Mad Money w/ Jim Cramer 5/14/25

Summary

Mad Money with Jim Cramer – Episode Summary (May 14, 2025)

Podcast Information:

• Title: Mad Money w/ Jim Cramer
• Host: CNBC (Jim Cramer)
• Release Date: May 14, 2025
• Description: “Mad Money” offers listeners an inside look into Wall Street investing with Jim Cramer, featuring his passionate insights and the popular Lightning Round where he shares his buy, sell, and hold recommendations.

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1. Market Overview

Jim Cramer opens the episode by discussing the current state of the stock market amidst fluctuating interest rates. He emphasizes the impact of rising interest rates on both high-yield dividend stocks and aggressive growth stocks.

Notable Quote:

“When interest rates go up, even if they go up just a little, you can see lots of very good, well-known stocks with juicy dividends just get pummeled right now.”
[01:26]

2. Stock Analysis

A. Pharmaceutical Stocks

Cramer delves into the challenges faced by pharmaceutical companies due to rising interest rates and potential regulatory risks.

• Bristol Myers Squibb (BMY):

  • Issue: Facing significant patent cliffs threatening future profits.
  • Strategy: Holding for dividends while awaiting new drug developments.

• AbbVie (ABBV):

  • Strengths: No immediate patent cliffs, strong franchises in neurology, oncology, and immunology.
  • Concern: Yield of 3.7% amidst rising interest rates.

• Johnson & Johnson (JNJ):

  • Strengths: Triple-A balance sheet, diverse drug pipeline.
  • Concern: Legal overhang related to talcum powder lawsuits impacting stock stability.

Notable Quotes:

“Why are the stocks of the tried and true companies getting crushed despite their solid dividends? Oh, there are a host of reasons.”
[03:15]

“Plenty of not so amazing stocks get hit too. And they deserve to have their stocks go down the drain.”
[02:05]

B. Consumer Goods

Cramer evaluates consumer packaged goods giants, highlighting their resilience but questioning the attractiveness of their current yields.

• Procter & Gamble (PG):

  • Strengths: Dividend aristocrat with over 70 years of payout increases.
  • Concern: Current yield of 2.68% deemed insufficient at $158/share.

• Colgate-Palmolive (CL):

  • Strengths: Leading toothpaste and pet food businesses.
  • Concern: Yield of 2.37% at $128/share.

• PepsiCo (PEP):

  • Strengths: Strong global franchises in beverages and snacks.
  • Concern: Yield of 4.4% amidst potential regulatory scrutiny on products like excess salt in snacks.

Notable Quotes:

“If you're nervous, if you fear Bobby Kennedy Jr., would you fear the ten-year? Nah. But you might fear General Mills.”
[07:45]

3. Reddit Stock Analysis

One of the episode's highlights is an in-depth analysis of Reddit's stock performance, exploring its recent earnings beat, growth prospects, and challenges from changing Google algorithms.

Key Points:

• Earnings Performance: Reddit reported a 61% revenue growth and a significant earnings beat, yet the stock declined due to perceived slowing growth rates and concerns over Google’s algorithm changes.
• User Growth: Daily active users grew by 31% year-over-year, but management remains cautious.
• Advertising Revenue: International ad revenue surged by 83%, with significant room for monetization.
• AI Partnerships: Collaborations with AI companies like OpenAI for data API access present high-margin revenue opportunities.
• Valuation: Trading at 54 times next year's earnings, deemed reasonable given the projected 85% earnings growth.

Notable Quotes:

“Most companies would kill for that growth. 61% may look great, but that's down from 71% the previous quarter.”
[18:22]

“With Reddit, we're talking about unadjusted numbers. That's reasonable.”
[25:10]

4. Listener Calls

A. Howard from Maryland – Lockheed Martin Investment

Howard seeks advice on whether to buy more, hold, or sell his investment in Lockheed Martin amidst criticism about drone superiority over the F-35.

Jim Cramer's Response:

• Recommendation: Buy More
• Rationale:
  • Valuation: Sells for 16 times earnings.
  • Leadership: Positive view of CEO Jim Taiglit.
  • Market Position: Despite recent volatility, Lockheed remains a strong defense stock.

Notable Quote:

“I would have no problem buying a stock that Jim takes, but is in charge of and that has sells for only 16 times earnings.”
[10:10]

B. Bill from Florida – Healthcare REIT Concern

Bill is concerned about the safety of his 9% yield investment in Omega Healthcare Investors amidst potential Medicaid cuts.

Jim Cramer's Response:

• Recommendation: Exercise Caution
• Rationale: Expresses similar concerns as the listener and suggests alternatives with lower risk yields.

Notable Quote:

“I think you're right to be worried. I think you're right to be worried.”
[40:42]

C. AJ from Florida – EdTech Company Inquiry

AJ inquires about Stride Inc., an edtech company experiencing significant revenue growth.

Jim Cramer's Response:

• Recommendation: Further Research Required
• Rationale: Acknowledges the growth but indicates the need for more information before providing a definitive stance.

Notable Quote:

“I would tell you about it if I knew it and I don't.”
[42:09]

5. Speculative Stocks Discussion

Cramer voices his concerns over the sustainability of rallies led by speculative stocks versus traditional blue-chip tech stocks.

Key Points:

• Speculative Stocks Highlighted: Palantir, Applovin, Quantum Nuclear, Coinbase, Robinhood, Hims & Hers, Archer Aviation, Pony AI.
• Concerns:
  • Valuation: Extremely high price-to-earnings ratios (e.g., Palantir at 220x earnings).
  • Sustainability: Speculative rallies are often driven by momentum rather than fundamental strength, making them vulnerable to sudden drops.
  • Investor Behavior: Lack of discipline among buyers, leading to potential bubbles.

