← Mad Money w/ Jim Cramer
Mad Money w/ Jim Cramer
Mad Money w/ Jim Cramer 5/18/26
00:44:19
Listen to Jim Cramer’s personal guide through the confusing jungle of Wall Street investing, navigating through opportunities and pitfalls with one goal in mind - to help you make money. Mad Money Disclaimer
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- [00:00]
Jim Cramer
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Jim Cramer
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Jim Cramer
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Lip-Bu Tan
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Jim Cramer
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Lip-Bu Tan
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- [01:02]
Jim Cramer
My mission is simple to make you money. I'm here to level the playing field for all investors. There's always a bull market somewhere, and I promise to help you find it. Mad Money starts now. Hey, I'm Kramer. Welcome to Mad Money. Welcome to Cramerica. Other people make friends. I'm just trying to save a little money here. My job is not just entertain, but to put it all in context. So call me 1-800-743-CBC. Tweet me at Jim Cramer. We keep waiting. Waiting for the bombing to begin, waiting for oil to stop going up, waiting for the war to end, waiting for inflation to cool down, waiting for interest rates to stop rising, waiting for Kevin Marsh to take the reins of the fed, waiting for SpaceX and Anthropic and OpenAI to come public. It's too much waiting. But do we have a choice in the interim? You know what we do? We trade. That's right. Trading is filled with vicious rotational behavior. Masked by seemingly sedate averages. DAL advancing 160 points today, S&P dipping.07% and the Nasdaq sinking 0.51%. Sometimes we buy hardware stocks and the goods that go into or help build data centers like semiconductors, semiconductor equipment. While we sell all kinds of software stocks. Sometimes we sell hardware stocks and buy those same software stocks that we threw away. We do more of the former than the latter. So hardware's generally charging higher while software generally dives low lower. But when we get a rotation and the losing software stocks power higher like did today, they do so With a level of ferocity that makes you feel like the decline's got to be over. Of course it feels that way every single time. Yet the rotations never seem to last. Of course, at any given day there are tons of other sideshows. Healthcare, restaurants and foods tend to trade up together as we saw today. Contractors, machinery and builders trade down as we saw today too. Then there's the 52 week low stocks, the pummel that tend to be rally with the software contingent damage stocks that momentarily levitate. And then there's everything else. Why is it like this? How can there be such whippy behavior? Because people there is no conviction whatsoever. These stocks keep being whipped around thanks to various ETFs that few stocks like play things. Even some of the largest stocks like Microsoft, like Nvidia. I know it sounds ridiculous, but many of these stocks will go up or down on what we call nothing. Meaning small buys from ETF managers who with their orders just jar the whole market. So what should you do during a rotation like we had today? Well, of course you can sit on your hands. But here's something I like to do. I introduce you to a way to make some money. You go to your machine that you use for stocks. You query it for the top 10 largest losers in the S P if you like any of them. And you have strong balance sheets and good businesses. But the stocks are sale nonetheless. Then well, guess what? Bye bye bye. Let me walk you through the process that I did today. First you need to decide whether you're a believer in the hardware thesis or the software thesis. The hardware thesis is all about the making of artificial intelligence. Both training, inference. The software thesis is about Companies like Salesforce, ServiceNow, Workday and Adobe Software Enterprise Software software as a service. All beaten down stocks that trade together as part of a basket. The software stocks are wildly emotional traders. They've been trans for ages and are trying to bottom. But if you had been bet on a bottom in these things so far you've been crushed. Each time we get a day like today with the software stocks making giant moves, people are convinced that it's real. They look at ServiceNow up over 8% on a buy recommendation from bank of America and say it just has to be done. Going down. It's down 32% for the year for heaven's sake. Or they kick the tires of Salesforce which is also down 32%. I think perhaps it to his bottom because Beckenberger actually started its research on Salesforce with a sell and it rallied 3% anyway. If it weren't for the centrifugal ETF force that took it up, I might say it's done going down too. But I just don't know. I recognize it always feels compelling to bet on the underdog or might you might call bottom feeders then to go for the otherwise winning stocks that just so happen to get hit very hard today. But I want to buy winners on a momentary slide, not losers that may just be resting before the next decline. So I go down the list of stocks