hey, Jim, this is Dennis from Cherry Hill. Want to thank you family club member. Want to thank you and the rest of their team for everything you do. Thank you. Couldn't do what I do if it wasn't for you. I stock I'm calling about today. I actually learned of through you, through an interview you did with the CEO. And my concern is that they are a small volume trading company, but they just had a monster move and that's strl stuff you can't buy here. Mike, we just have to say we moved. We missed it, Dennis, we just missed it. And I just can't Put you in that stock after it just had a 52% move? That'd be irresponsible, Nick. And that. Ladies and gentlemen, conclusion of the Lightning Round.

[Jim Cramer]

The Lightning Round is sponsored by Charles Schwab. Coming up, data center stocks have hit a speed bump this week. So is it time to pump the brakes on buying them? Kramer's link out, his rules of the road next.

[Interviewer/Host]

Just got too easy. Yeah, this relentless rally in all things data center, save for Nvidia. Despite the fact that Nvidia started the whole shebang, the rally started early, usually before the sun came up, and kept going after the opening bell. You'd look at the tickers and every time you saw them, maybe up more than the last time you looked. Everyone figured you could just buy some and ride them for a couple hours and dump them. Make quick bucks. Very easy. Then came yesterday, and we had the first crack. The first since the whole move began. It started like any other day, with huge moves before they open. Then when the bell rang, the stocks were way up versus the previous night's close and the pace just accelerated. Nothing had been said to keep the data center stocks going, but they just ran up anyway, led by the most unlikely of prospects, Qualcomm. That's not really a data center stock. The core business is cell phones. That's a terrible business. Ask ARM Holdings. It just told us so. Notably, Nvidia didn't get going until later in the game. It was the usual suspects, Western Digital, Micron and of course, Sandisk, that led the whole move up again, Perhaps influenced by some pre buying the new etf, the Roundhouse memory ETF symbol. Dram. Dram. The pirouette. What always occurs at the end of an extended run. Higher started midday. It began with a deceleration of the incline. Then this weird equilibrium of buyers and sellers, followed by the tipping, which grew relentless with incredible velocity and took the stocks down to where they'd be unchanged for a short respite, usually because of the closing bell. Today was a telltale wrecking, just nasty. As we saw, there were many summer soldiers in these data center plays. Sunshine Patriots who didn't really know what they owned, who couldn't tell Western Digital from Eastern Digital. Now I'm going to shock you. I'm actually glad this happened. I'm glad the data center names pulled back. That rally got to the point where it was pure greater fool theory, a belief that you could buy it and someone else would come along and take it off your hands at a higher price simply because there's a sucker born every minute. You could justify it by saying that the whole group is undervalued, but at the same time it was pretty absurd that these things could go up day after day without taking a breather. So what happens when a parabolic move goes bust? Nothing good. At least today you need a liquidation by the weak hands who don't know what they own. There will be buyers every step of the way, but without the firepower of the rally that just concluded those buyers might be done. The owners have never felt the selling lash before. They'll be anxious to get out as we approach the previous top on the way down. That means be careful. This selling might not be done. Now, as the money spreads out, we ourselves, we find ourselves without a leadership sector. Oh, that's okay. The data center will be back, no doubt. I just caution that when you see a rebound and some stabilization which will occur, you don't let yourself get too excited. You need to let these stocks turn and burn before they get rolling again. There's just not enough money to go around right now and this group, it was due or maybe doomed for some selling. I like to say there's always a bull market somewhere. I probably started finding just right here on my body Object Grammar See you next time.

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All opinions expressed by Jim Cramer on this podcast are solely Kramer's opinions and do not reflect the opinions of CNBC 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 Meta Money disclaimer, please VisitForward/MadMoneyDisclaimer Introducing Fidelity Trader plus with

[Jim Cramer]

customizable tools and charts you can access across all your devices, try our most powerful trading platform [e-mail] Trader+ investing involves risk, including risk of loss. Fidelity Brokerage Services, LLC Member nyse, SIPC.