Notable Quotes:

“A rally led by speculative stocks is a rally that is just not sustainable.”
[43:01]

“If you own one of these speculative stocks, do this for me. Trim some, take as much of your basis out as you can, then let the rest run.”
[44:30]

6. Lightning Round

In the Lightning Round segment, Jim Cramer provides quick buy, sell, and hold recommendations on various stocks based on listener calls and his analysis.

Highlights:

• Lockheed Martin (LMT): Buy more due to strong fundamentals and attractive valuation.
• Reddit (REDDIT): Buy despite volatility, emphasizing long-term growth potential.
• Cardinal Health, Sancora, McKesson: Cautious on drug distributors due to regulatory risks despite strong earnings.

Notable Quotes:

“Why take the risk? There are so many potential winners in this market. I say why take the risk.”
[36:50]

“Let’s take calls. Start with Tim in Kansas.”
[39:26]

7. Guest Interview: Andrew Devgan of Cadence Design Systems

Cramer interviews Andrew Devgan, President and CEO of Cadence Design Systems, discussing the company's strong performance and strategic partnerships.

Key Points:

• Earnings Growth: Q1 saw a 23% revenue increase and a 34% EPS growth.
• AI Integration: Essential role in AI-driven chip design and digital twin technologies.
• Partnerships: Strong collaborations with Nvidia and potential synergy with Intel under new leadership.
• Business Model: Recurring software revenue with high gross margins and diversified client base.

Notable Quotes:

“We deliver a fabulous quarter in Q1. We are up 23% revenue and 34% EPS.”
[14:30]

“We are part of the R&D cycle. The customers are innovating for products that will be released years from now.”
[17:48]

8. Closing Remarks

Jim Cramer wraps up the episode by urging listeners to approach speculative stocks with caution, highlighting the importance of disciplined investing and the potential risks associated with high volatility stocks.

Notable Quote:

“Play with the house’s money. Take some profits. Because I'm betting you that you won't regret it.”
[46:25]

---

Conclusion: In this episode of "Mad Money," Jim Cramer provides a comprehensive analysis of various sectors, particularly focusing on pharmaceuticals, consumer goods, and speculative stocks like Reddit and Cadence Design Systems. Through listener interactions and expert interviews, Cramer emphasizes the importance of understanding market dynamics, valuing stocks based on fundamentals, and maintaining disciplined investment strategies amidst market volatility.

Transcript

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[Jim Cramer]