in the SB500 that are down the most and see if there's anything that kind of strikes my fancy. Incredibly, today's many of today's market's worst performers were indeed linked to the data center. Community Electronics, a material company used by chip makers, is down 5%. We own this one for the Chopper Trust. It's had a parabolic move even after this pullback. I think it's too expensive for the moment. Comfort Systems is a heating, ventilation, air conditioning company with plenty of data center exposure. But it's a $1,854 stock that's nearly doubled year to date. I might mess with that one. Western Digital's down nearly 5%. It's a memory stock that trades at 46 times earnings. That seems too rich to me. The fairly similar Micron sells for less than 12 times earnings and it seems compelling, down 6% today. I've been waiting for Micron to come down. This may be the opportunity. Next, there's Corning, another Chapel trust company with a parallel. Another parabolic move. It's gotta come in more than just down 7%. The beatdown's not enough to entice me to buy, or at least buy more of it. Sandisk that stocks up more than 3,000% over the past 12 months. Even up here, it only trades. It's just 20 times this year's numbers. But that may be too expensive versus micron. Gotta let it come down more than today's 5% decline. Seagate again, too pricey. Nearly 50 times next year's earnings estimates. These are commodity companies. Vertiv had an amazing quarter. The best backlog of any of the data center stocks. But at 53 times earnings, I got to say no thanks. Finally, there's Regeneron, which got blasted by a poor result on a metastatic melanoma cancer trial. I, along with many others, thought that this trial would succeed. You can't buy a drug stock that falls that much on the first day of the decline. Most analysts seem to have keto on this Drug to recommended stock. It's damaged. There could be some more downgrades. So what do you do? As someone who's always looking for bargains, I think Micron's the only possibility that I heard in that whole list. It's the hardware stock that can most easily turn itself around the next move higher. I buy some right here and then wait for another, say, 2 to 3% decline to buy more. That's how I get started. Bottom line, I just showed you how to use rotation to buy something. Not aggressively, but gingerly on the way down. As we wait for all the variables I talk about, especially the endless back and forth about the war and about the Strait of Hormuz and nuclear materials to play out. We got to find out whether President Trump's inability to bend Iran to his will is ever going to end. Caleb in Texas. Caleb. Hey, Jim. How are you doing? Hope you're having a terrific Tuesday. Well, it's kind of more of a Monday feel to it, frankly, what's happening. Yeah, that's all right. I mean, look, I. Time passes so quick. So this is what I was thinking of right here, what I wanted to talk to you about. And looking at my notes, this is why I said Tuesday. So last Tuesday, the FCC approved a purchase for this telecom company for them buying about 50 MHz of EchoStars nationwide spectrum for roughly $23 billion to expand their 5G network. Now, the project could require sustained capital and operating spends, adding pressure already to the high debt load if returns are slow. But the satellite coverage meaningful, meaningfully could reduce dead zones and strengthen customer loyalty and rural and enterprising segments. And that company I'm talking about is AT and T. Do you feel like it's. I don't want to be an AT&T. And I'll tell you, I also am very concerned about rural. I'm very worried about Starling. I think Starlink is. I also think Leo from Amazon, both of those are going to be considerable competitors to the rural part of a company like AT&T. But thank you so much. I think you've got a good thesis, but I trumpet with mine. I'm sorry. All right. You have to use rotation to your advantage. If you're going to just sit there and look at it, you got to think about what to do. Buy things slowly, even gingerly, until all the variables settle down. Use wide scales on everybody. Tonight I'm sitting down with Intel's Lip Wu Tan in his first interview as CEO of the Story Chip company. Don't miss my wide ranging exclusive interview where we get into the turnaround of this American icon, the state of US Chip manufacturing, how Intel's investing in America and more of you do not want to miss this interview. Stay with Kramer. Don't miss a second of Mad Money. Follow imKramer on X. Have a question? Tweet Kramer hashtag mad mentions. Send Jim an email to madmoneycnbc.com or give us a call at 1-800-743-CNBC. Miss something? Head to madmoney.cnbc.com. Say you always wanted to have a backyard oasis. Here's the thing. If you get smart with your money, you can do things like that. With Empower, you can start making the most out of your money so you can go out and live a little. Isn't that why we work so hard to have some fun with our money? Like treating yourself to something special or spontaneously doing something extra for a loved one. So use Empower and get good at money so you can be a little bad. Join their 19 million customers today at empower.com, not an empower client, paid or sponsored.