Hey, I'm Kramer. Welcome to Mad Money. Welcome to Kramer America. I'll be with my friends. I'm just trying to make you a little money. My job is not just to entertain, but to explain. So call me at 1-800-743-CNBC tweet Meyim Kramer. When interest rates go up, even if they go up just a little, you can see lots of very good, well known stocks with juicy dividends just get pummeled right now. Some amazing stocks, some amazing companies are just getting thrown out with proverbial battle. There's just one problem. Plenty of not so amazing stocks get hit too. And they deserve to have their stocks go down the drain. You need to avoid those like the play, which means it's very important to know, well, how do you tell the difference? So in a decidedly mixed day where The Dow dipped 89 points but the S&P advanced point one overseas and the Nasdaq gained point 72%, should you consider going against the grain to buy something that's totally out of fashion right now but may not stay that way, particularly if you have a slowdown. Do you want to buy the stock of let's say a red hot core, weave a big in after hours or maybe buy a tried and true well known company with a very nice dividend? Oh, it's a tricky situation because we're taught to like value with income. But the stocks that are both value and income right now are getting slaughtered while aggressive growth stocks, they're soaring. Why are the stocks of the tried and true companies getting crushed despite their solid dividends? Oh, there are a host of reasons. First and most important, interest rates are going higher. Specifically the ten year Treasury. It's a fierce competitor to these Stocks and The yield crossed 4.5% today. That's the magic number where investors say ooh, I like that piece of paper. Solid yield, no risk. Get me out of stocks that yield about the same and into the bonds. Second reason why these stocks might be dangerous government. We got a wildcard. Department of Health and Human Services Bobby Kennedy Jr. We don't know whether he's for or against the companies he's regulating probably gets and we we don't know if he has the authority to do anything real negative but he sure has the purview to look at them. So with those two caveats in mind, let's get started with the stocks that sold off hard today because I think it's really important because you know most if not all of these companies. Why don't we start with Bristol Myers which we own for the charitable trust. Now here's a drug company with a decent oncology franchise that happens to be facing what's known as as a huge patent clip. All right. It meaning it's about to have some highly lucrative drugs lose their power protection therefore not make them much money at all. We own it in part because of the yield they're paying you to wait for new drugs that turn things around. The chief one is Copan Fee. It's a potentially revolutionary drug that treats some tough neurological problems including schizophrenia. Now we sold some of this stock when it had this ridiculous spike right here have a some bizarre rotation into safety. But now Bristol's in the mid-40s. Now we haven't bought back all the stock that we sold. We're waiting for the bottom because its most recent studies using Kobenphi it's one study came up Snake eyes management has said over and over again that it can pay the dividend which gives you a 5.6% yield. Why not buy more honestly, because I think you can go lower still without evidence that co Benfi is doing better. Or how about one of my absolute favorites right here to AbbVie. Now here's a drug company with no patent clip in sight whatsoever. Got tremendous franchises in neurology, oncology, immunology and medical esthetics among others because of today's vicious bond market inspired sell off this fine stocks down a quick 10 points today or more than 5%. But it only yields 3.7%. With rates going higher, you have to wonder if Abbvie is worth the risk even as it's among the safest, if not the safest stock in the group because of these amazing franchises. I think it makes a Ton of sense to start a position in the stock right now. If only because of the amazing Skyrizi and Rinvoq immunology drugs as well as Botox which right now is sainted for those who get too many wrinkles as their skin sags from taking GLP1. Those are the drugs that combat obesity and diabetes. I don't know. Tempting or let's consider Johnson and Johnson triple A balance sheet. Many drugs in the pipeline. One of the best run companies in America if not the world with perhaps the most billion dollar franchises of any pharmaceutical company I know. But JJ only yields 3.55% and it's got this terrible legal overhang related to allegations that his talcum powder no longer the market caused ovarian cancer. We don't know how open ended the claims are. Can you tolerate that risk? I'd love to say just go buy J.J. but. But where? What price that yield is no longer enough to compensate you for the risk. Especially if you don't know if RFK Jr just like some of their drug delivery mechanisms and for formulas. So people are staying away from that too. Not just because of the bonds. J and J down 3.3%. I've always believed that there are two consumer packaged goods companies that make a ton of sense whenever they go down and that's Procter and Gamble and Colgate. Now the former is the most unassailable consumer product lines in the world. Proctor is also what we call a dividend aristocrat. Increasing its payout