- [10:51]
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- [11:18]
Jim Cramer
It's smart to always have a few financial goals, and a really smart one. You can set earning cash back on what you buy every day. And with Discover, you can get this Discover automatically matches all the cash back you've earned at the end of your first year. Seriously, all of it. And we trust you to make smart decisions. After all, you listen to this show. See terms@discover.com credit card. A little over a year ago, when Li Blutam was named CEO of Intel, the stock was sitting at around 20 bucks. Now, after major cash infusions from the federal government and Nvidia and some fabulous earnings surprises, it's a $108 stock, one of the greatest turnarounds I've ever seen. And as we spotlight the companies helping shape the next chapter of American Innov, Intel's become a major part of that story. Litboo is friendly with pretty much everyone who matters in the industry. He told me, for example, that he talks to Elon Musk once a week Engineer to engineer. Meanwhile, Intel's high end CPUs are now essential for the data center. At a time when there are chip shortages all over the place. Intel's been building out its domestic manufacturing capacity. Exactly the kind of investment in American industry we're focusing on in our Invest in America 250 years of innovation series. The most recent quarter was phenomenal and they still can't keep up with the demand. Earlier today, I had the chance to sit down with Liu Boutan for the first time and discuss how he's brought this great American company back to life. Take a look. Lippoo. First. It is an honor to have you here and you have done something that most people thought was impossible. You have turned around, saved a national treasure that is Intel. How'd you do it?
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Lip-Bu Tan
First of all, thank you so much for inviting me to be here and in a very humble way. And I take steps in terms of improving and the main reason I joined this company to be the CEO is an iconic company. It's so important, like you described, a national treasure. It's so important for United States. And I decided, even though I don't need this job, I decided to come in to save the company. And also good for United States.
- [13:36]
Jim Cramer
One of the first things you did is very atypical of a CEO. You decided to canvass the workforce. Very few people want to know what rank and file do, but it's worked for you.
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Lip-Bu Tan
Yeah. So I think the main reason I changed that is basically focus on the culture of holding people accountable and also drive result. The best product, the best delight customer is very important. And so with that I think I used to have 12 layer of the management team. I bring it down to five layer and then the other part is not just the middle management. It kind of slow decision making. I want to have that removed so that we can be hold people accountable and drive result focus of the best product development and also delight the customer. And that's a cultural change.
- [14:27]
Jim Cramer
Sure. Now, you also had to fix the balance sheet and you did get some help from the White House and the federal government. How did that come together?
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Lip-Bu Tan
Yeah. So first thing I do is focus on the balance sheets. And the balance sheet is critical. And initially I talked to some of the talent to bring on board. They said that Liverpool is a bankrupt company. Why I want to join you. I love you, but I don't want to join. And so I decided it's very important to address the balance sheet. So I'm delighted President Trump and Howard and support me to be an investor and used to have a five year milestone to that chip program. And then they decided to upfront to give me the money so that I can strengthen my balance sheet. And also my good friend Jensen Huang and he beside doing R and D engineering engagement together. And he said by the way, Lippu are going to give 5 billion to you and support and help you. And that mean a lot to me. And of course softbank Masa good old friend of mine, I used to be on the board of Softbank and then he said libo, I like to support you. He also put 2 billion in. So strengthen my balance sheet and that so that I have a chance to recover from the, you know, the revenue and gross margin and profitability so that I can really build from there.
- [15:48]
Jim Cramer
Now I think people will be listening saying well what did this man do that he warned that but you know, took over Cadence at a bad time. And you gave cadence shareholders a 3200% return almost inconceivable. You were able to turn that around. I think other people felt that if you could turn around Cadence intel not so hard, how did you turn that one around? And I know that one was very mired.
- [16:15]
Lip-Bu Tan
Yes. So I think back to that Cadence design and I was asked to step in to be the CEO and I promised to be interim CEO. First of all, I never been a CEO before and I not even talk about turnaround. So it's a new experience for me. I remember the head of the chief people officer said that little is a three book for you to read. It's a CEO for dummy. So I read every page of it, make sure that I do it right. But good news is basically you don't have that legacy of old history. So you are open minded. Listen. In fact I still remember the first day on the job. I have an all hands meeting. I asked anyone have any good idea reach out to me. I received thousands of email and I promised them I will respond each email and turn out to be a challenge for me to do that. But good news, if people are surprised, I respond. I also reach out to their cubicle to tell them some of them drop to tears that in the past you drop send an email to CEO never hear anything. But that's how to change the culture. And then listen to the customer, listen to the employee and then formulate something that meaningful for the company. So long story short, that company I done well. And then from the interim time is $2.42. I took over and I really built that business that the rule of 45 I accomplished that and beyond that and so in some way I create shareholder in our return. So when I applied to intel, same thing, I tried to do that. And then we try to recover first and then listen to customer and some of the customer tell me that lipo, this is so horrible. And then not only listen to us, they lecture us. And I said got to change. And then so I listen to them. Is that about this 14, 15 area? You make mistake. So I take notes on every single one. I'm a good listener. Then I respond back to that 13, 14 point how I'm going to correct that. They kind of build that in a long term trust with the customer and delight the customer. That's most important.
- [18:26]
Jim Cramer
Now early on your voice really moved to a different drummer. You understood hardware. Everyone was going software but you went hardware. Now that's very iconoclastic. How did you know to go hardware?
- [18:42]
Lip-Bu Tan
Yeah, it's very interesting. I still remember 20 years ago, semiconductor is not popular at all. I went to some of the tier one venture firm I talking about semiconductor. Then half of the team partner left. They only left with two person kind of sympathetic to listen to me. And by the way, do you have any software service company? And so in a way it's kind of being a contrarillion. That's why you know, I formed Warden International. Warden is a thorough book about being a quadrillion. That's why I learned that I decided to commit to the semiconductor. And I still remember some of the investors at El Valle pool named me one semiconductor that over one trillion. And that time, you know, Jensen is not $1 trillion yet. And so it's kind of happy to see Jensen, my good friend is 5.7 trillion market cap and the most valuable company. And so in some way I kind of happy to see the semiconductor come back in cycle and become hot industry again. And that time I was thought that, you know, I talked to some of the customer all this application without the semiconductor you had to shut off some of the apps. And so semiconductor is critical now people realize the supply chain, the memory, the CPU and all these are in big shortage. And that's why I think it's delighted to see semiconductor starting to rise up again.
- [20:10]
Jim Cramer
Well, Jensen is adamant that you saw AI coming before everyone, before ChatGPT. How did you know it was going to happen?
- [20:21]
Lip-Bu Tan
Yeah, so I think it's just by accident. And a lot of good friend of mine in the industry mentioned about the Internet and the next thing is the AI and AI is not new actually it's more because of the data become massively available and then AI, you can really drive better application and drive efficiency. And now they're moving to the next stage is agentic AI is all the agent doing the work for you so that you are not just doing the search. Now you can do things and predict things and then anticipate what will happen. So that will be more application. The next frontier going to be the physical AI. And that means that you're going to mean a lot of agents, a lot of digital worker. And this is changing the whole application. And that's what I think is very exciting for me. Sometime in life you want to have some breaks. The big break is the CPU becomes sexy again and everybody asking for more CPU for reinforced training and for managing all the agent. And that's why the big shortage of the CPU now.
- [21:31]
Jim Cramer
All right, well, we're going to talk about that shortage, what it means for shareholders in a moment. This is Lip Bhutan. He's the CEO and the amazing turnaround he engineered at tell. Coming up, Cramer's digging deeper into the comeback at intel and how the company can continue its rise with CEO Lip Bhutan. Next,
- [21:55]
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- [22:23]
Jim Cramer
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- [22:48]
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- [23:24]
Jim Cramer
Can intel keep flying after its remarkable 400% run over the past 12 months? Before the break, you saw the first part of my sit down with Lip Bhutan, the turnaround artist CEO of Intel who's orchestrated this incredible comeback. Here's part two of our discussion. So, Lip Boo, let's talk about intel today. I had always thought of intel as a company that puts PCs together. You know, the key part of PC and I know PCs aren't doing that well, but that's really not the story anymore. It is the agentix that you mentioned earlier. Can you explain how much of a data center was say what you were doing versus the GPUs of Jensen and how that's changing the mix is going your way?
- [24:05]
Lip-Bu Tan
Yeah, so a couple of things. First of all our main business is a PC client that you know very well the intel insight. And so I think clearly that part is still very important for us. And in fact agentic AI is more move into the edge and on promise on the laptop and PC. So that play really strong to me. And we have a big lion's share of that. And then the other party we just announced the Penta Lake and that's something that is really designed well and the power in terms of the PC can last longer hours and the performance very well. At CES we launched that and then we have 200 design win and so it's really good product. We're catching up and actually better products now. And the next we move on is the data center and AI and the data center right now we in the past we make a lot of mistake and now we correct that mistake and we simplify the roadmap. By the way, from day one I came on board as a CEO, I have all the engineering report to me. So in a way I understanding here the customer where are the mistakes of the previous CEO? No and so in a way, you know, they have too many silo, too many people leader reporting and even though come to the CEO, but they are not paying attention to it. So I decided the best thing is to really understanding where the problem is so that I can focus on the engineering, how to redesign, simplify the product and then get the real killer product come out.