by a little more each year for more than 70 years. Procter is such a winner. That is an amazing record. But here at $158 and we're focused on Procter and Gamble. Less than two points from its low. Approximately 22 points from its high. I mean you might be thinking how can you miss easy. You can miss because Procter only yields 2.68% at these levels despite all those dividend boosts. Well that's just not enough to compensate you for the risk. Colgate's worse again. Two points off its low. More than 20 points from its high. With amazing toothpaste and pet food businesses among so many others. But it only yields 2.37%. So why can't you buy it here? Could go lower. How does it bottom then? Let's go food. PepsiCo is by all standards an amazing company. Worldwide franchises and beverages. Snacks while snacks. While its beverage business has a formidable competitor in Coca Cola. They're Frito Lay snack business. Come on. It's the Best world. I've never seen the stock so from its, from its high, it's at $128, down from $183. It's down to the point where it yields roughly 4.4%. But what happens if the Secretary of Health and Human Services goes after the snack business for excess salt? I don't know. Because you can have excessive weight if you eat too many of them. Like what else wouldn't? Or maybe says that soda has to be a natural color. Whatever color that is. Does 4.42% in yield protect you from that? Obviously today's sellers don't think so, but this company is worth a lot more than it's selling for. I just don't know when it stops going down. General Mills, which makes top drawer pet food. Let's go over that one. Incredibly popular cereals. You know them. Trix, Lucky Charms, Fruity Cheerios. When you were a kid, was there anything more fun than eating these for breakfast? I mean, they're practically addictive children, even for adults. I had some last week and that's the problem. Bobby Kennedy Jr. Wants to demagnetize these cereals as well as make many other products that have artificial coloring that kids can't resist. Question becomes, what if he gets his way? Will kids eat Lucky Charms without those colorful hearts and rainbows? Imagine if you took the color out of tricks. It wouldn't be for kids. This stock's 1 point off its low, 22 points away from its high yields 4.5%. Hmm. 4.5%. Let's think about this. General Mills now yields the same as the ten year Treasury. If you're nervous, if you fear Bobby Kennedy Jr. Would you fear the ten year? Nah. But you know what? You might fear General Mills. So why buy a company that could be in the government's crosshairs when you can get the equivalent yield from something that's backed by the full faith and credit of the same government that might be coming after them? I am tempted to buy General Mills, but I do fear Bobby Kennedy Jr. More than I care about how much I might make with this stock. So here's the bottom line in a very uncertain tape for what used to be called safety stocks. I'd rather just own a piece of paper like the 10 year treasury where if worse comes to worse, at least I get my money back. Howard and Maryland Howard. Hi Jim, how are you? I am real good, Howard. How about you?

[Howard]

I'm laid up, but that's why I'm calling. I have invested in Lockheed Martin for some months and since some influential person knocked it and said that drones were better than the F35 the stock hasn't performed too good. I'd like to know if I should buy more, hold it or sell.

[Jim Cramer]

Okay, so Jim Teiglit runs this company and He's a terrific honorable good guy. It now yields almost 3%. You can say well that doesn't compensate but it only sells for 16 times earnings. I think Lockheed Martin you start a position right here. I would have no problem buying a stock that Jim take but is in charge of and that has sells for only 16 times earnings. This tape has turned safety stocks upside down and I'd rather actually at this point unless it's really big in yield and it's Safe on the 10 year treasury where I can at least get my money back at the very worst man tonight can Cadence keep climbing alongside the market? I'm getting the read of the infrastructure space for the company's top risk that is ready to buy at these levels if today's monster move higher. I'm searching for answers telling you where I stand on the stock and the latest headlines from Washington Post Headwinds for the drug distributors. I take a closer look so stay with Kramer.

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[Jim Cramer]

The moment we stop worrying about tariffs the infrastructure stocks came roaring back. Some of that's because this business never went away in the first place. Take Cadence Design System. This is a software company that helps design semiconductors and other electronics. By the way, it's a key partner of Nvidia, but along with many other players the ecosystem. There was never anything wrong with this business. But the stock got whacked when the trade went out of style in January and it got whacked even harder. The Liberation Day tariff announcements. They have very little china here. Wait a second. Then Cadence Bottom along with everything else, and now it's rallied heavily from its lows. Doesn't hurt that the company reported a terrific beat and raised quarter at the end of April. So can it keep running? Let's check in with Andrew Devgan. He is the President CEO of Cadence Design Systems to find out more. Dr. Devgan, welcome back to Money.

[Andrew Devgan]

It's great to be agent.

[Jim Cramer]

First, it's been a couple of years since I've seen you and it's been spectacular years for Cadence, including the most recent quarter. What is the reason why you've had such strength throughout this period?

[Andrew Devgan]

First of all, you know I'm really appreciative of our customers and partners. We have great collaboration driven by this supercycle because we are essential to the design of AI and then we use AI to improve our products and have new products. And the other thing is we are a recurring software business so with high backlog and we are essential to the design of products. So we delivered a fabulous quarter in Q1. We are up 23% revenue and 34% EPS.

[Jim Cramer]

So now let's take the case of in video we often talk about Blackwell and I think there's this perception that people say that okay, so what happens is Jensen Wong develops this great, great product and then he sends it to Taiwan semi and they make it. And that's what we have. Unfortunately, that's not the way it works. They are partnered with you and without you, I don't know if they could make it.

[Andrew Devgan]

Yeah, we have a great partnership with Jensen and Nvidia and I think Jensen has said publicly that they can design Blackwell without Cadence products. At the same time, you know, we use, you know, their products, you know, their AI and their accelerated compute to come up with new products. So a great example recently, last week we announced Millennium M2000. It's a new class of product. It's like a supercomputer. It uses our software, you know, optimized for Blackwell and Nvidia AI to create digital twin for entire industries, you know, for chip design, for 3D IC, you know, for system design like cars and planes and for even for drug design. So it gives up to 80x speed up in performance and 20x lower power. So it enables a new class of applications with Nvidia to get.

[Jim Cramer]

This is a good example. I think it would take too long to do most things without that. If you're doing 80 times faster, what would have been, how many weeks or months would have taken before the supercomputer?

[Andrew Devgan]

And some of these things are not even possible. You know, we have endorsement with customers that, you know, they were running only few cycles, you know, they need to run thousands of cycles to verify a chip, but they were only running 10 and 20 cycles. So some of these things were not possible before. And that's for chip design, but also for system design like planes and cars and drones and robots. So. So the whole industry needs to be done virtually in the computer. And for that you need a very accurate digital twin, which is what our products like Blackwell, Blackwell Powered, Millennium and Palladium allow that to happen.

[Jim Cramer]

Now, in one of your most Recent conference calls, Q125, this was recent when you have said we haven't seen any shift in customer behavior at this time. There seemed to be a perception that there was some sort of shift how that happened.

[Andrew Devgan]

No, we are, you know, primarily software business, so we, we don't see any change in customer behavior. Also we are not directly affected by tariffs. So our Q1 was very strong. So as a result, not only we reaffirm guidance, we beat and raise our guidance for the year. So right now, you know, these things as you know, take multiple years to design. You know, we are part of the R and D cycle. So the customers are innovating for products that will be released years from now. So they continue to invest in R and D and they continue to invest in.

[Jim Cramer]

I want people to understand that there is a difference between R and D cycle and actual making of hardware. They're very different. One is very long range and doesn't get canceled, the other periodically does. So when you say R and D, please explain to people how different that is from some of the other things.

[Andrew Devgan]

Exactly. So when we mean R and D, this is the design of these products, you know, not the manufacturing of the products and these design of the like, you know, all industry, all customers have to, you know, add AI into their products, change, you know, whether it's phones or it's cars with self driving or with physical AI, with robots of course, in the data center. So and these things are essential for their future business and we are essential to design these things. So as you know around us almost everything has chips and electronics in it and almost any chip design in the world today uses some form of Cadence software. And these software are, these products are essential for our customers. So they continue to invest and, and it's accelerating, you know, the cycle is accelerating not just with data center and agentic AI, but now with physical AI, with biosciences. So we see a lot of big business.

[Jim Cramer]

Absolutely. Now a couple of years ago I saw you, I was on a dais when a man by the name of Lip Bhutan won an award. The Robert Noise or Noise, one of the founders of intel, legendary figure. You were there because he was a predecessor at Cadence.

[Andrew Devgan]

Yes.

[Jim Cramer]

Now I've noticed he's now running Intel. I've had the pleasure to meet him. I don't think you do all that much business with intel, but I think that you might be an answer for some of Intel's admitted problems. Have you had talks with Lipbu? Do you think that that could be a good partnership like you have with Video?

[Andrew Devgan]

Yeah, I mean first of all I'm really happy that Libu is CEO and I think he has said publicly that intel needs to do better and especially have engineering focused culture and he knows how well we have done with other companies and we are glad to partner with a lot of leading companies, companies in the world, you know. So I think we can help liberal and intel to change its kind of engineering discipline, engineering culture because you need state of the art products to really succeed. I think intel needs to focus on its core business and Libu knows that. And our products make the design easier is better with AI, you know, the ppa, the power performance can be better. So we look forward to working with intel on that.

[Jim Cramer]

Excellent. One last question. People need to know we emphasize in video because everyone's. And I just mentioned it though, but the plethora of clients. You are not all your eggs in one basket at all. Correct?

[Andrew Devgan]

Yeah, we are very diversified, but at the same time we are working with all the leading companies in the world and also in all geographies. That's the key thing about Cadence. We are in all geography, in all industries, all the leading companies. And of course we cherish these partners, you know, these. These leading companies that are driving the industry. And the second thing like I mentioned is we are essential to the design of, you know, we part of R and D. And third thing is our business model. It's a ratable business model. High gross margin, high operating profit of always.