- [25:37]
Jim Cramer
Is that why Google has chosen you as a critical partner?
- [25:40]
Lip-Bu Tan
Yes. And then Google is a very important is a winner. I always have the belief work with the winner and then so it's really supporting the winner to be even more successful and be partnered with them. That's my trademark. I Always want to delight the customer. I pick customer partners so that we can work. And helping us and helping them to be successful is a win win situation on that. So some humility and listening is very important skill to have as a leader. And then the other part on back to the data center is something that we used to have a leadership in that and over the years we lost it. And then we make some big mistake like multi threading and we lost it. And so I try now how to bring that back, bring the talent back and refocus. A product like CORA Rapid will be the multi threading and will come out very strong. So I think we are working on that. And the other part is very beneficial for me is I have the advanced packaging and also the foundry that we can bring that together.
- [26:42]
Jim Cramer
I want to talk about advanced packaging was your bailiwick. That was not really a factor for Intel. But on your last call, your excellent CFO Mr. Zinsser he was talking about how it's going to be. It could be billions, it was supposed to be hundreds of millions. This was shocking to people.
- [26:58]
Lip-Bu Tan
Yes. And in fact you know our technology is called emipt. This is the next generation of advanced packaging and that we have the really the best technology. And now we try to make sure that we can bring it into a volume production with reliable yield so the customer can count on us. And in fact the customer couple of customer even prepay some of the subscript for me. And because right now subscript has become a very tight supply chain. So I need to put money to secure the memory this material. And then right now the customer support me to pay some of the advance. That means show the commitment to me. So that means that it's very exciting. And also I think the cowards and then the technology and the capacity they run out capacity. So in a way we become a unique position to support that. And I think that's something that we are very excited.
- [27:56]
Jim Cramer
Great forward thinking. Now let's talk foundry. This is something I'm concerned about. You've got the balance sheet in the right place, but this is very expensive business and will you have customers beside yourself? So I know that's important for the supply chain in the United States.
- [28:11]
Lip-Bu Tan
Yeah, I think the foundry is very important actually it's one of the key national treasure because 90 plus percent of the most advanced processor is manufacturing outside the country. So I think it's important to bring some of them back. And then when I took over the 18A the yield is not good and I had to ask some of the ecosystem partner to help me to look at the data. How to improve the industry standard. The best practice Is to see 7 or 8% yield improvement per month. And now I'm seeing it. And then the other part is supposed to be at the yield performance defect density at the end of the year to see that particular target. And now I was so happy. Now I see that before even the end of the year. So that is a very big encouragement for me. And also that's why Panta Lake we can ship in volume now and then. Now some of the customers starting to knock on my door. He said, lipu, now we hear that you are making great progress. Can you also open up for outside customer to do that? That's what you want and that is very exciting.
- [29:18]
Jim Cramer
But the old intel the yield was. They almost threw away nothing. Maybe the first couple of months. But people have realized yield is your specialty too. That's how you get the gross margins up.
- [29:29]
Lip-Bu Tan
It's a lot of hard work, It's a lot of teamwork, a lot of talents. I brought on board to help. And then the other part is also very important. In order to serve outside customer, you need to have the right IP to support them. And so like for example, if you are in the mobile related products, you need to have the low power ip. Without that you cannot serve them. So it's a service business. You need to build the trust with the customer. You have all the right ip, you have all the right yield and defects, intensity and cycle time. So that this is a lot of responsibility. If they can count on the revenue depend on your waiver. You got to have that yield performance. It's a big commitment from us to serve them. So something that I take it very serious. I want to build the trust with the customer. And good news, some of the customer, they know me from Cadence day so they know they can trust me. And I work really hard to meet that. And then the other part, the Most advanced is 14A. This is 1.4 nanometer. This is the most advanced. And then to be Candid with you, 2028 we will have wrist production. 2029 will be volume production. It will be the same time as tsmc. So that is a major, major breakthrough. And so I'm excited. And we already have multiple customer engaged with us. We have 0.5 PDK available.
- [30:54]
Jim Cramer
I did not know this. Yes, I did not know that you have multiple customers.
- [30:58]
Lip-Bu Tan
All set with us.