[Jim Cramer]

Everybody like you never miss on the board. Well, you don't miss. I mean.

[Andrew Devgan]

Well, look, I was a lot of hard work. I'm really.

[Jim Cramer]

I know. But you do a great jobless team by the way. We should mention that. What up 60% since I saw you at the CNBC CEO Council. Yeah, well, you could do a lot worse than that. I want to thank Andrew Devgan. He's the President CEO of Cadence Design Systems. There's a quick video if you ever want to go. There's actually a bunch of videos on the site that really help explain in depth some of the things I just talked about, including the billions of things you put onto something like this. I don't know how you do it, but I know you do do it, man.

[Dogtopia]

Money's back up in the market coming up. Kramer's eyeing a stock that's been downvoted by this market. But is it a buying opportunity? You won't need to find the right subreddit to find out next.

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[Jim Cramer]

So many stocks have made incredible comebacks over the past few weeks, but there are still plenty of names that are way down from their highs earlier this year. Take Reddit. That's the popular online message board that's one of the top 10 most visited websites worldwide. While the stock soared 11% today, it's off more than 100 bucks from its February peak of $230 and change. I think it might be a buying opportunity here. As long as you steal yourself for potentially wild ride. It is a wild trader. See, two weeks ago, Reddit reported the stunning quarter, but the stock didn't get any credit for it at all. It was in the Rodney Dangerfield zone. It got no respect. These guys delivered a phenomenal top and bottom Line beat 61% revenue growth, far outpacing their 19% increase in expenses. So not only is Reddit growing like crazy, they're also keeping costs down. And that translates into profitability. They earn 13 cents per share. Wall street was only looking for 2 bucks. 2 cents. Imagine 13 cents looking for 2 cents. And this was their third straight quarter of unadjusted profits. Now, despite all the hand wringing about how a softening economy might hurt the advertising market, Reddit's management sounded very confident about the future. They gave strong guidance for the current quarter quarter talking about 50% revenue growth at the midpoint, 200% growth for earnings, for interest, taxes, depreciation, amortization. Wow. You think the stock would have taken off in those numbers, right? But despite initially surging 18% in after hours trading, Reddit stock finished the next session down more than 4%. Why the heck did people sell this stock in such a seemingly strong number? When you look at the excuses the Bears came up with, frankly, I think the selling is wrong. Totally absurd. For example, for the first time since its IPO, Reddit's revenue growth decelerated. 61% growth may look great, but that's down from 71% growth the previous quarter. I said, you kidding me? Reddit only grew at a 48% clip in the first quarter of 2024. That's 61% number. It's phenomenal. What else? While daily and weekly average users both grew 31% year over year in the first quarter, some analysts worry that additional growth might be harder to come by. CEO Steve Huffman, known as kind of affectionate as spaz, no accounting for taste there, noted that daily active users through the month of April were, quote, growing in the high teens range year over year, end quote. Which suggests that the growth rate is slowing. These are the same fears that sent the stock down from its highs back when they reported emphatic beat and with strong forward guidance in mid February. Now again, I think it's nuts. Most companies would kill for that. Growth manager's being cautious with its user forecast. Why? Because Google keeps changing its search algorithm, which is a major driver of traffic for any website, especially Reddit. Some of these changes are subtle, but others are more visible, like the recent introduction of AI generated summaries that attempt to answer queries directly and let's face it, sometimes inaccurately. All this is in flux. So it's hard for Reddit to predict how many eyeballs they can attract via search. Now, lots of people were actually skeptical about this Google algo issue, but as someone who started a website, the street.com back in 1995 and relied on Google for a lot of traffic the whole time, every time we seem to be building up a full head of steam, Google changed this algorithm and crushed us. Oh, I would be furious at Google. But unlike Reddit, there was nothing organic we could replace it with. And I certainly nothing I could do. Google I am not that worried about the Google hostage issue here because is a variety of draws that Reddit has. Management for instance, reminded investors that Reddit still the sixth most searched word on Google. They're just behind the word news and just ahead of the word Trump. Nice bragging rights, don't you think? At least the President finds out now. Management acknowledged that, quote, the search ecosystem is under heavy construction, end quote, and that the quote, near term could be more bumpy than usual, end quote. Okay, that that did rewrote, but Reddit explains that these fluctuations are simply a byproduct of their platform's open nature. As management noted, Reddit remains, quote, one of the last major platforms that doesn't require you to sign in to learn something, end quote. It's really one of the few sites that still has that old school Internet vibe. I like that. In a world that seems increasingly dominated by fake accounts, AI generated answers and clickbait garbage. Reddit stands out as a place where you can get real answers from reality, real people. Especially for questions and scenarios that are too niche for traditional search engines like different illnesses or different hobbies. Now look, that's why the platform thriving. But beyond that, Reddit's made huge progress on the business side. In the most recent quarter, their active advertisers grew more than 50% year over year. Driven by increased impressions and improved pricing. The company highlighted strong performance across key industrial industries like pharma as I mentioned. You know, people are sick, tend to congregate, want to talk to other. I don't blame them. Right. You want to kind of have that affinity group, auto, telecom, finance. You want to ask questions. There you go. Including of course Wall street bets. This is especially encouraging because after Reddit came public, there were a lot of worries about whether it could monetize its user base effectively. Management noted that roughly 40% of his conversations read are commercial in nature, underscoring its attractiveness to advertisers. Company also testing something called dynamic product ads. Early results show that ad these ads deliver a 90% higher return on ad spend compared to campaigns run last year. Now that's another sign Reddit's building a more sophisticated, high performing ad performance. Red is also working on multiple product improvements aimed at enhancing the user experience. Like improving frankly their I got to say not so hot search function, which really a kind of bewildering I find that can bring in new users while also reducing Reddit's reliance on traffic from Google. The less they need to rely on outside search engines, the less we need to worry about the daily average user numbers being thrown off every time Google changes the darn algorithm. And they don't tell you they're going to change it. But the major initiative here is Reddit answers the platform AI powered search tool, which has already reached 1 million weekly users. It began its global rollout last month. Started with Australia, then the uk. Hey, speaking of international expansion, Reddit's aiming to become a truly worldwide platform with the help of its machine translation tool, now available in 13 languages. This international push makes a lot of sense when you consider international ad revenue grew by an astounding 83% year over year. That's outpacing the 56% growth in the United States. What's even more compelling is the monetization gap. Reddit's average revenue per user internationally is just A$34 compared to $6.27 in America. We'll talk about some significant room for improvement despite coming up on its 20th year anniversary. Welcome to the club. Reddit still in the early stages of monetizing its international user base, so I'm confident they got a lot of room to grow. And don't worry, there's another angle to this story. The company has entered into contracts with generative AI outputs like OpenAI, granting them access to Reddit's data API. The API provides real time structured content from Reddit's vast archive of user generated discussions that is an invaluable resource source for training large language models that power these high tech chat bots. Oh my God. That is just a pot of gold. Matt highlighted this in the conference call, noting strong demand for their data among AI companies. Now, this could be potentially very high margin revenue stream. Some people think it could be the highest. I wouldn't be surprised if these deals keep coming and as they are announced, this stock will go higher in the end. There's a lot to like about Reddit, but even with the stock down huge from its February highs, it's still trading at 54 times next year's earnings as. But okay, it's not a crazy valuation given that they're on track to put up 85% earnings growth next year. And remember, with Reddit, we're talking about unadjusted numbers. That's reasonable. Bottom line, while I think Reddit's absolutely worth buying at these levels, even after today's monster move, stocks like these are only worth owning if you can stomach some serious volatility like we're having right now. Keep in mind we're always one presidential tweet, or whatever you want to call it, away from these kinds of names falling out of favor. Favor all over again. That's why I say Reddit's a buy, but only if you got the intestinal fortitude to stick around for the long haul. Let's take calls. Why don't we start with Tim in Kansas? Tim.