- [31:01]
Jim Cramer
Well, this is good. I know you are great friends with Taiwan Semi with the billion people who run it. But I do. Do you think the government is right to be able to be concerned and have a supply chain in the United States just because of all the stuff they were talking about last week in China and Taiwan and Taiwan's independence? It's a very convoluted situation. So you share the idea that United States should be making things here.
- [31:26]
Lip-Bu Tan
Yes. And in fact I was very glad for President Trump and Harper Duckneck, Commerce Secretary, understanding the strategic importance for the United States to have that. And they approached me and support me. That is valuable to me. And then because this is an infrastructure buildup and it's so critical for the country to have the technology, R and D development, manufacturing in United States. And that's why the main reason I came back in as a US Citizen to do this, calling to do that and we're looking forward to serve them.
- [32:03]
Jim Cramer
Now, do you keep the President up on how things are going?
- [32:06]
Lip-Bu Tan
Yes, you do? From time to time I update President Trump and also Howard Lapnik and now they are big supporter of me and so we are delighted to have them now.
- [32:18]
Jim Cramer
The last quarter was quite a surprise because I think a lot of people don't realize all the things that are coming together now. You did say though you made it very clear that you expect double digit decline in PCs. Can things happen fast enough in foundry, in data center that we won't. That we'll be able to overlook that decline?
- [32:38]
Lip-Bu Tan
Yeah, good question. So right now, as I mentioned earlier, CPU is highly demanded, right? And that's a good part for me. I cannot even ship enough to this customer. And in fact used to be CPU to GPU ratio for training is 1 to 8. And now because of the inference and the genetic AI and then and more agent that you have to manage orchestration and reinforce learning CPU actually better so that become one to four and one to one and maybe some people even talk about four to one. And so that's a huge opportunity for me to really drive the CPU requirement. And the other part, we also have the AI strategy coming up. We have a commitment partnership with Sampanova that I was earlier investor and then now we are going together with the XPU from Intel and the support Sampanova data dataflow architecture actually is driving better performance and lower power that is critical. So in that way we can support the customer.
- [33:45]
Jim Cramer
Do you have enough CPUs? Are you possibly able to meet all that demand? Because that would be monstrous how big that would be for you. You have it?
- [33:54]
Lip-Bu Tan
No, actually you have to take step because overnight give you one example I have one customer said that Lippo will give you the forecast for this year but we want to increase three times and I say I can't do it overnight. Give me a few quarters, I will catch up. So I think in a way this demand is not the short term, it's the next couple of years. Now that's great opportunity.
- [34:17]
Jim Cramer
You mentioned every. I know everybody likes you and I presume I know that it's difficult to talk about Apple but I presume that you have a terrific relationship with them too and they need you.
- [34:27]
Lip-Bu Tan
Yeah. First of all in my personal this policy I don't disclose about customers.
- [34:34]
Jim Cramer
Understood.
- [34:35]
Lip-Bu Tan
And then but you can draw the line. You know, look at the customer from intel day, from Cadence Day. You know some of them they trust me, they want to work with me. And I think the other part is you know this is a journey and I back to my point where to build the yield up the defect density up and over time the IP will be ready so that we can serve some of these customer. So we are delighted. I think the best indication when you see I increase my capex I putting money to buy equipment that may not I have real customer. That's a discipline I have.
- [35:11]
Jim Cramer
I do want to touch on one thing because I know people hear your success but I know you're humble and one of the reasons I think you're humble is because a sport you played it might surprise people because you were very good at it.
- [35:23]
Lip-Bu Tan
So at high school and college I play basketball team and in fact a period of time I am a captain and I play power forward. Power forward, power forward. And so in Asia I consider tall. So I play power forward sometime I play center and as you know when I took over in the high school you know some of the team that I won we are kind of last in the last in the rank. And then when I finish high school and go to college we are number one and then so it's a culture of team. You build the team. You know I'm good at the under the net and but I need the three pointer shooter. So I had to find the partners that I can work together and we work together as a team. You can pass the ball without even look at it. So you know your player going to be there to receive the ball.
- [36:15]
Jim Cramer
So you're Steph Curry?
- [36:17]
Lip-Bu Tan
Yeah, he's my big fan and I'm a big fan of him. And so how he changed the game. And I'm a warrior big fan. And so in some way I play sport. So I recruit all the key talent, I think you noticed last few months I recruit some of the real good leader. And now by end of June, I will have my team, I can consider my team so that we can work on the next five years, 10 years, how to become a different company. And I call it the New Intel. A new culture is almost like work on the speed of light and then work on the team that we can really kind of progress forward. So it's a journey, so it's a beginning. And that will take time to do that.