[Howard]

Hey, Jim, how are you?

[Jim Cramer]

I am real good, Tim. Tell me how you are.

[Howard]

I'm great. Hey, I'm an IT professional and love super micro computers. I have 40 or 50 of them that are running zero failures with them in the last 15 years. So I went and bought the stock when it was super dirt cheap and it went up to about 120 bucks and now it's in the dirt again and it should. Should I look at getting rid of it or.

[Jim Cramer]

No, no, to tell you the truth. I mean, this one had some accounting issues. They do seem to be now long enough behind them that analysts are starting to recommend the stock again. It's relatively cheap versus the whole cohort. If you want to consider the cohort, it'd be things like Core Weave or of course, an Nvidia. And I would tell you it is more expensive than Dell. I do like Dell more, but I think you could do a lot worse than Supermicro. But let me tell you something, you've got more product knowledge than I do. And I like what you had to say. All right, I think Reddit is worth buying at these levels, but maybe not all at once. Be prepared for some volatility in the stock if you're holding onto it. It's a wild one. Now much more man money at major drug distributors stocks. They've fallen from their recent all time highs. I'm breaking down the post earnings action and it is very compelling then doesn't mean the stocks are compelling them then. I'm analyzing some spec stocks that have caught my attention and outlined my strategy for approaching these riskier names. You probably won't like it because it involves actually making money. And of course EUR calls Rapid Fire fire, Tonight's edition of the Lightning Round, so stay with Kramer. Is there any group that's more perplexing than the drug distributors? These stocks, namely Cardinal health, Sancora and McKesson, are seemingly perpetual residents on the new high list over the long haul. There are some of the best performers out there and they've done great this year, as is pretty much always the case. And yet doesn't it always feel like the drug distributors are just one bad day away from falling apart? Most of the time that's because of vague amorphous concerns to some type of regulatory crackdown will force them out of business or at the very least make them a lot less profitable. We saw an abbreviated version of this at the very end of last year when then President elect Trump talked about knocking out the middlemen in the pharma business. Nobody was sure exactly who he's referring to, but the drug distributors seemed like obvious targets and the whole group got clobbered. But the stocks came roaring right back because Trump never mentioned it again until we started hearing rumors last week, rumors that came true a couple of days ago. Lately we've seen this whole saga play out in miniature. Cardinal hell, Sinclair, McKesson have all reported just fantastic quarters over the past two weeks, pushing their stocks to new all time highs. Then the President issued an executive order to bring down drug prices and the whole group sold off. Of course, legally speaking, the White House can't set price controls on anything without Congressional approval. But you never want to be on the bad side of the President, especially this President. So what the heck are you supposed to do with the drug middlemen here? Historically, no politician has been able to touch him, even though this seems to be one of the most hated industries in America. I think this time actually might be different though. Before we get into that, let's not forget that the drug distributors are making fortunes right now. Cardinal Health turned in an excellent set of numbers two weeks ago with double digit earnings growth. Imagine put through a big boost in their full year earnings forecast. Cardinal stock jumped 3% in response, climbing from 141 to 145. And it kept running for nearly a week after that, eventually setting at an all time high of $154 just last Thursday. What a fabulous move. Sancoura, the drug distributor formerly known as Amazon Mersource Bergen knocked it out of the park when they reported last Wednesday. Copy posted a slight top line miss but monster 31cent earnings beat off a $4.11 basis. Even better. Just like Cardinal management raised their full year earnings forecast substantially, St. Croix raised its 2025 earnings guidance multiple times since originally issuing it in November. That's what you really want if you're a growth manager. The stock jumped 4.7% last Wednesday in response to the report, setting an all time high of $309 and change before settling a little bit below that level. The last quarter from the major drug distributors came from McKesson, and that was last Thursday night, which delivered yet another very strong set of numbers. Repetitive, isn't it? Like the others, McKesson had a top line miss in this case actually pretty sizable one, but still delivered a significant earnings beat and gave a higher than expected full year earnings forecast in a vacuum. I think the McKesson quarter was strong enough to spark a nice rally for the stock last Friday. But we don't live in a vacuum, do we? And unfortunately some external headlines had already begun to impact the drug middlemen at that point. See, while we were out last week, there were a number of negative headlines for the health care sector. Early on in the week we had a bunch of leadership appointments at the Department of Health and Human Services that's now run by Robert F. Kennedy Jr. Not the most pharma friendly guy in America, and now his leadership team at HHS isn't looking that pharma friendly either. But the big negative development for the drug distributors came midweek when Politico reported that President Trump would be reviving an effort to dramatically cut drug costs by adopting what's known as the most favored nation pricing for Medicare. Basically, this would force drug companies to offer the government prices that align with the lowest prices paid for the same drugs in other developed countries. Wow. The fear was that this would lead to compressed margins for the drug distributors if the drug makers customers suddenly had to charge much less for the drugs. Of course, margins go down. Last Thursday, the Big Three saw their stocks get hammered in response and rightly so, because that report turned out to be true as President Trump signed an executive order on Monday aimed at the lowering drug prices, which included that most favored nation pricing language, but also proposing to let Americans buy drugs directly from the manufacturers. You know what that would do? That allow them to cut out the middleman. As a result, all the drug distributors are either flat or slightly lower this week while the broader market continues its comeback. So that's the conundrum with these middlemen Cardinals and Cora McKesson Earl doing incredibly well. But like I said before, there always seems to be a third threat that they could be regulated out of existence. That's extreme, I know, but that's what's in people's heads. Typically, Wall street worried that the Democrats will go after this industry, but now the Trump administration wants to target them, too. What can you do about all this? Man, it's tough to say. Look, when I look at the drug distributors, they remind me of the floor brokers at the New York Stock Exchange, where I am right now. But back in the old days when my hedge fund was paying huge commissions for reasons they're really, frankly never quite clear to me, including the right to have a rebate for research. That was a good business for the brokers for a very long time until the industry got increasingly digitized and you just didn't need the floor brokers for pretty much anything anymore. And that crushed the margins. Are the drug distributors at that point right now? I mean, you could argue they are after money's executive order on drug pricing and more generally with the Trump administration's generally hostile view of the pharmaceutical industry. Now, I don't know the comparisons. Apartment in fact, I think it's telling you many of the drug companies and the drug distributors haven't even gotten hit that hard this week after we got to look at the language, the executive order. This is not something that can happen without real battles in Congress and the courts. But the drug stocks were hurt today. But now that Trump has the drug distributors in his crosshairs, you better believe that will affect the people, what people are willing to pay for their numbers if you don't, let's say you, if you, let's say you own these, okay, I don't recommend dumping them completely. But if you're sitting on huge long term gains here, there is nothing wrong with rein the register on a pretty sizable part of your position. And if you're someone who's putting new money to work, unlike even just a few months ago, I wouldn't allocate it to a group of stocks near their all time highs and suddenly have huge political risk to their entire business model. Now if you really want to own one and I do like this one, Cardinal Health is the one to do it with because it provides a lot more value added services than the others. Now we've had Cardinal on several times that I think doing some very innovative things. They are impressive, they're beyond middlemen. But the bottom line, no matter how well the drug distributors have been doing, I do not want to stick my neck out for an industry that now seems to be hated by both the Democrats and the Republicans. It seems like the only thing they agree on. Does it? There are so many potential winners in this market. I say why take the risk. Net money's back after the break.

[Dogtopia]

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

[Jim Cramer]

Next it is time to start with the white round cruise pass. We'll be sitting in the stock regrets on my staff person planet sound and then the lightning round is over. Are you ready ski guys have a light round crash up with Bill in Florida.

[Howard]

Bill, hello Professor Kramer. How you doing today?

[Jim Cramer]

I am doing all right. How about you, Bill?

[Howard]

I am doing great. Hey Jim, I'm a first timer here. I've got to start by telling you that I really appreciate the priceless education that you provide for all of us every day. You're very, very confident investor.

[Jim Cramer]

You're very kind. Thank you. Thank you very much, Jim.

[Howard]

I've had a position in this health care REIT for a few years now. I've had some decent price appreciation but what's attracted me to it has been the Yield. I'm getting 9% on my investment and would still get over 7% if I added to it today. But considering all the new about potential cuts to Medicaid, I'm wondering how concerned I should be about the safety of the dividend. Jim, what do you think about Omega health care investors symbol?

[Jim Cramer]

I think you're right to be worried. I think you're right to be worried. Why? Because of what you said. That's why I've always liked Ventas because I think that Deb Cafaro can navigate through anything. But the yield is much lower. I don't want to reach for you. I need to go to Andrew in New York. Andrew, who are you?

[Howard]

Jim, I'm calling your brain on Asteria Labs.

[Jim Cramer]

Okay. Asteria Labs is a company that is incredibly well run, that has tremendous growth but like many other companies, stock has Come down in value. I actually think it's a good place to buy given the fact that so many of these other stocks actually even have higher price journeys multiples. Let's go to AJ in Florida. AJ getting the biggest bum, bum, bum up. This guy is a fired up guy. He's not just having a normal day, he's having a great day. Let's go to work.

[Howard]

Jim, thanks for taking my call. I watched as a kid. I'm 26 now, new to investing. I'm calling by an edtech company that's up 48 year to date. Market cap of 6.7 billion. 16 increase increase in revenue year over year. It provides individualized adaptive classroom tech and now has a K through 12 tutoring program. As a teacher myself, I know the gaps that need to be formed across the nation. I think this might take off. Tell me about LRN Stride Inc.

[Jim Cramer]

I would tell you about it if I knew it and I don't. So we're gonna have to do work. I'm looking right now at Dr. Ben Stodo and he and I are gonna have to coalesce on this issue and find out the answer. And that, ladies and gentlemen, the conclusion of the Lightning round.

[Dogtopia]

The Lightning round is sponsored by Charles Schwab. Coming up, you can't spell suspect without spec. Kramer's cautioning against chasing the big moves in the market's most speculative names. Next.

[Jim Cramer]

We spent a lot of time in the office watching speculative stocks like Palantir, the software and cybersecurity company Applovin, which places ads, mobile, video games or any of the quantum nuclear stocks, the rigged computing or Aqua. We constantly take a gander at Coinbase, Robinhood, Hims and hers, Archer Aviation. Oh, and let's throw in Pony Aye, the Chinese autonomous driving plan. Of course, we also look at some of the so called tech blue chips like Apple, Microsoft, Micro, you know, get it Delmer. And we examine the behavior of those stocks too. And lately we've begun to wonder, can both of these very strong groups coexist? Think about it. Ever since the market bottomed back in the second week of April, we've seen huge moves in the blue chip tech stocks. But the much bigger moves have come from the distinctively red chip speculative stocks like the ones I just mentioned. And I have to tell you that a rally led by speculative stocks is a rally that is just not sustainable. These two groups are indeed antithetical. A frothy market is not one that you want to get excited about. So I wish that the buyers of the Red chip. Well it's called Redship Red hot names which is cooler jets for a moment let the stocks come in a bit. But they won't. These specs just get bought and bought and bought and bought no matter what the price and on no news whatsoever. That is worrisome to me because the buyers are showing no discipline. Take Palance here. This is an exceedingly well run company. Very flamboyant CEO who really knows what he's doing. His company offers superior technology that can pay for itself almost immediately by making their clients more efficient, smarter. Got a very strong defense business. The envy of the big iron guys. Palantir is expanding margins incredibly fast growth. But the fact is the stock sells for 220 times earnings. That is ridiculously expensive. And just you know of all the speculative stocks I just mentioned, Palantir is probably the cheapest. The traditional tech stocks I followed the other side between 20 and 30 times earnings but it just doesn't matter. Like the other speculative stocks, price seems irrelevant. The buyers only care that they're going up. Sometimes I think that's all the buyers know about the companies. If you were to watch the stock of Palantir for instance, I mean really watch it. What you see is the stock starts trading very very early, around 4am I watch it like a hawk. Usually starts going up right around then it start be maybe 80 cents and then it'll be a dollar 20. A few minutes later it might be a 2 bucks and then 250 and it stays up around 250 sometimes jumping up to 3 or 4 points once the actual market opens. Palantir is the most egregiously successful these speculative stocks. And I say that because it roars even when nothing's going on. When the company last report it looked like the stock might actually be done because the international business wasn't robust. But management disabuses of that notion with some wildly promotional verbiage the stock quickly shed 15 points. That was right back up as if nothing happened at all. House of pleasure this morning I said that Palantir is going to $200 and that is up 70 points from here. I do not want you to laugh at me. When I when it was at 50 I said it would double and it did. Why am I so confident? Because the buyers, whoever the heck they are, just won't quit. They are totally insensitive to price by the way same with the buyers and pony AI up 318% from its lowest set about three weeks ago. And hims and hers up 155% from its own from its April lows. Anything nuclear quantum just keeps rallying. Doesn't even matter what's said there. What's wrong? Look, usually a couple of things happen when speculative names catch fire like this. First, there are no real expectations now from any of these stocks, so it doesn't matter when they report, but soon enough they'll be heavily covered by analysts and then there will be disappointments and that does matter. And then second, the insiders aren't stupid. They start dumping stocks like mad when the stocks get too high. Third, the buyers tend to run out of gas right when the short sellers come in because the shorts know these stocks have run on very light volume and can be knocked down with heavy short selling that could be get real sellers, real scared sellers that is. I have nothing against speculation, but when you play with these stocks you have to ring the register before you get hurt because the eventually someone always does get hurt. I can't tell you when that hurt will occur. Maybe it never occurs when it comes to Palantir. I can tell you this though. If you own one of these speculative stocks, you know what? Do this for me. Trim some, take as much of your basis out as you can, then let the rest run. Play with the house's money. Take some profits. Because I'm betting you that you won't regret it. And I think you know what, you'll thank me in the end. I like to say there's always a bull market. Summer Thomas. Try to find it. Just for you. Right here. Made money. I'm Jim Cramer. See you tomorrow.

[Multicare]

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 Introducing CNBC, the.

[Dogtopia]

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[Jim Cramer]

Start.

[Dogtopia]

Start Streaming. Go to cnbc.com stream now.