- [37:01]
Jim Cramer
Well, I think people now understand how this Stock went from 20 to 100 and more and it's just going to keep going. And I want to thank you, Lip Wu Tan, intel CEO, for your time and best of luck to you, sir.
- [37:13]
Lip-Bu Tan
Thank you so much.
- [37:16]
Jim Cramer
Coming up with maybe less than a month to lift off of Space X's ipo, Kramer zeroing in on when it could be joining the major indexes next, I keep telling you that my biggest worry in this market has nothing to do with the war or the stubbornly high price of oil. It's got everything to do with the wave of mega IPOs on the horizon. Specifically SpaceX, Anthropic and OpenAI. Nothing crushes a market like a flood of new supply. And any one of these would be multiple times larger than the biggest IPOs in history. Late last week we learned that anthropic's raising another $30 billion from the private markets at a $900 billion valuation, more than double the price tag from the last fundraise in February. It's now even bigger than OpenAI, which raised 122 billion in March at an $852 billion valuation. One of the biggest developments here coming from SpaceX, where we're hearing chatter that the IPO might price as soon as June 11 and begin trading the next day. With the company planning to raise 70 to 80 billion dollars at perhaps a 2 trillion dollar valuation. That's one of the largest companies on earth instantly. That's less than four weeks away, people. So in the spirit of preparing you for the SpaceX deal and the mega IPOs to follow, I want to talk about one particular aspect of these offerings. See, these companies are aiming to join the major indices practically right out of the gate. This is very different. We've never seen anything like this before. It's kind of jarring and for better or worse, it could have a major impact on the market and you need to know about it. Keep in mind the major equity indices like The S&P 500, the Dow Jones Industrial Average, the Nasdaq Composite or the NASDAQ 100 are all governed by somebody, either S and P Global for the Dow and the S and P or Nasdaq. And they all have rules for what types of stocks are eligible for inclusion. For example, if you want to join the S and P, your stock needs to be publicly traded for at least 12 months. Historically, that was standard practice for all the majors. I use the past tense there because at the beginning of May, Nasdaq adopted new rules to speed up the addition of newly public companies to the NASDAQ 100. Technically, they made a few changes. Most importantly, they created a fast entry pathway for the largest new listings on the seventh trading day. That's right, the seventh trading day after an IPO. If its market cap ranks within the top 40 of the current index and meets certain liquidity requirements, then the stock can join the NASDAQ 100 very quickly. Right now, the 40th largest company in the NASDAQ 100 is Marriott, with a 93 billion dollar market cap. SpaceX and Anthropic and OpenAI will easily clear that threshold. And they'll have no trouble with the liquidity requirement either. Finally, there used to be a blanket minimum float requirement of if less than 10% of your shares actually traded, you were barred from the NASDAQ 100. They're now doing away with that requirement. Although companies with low floats will have their weightings adjusted within the index, the new rule is that for weighting purposes, a low flow company market cap will be capped at three times the float. So if SpaceX comes public and gets fast tracked, it could quickly join the NASDAQ 100. But if only 5 or 10% of its shares get sold in the IPO, then the market cap used for its weighting within the index might be 15 or 30% of its actual market capitalization. As the lockup on insider selling expires, its weighting will that within the index will increase. Why are they doing this? Well, if you ask Nasdaq, they say they're just adjusting the fact that companies stay private for longer these days. But the more cynical view is that they're trying to win business from the New York Stock Exchange. And hey, they got SpaceX, didn't they? What does this mean for the broader stock market? Assuming SpaceX begins trading on June 12th as predicted, then we'll likely learn that it passes the NASDAQ 100 test around June 22, at which point there will be a tremendous amount of force buy from index funds that passively mirror this index. There's a $1.4 trillion of exposure to the NASDAQ 100 through various ETFs, mutual funds, insurance products, structured notes and exchange traded derivatives. While the new rules on weighting limits for companies with low float will blunt the impact, it's still going to hit hard. Of course, everybody already knows about the rule changes, so I don't expect buyers will wait for the formal announcement. They'll come after this one as soon as it starts trad that comes on top of the massive retail demand that we're already expecting. Basically, these new rules mean that there'll be even more enthusiasm for SpaceX right out of the gate. Now I care more about discipline and enthusiasm, so call me concerned about this extra stoking. It's hard to say things will play out after that, but as SpaceX shares gradually become unlocked following the IPO, it will get a larger weighting in the NASDAQ 100 Cherokee is still more forced by Normally when the lockup on insider selling expires, it puts tremendous downward pressure on the stock, but it's paired with forced buying for the NASDAQ 100 index funds. Maybe that acts as a counterbalance to the selling pressure from insiders who are eager to ring the register. Now some doom sharers are arguing this could get real ugly for home gamers. They expect insiders to get out as fast as they can, leaving John Q. Public holding the bag. Now I'm not so sure it's going to play out that way, but legitimate possibility. At the same time, the keepers of the other major indices, including S and P Global, are reportedly considering making similar changes. Last month S and P Dow Jones said they're thinking about reducing the wall period, the wait period from 12 months to six months, which is a big deal, but at least we don't have to deal with it immediately. 12 to 6. Okay, I can deal with that. So as these mega IPOs start hitting the market, we're going to have to get comfortable with the fact that these deals are unlike anything we've ever seen. People, we are charted, we are in uncharted territory and it is disconcerting. But the bottom line? With SpaceX coming public next month and likely joining the NASDAQ 100 a few weeks later, that's yet another reason to expect the stock to soar early one and that does make me nervous. I think over enthusiastic early buyers could end up getting burned if they pay up in the aftermarket. But like it or not, these deals are coming and they're likely to change the character of the entire stock market while we're focusing on them. Likely not for the better because the money to get a piece of SpaceX will mostly come right out of other stocks. So prepare yourself. Things can get real turbulent as these deals come to fruition like no other. That money's back there for Christ. Coming up, you've got questions. Kramer's got the answers. Get charged up for a fast fire lightning round. Next, It is time to talk about light browns ahead of time. I step first to preferences, why you blend in sound and then the lighting round is over. Are you ready? Ski, dad, tumble, rhyme, cribs, money. Let's go with Willie in Texas. Willie single, Kramer, Buenos Aires from the Texas.
- [44:35]
Lip-Bu Tan
Big Ben.
- [44:37]
Jim Cramer
Good to have you. Good here. Afternoon man. What's happening? I'm a first time caller but a longtime viewer going back to Kudlow and Kramer. Holy cow, that does date us both. So what's happening? And I'm also a natural gas royalty owner which brings me to my stock usac. I think that's real. I think that's real. Now it did hit a 52 week high day but I think that's a pin of just another nice one to have. And it won't go down as much as the others because it's got that good yield. I think you got horse sense. Let's go to Spencer, New York. Spencer. Hey Jim, thank you for taking my call. Of course. What's going on? The company I'm calling about is arguably the most indispensable choke point in advanced semiconductor manufacturing. However, its stock which has performed very well overall has not made a parabolic move the way Micron in video and AMD have. Do you think there's potential for TSMC to skyrocket? Especially given the news of a potential collaboration? Well, my take is that it might not necessarily skyrocket, but I think the world of it. I think it's going to go higher I to everybody. But I speak to LIPU or I speak to anyone out there or you know, Jensen. Everyone's just nothing but great things. And the more I look at it, the more I like it. Carter in Tennessee. Carter. Jim, what do you think about Devon Energy? Devon's a buy, plain and simple. It's exactly what you should be buying right here because they have tremendous natural gas and that's what we're great at. Let's go to Greg in Maryland. Greg. Hi Jim. I'd like your opinion on ST Micro Electronics. We are late. We are late. We are late 51 times earnings does not make it for me even if you. It's a good company. Let's go to Ron in California. Ron. Hey, Jim. How you doing today? I am doing well. How about you, Ron? Very good, thanks. First, a big thank you for Vertiv and Sterling infrastructure that paid for a house remodel. Oh, man, that's great. Those were. Those were good ones. Let's keep it up. What's going on? Okay, so for today, this is a fairly new public company. It serves the infrastructure to the power industry. Revenues up 66% year over year, double the gross profit. Backlog is up almost twice from the previous year to 88 million, I believe. Okay. Company is Solve Energy. Yes, that is again. Well, we've got some really good ones tonight. That's a great niche company and I salute you for bringing it to our attention. And that, ladies and gentlemen, conclusion of the Lightning Round. The Lightning Round is sponsored by Charles Schwab. I like to say there's always a bull market somewhere and I promise to try to find it just for you right here on Man Money. I'm Jim Cramer. See you next time.
- [47:34]
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