← Mad Money w/ Jim Cramer
Mad Money w/ Jim Cramer
Mad Money w/ Jim Cramer 6/1/26
00:44:17
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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that fits their needs. And listeners of this show will get
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a $75 sponsored job credit to help get your job the premium status it deserves. Indeed.com podcast terms and conditions apply. Hiring do it the Right Way with Indeed. 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. I'll be with friends. Hey, I'm just trying to make a couple of bucks here. My job, not just entertain, but to educate, to teach you. So call me 1-800-73-CBC. Tweet me at Jim Cramer. Look, I get it. The bull case on the data center has always seemed too good to be true. So many companies spending hundreds of billions of dollars sounds like something right out of the.com period. It's very easy to assume that there's no way these expenditures are going to make any sense in and the only real winner is going to be in video because they make the chips come on. That's the rap in a nutshell. You know that. And when Iran isn't dominating the headlines is what we tend to fall back on. Today was the day when the Iranians broke off talks claiming the US Government is dragging its feet in the talks to end the war. Yet somehow the average is still caught their way back. Yes. Dow advancing 46 points as a beginning point to 6%. Nasdaq climbing 0.42%. Why? I'm explaining this very carefully because this session, perhaps more than any of late, showcased the possibilities of the data center as a truly broad, legitimate investment thing. And it did so in a way that made people feel that the so called fourth Industrial Revolution might be less boom let me boom bust than we thought. See, the railroad boom changed the world. But the railroads, well, they busted. They practically bankrupted the darn country. While we kept using trains. The initial investors in those trains did get obliterated. What triggered the newfound optimism in this insanely positive tech session made me feel like it's not going to be boom bust. It was a hugely important keynote speech by Nvidia's Jensen Huang at the Computex festival in Taiwan. He had so many insights, but let me distill the winners and the losers so you don't have to waste your time. Although I have to tell you I enjoyed the speech so much and I didn't feel it was it. I thought it was time well spent. The discussion started with the power of the Vera Rubin, which is Nvidia's latest supercomputing architect for the data center shipping and scale. Then he pivoted to talk about how their new product, this revolutionary new product where they'll have millions ready in the fall. It's the RTX Spark super chip. That's an ARM based product for this PC. It works best with the air agents that Jensen sees proliferating all over the place. This is a CPU combined with a GPU in a single package. The CPU category is currently based on AMD and intel. It's an 86 base tech and Jensen said those are just they're designed for personal computers but they're not good enough for AI agents. His are that of course and club name ARM holdings higher while intel and AMD got hit. Then he talked about how he's lowering the price of compute drastically so his partners will make more money. The initial winners will be the data center builders with Oracle, Nubius and Core Wave getting a nice shout out and then users which will be like the sovereign funds from Indonesia, India and then as well as Microsoft, OpenAI, Anthropic and Space X. I saw that Amazon now but were pointedly absent among the among the winners. That's right. Although Jensen did mention that Output uses some of their most advanced products and Alpha by the way announced after the close it's going to raise an astounding $80 billion in equity with Berkshire Hathaway agreeing to buy $10 billion of that in a private placement deal. Amazon stocks down along with that. By the way, gents is not mentioning much about Amazon and Alphabet is important because they have their own lines of chips which Jensen continues to challenge but neither feels the need to defend itself. That's a debate I thrust myself into saying that you need to be in all three companies because the opportunity is so great. That's right. I'm not saying either or I like them. All the rest of this trivia talk had to do with all the amazing things that people be able to do with this technology. And now the personal computers using his ARM based superchips will become far more powerful and creative than those based on the old architecture. And that's why Nvidia stock rallied 6% today and Microsoft, who they're working with on this, gained 2%. It was incredibly heartening at a time when we're getting very suspicious of the data center as a concept, let alone a profit center. Until this keynote, I was getting the feeling that the bubble contingent had lately had the upper hand. They talked endlessly about the waste of the data center build out, the lack of power, the desperation, the ruination of the area, the destruction of jobs. I think the endless talk from Jensen at Computex that compute is money, that compute will give you a big return and then we all know that it's going to be a big run for many companies is truly a tide turner. It just felt right. Can they deal with the community problems? The end of the day, these are companies with incredibly deep pockets. It's not hard for them to buy off the communities that will be affected. Well, there are more, maybe much more about the economics of it all as anthropic just filed to go public today. They're not seen as a marquee client for Nvidia. They have a $14 billion investment from Amazon. And Amazon's chips are crucially anthropic. But when Jensen put up a list of key clients, there they were along with OpenAI and Space X. As important as those three are, Jensen spent more time talking about sovereign AI mentioning countries like Indonesia and India as important clients. I got the sense that as big as Alphabet and Amazon might be as clients, they their endless attempts to present themselves as friends when they're also competitors starting to wear thin with everybody. But there are plenty of other customers, so I am not as concerned because you know that it is a big position. But trust, how about the actual business for other companies? This is where the fourth industrial revolution comes in. Cor we've Nebus and Iran got mentioned as the companies that do the building and they're worth a great deal of money according to Jensen. Hp, by the way, was a great number after the close. Dell obviously, he says those are terrific. The companies that bring the power and the companies that create the power didn't get much of a nod that's okay every day something new happens like Caterpillar deal I told you about where the money managers stringing up turbines and holding them into that gas area right in there and then pumping it right into the machines it's a big business and CAT just told you today that can plug turbines in nearly and nearby natural gas reservoirs generate plenty of electricity more revelations Jensen said he didn't want to destroy software allowing almost every software stock to soar higher it was an unprecedented software jail just last week this group was left for dead now many are up 30% on nothing but what may be a short squeeze Salesforce service now incredible perhaps the most shocking news came out of that came out of Taipei with the new alignments is in the PC world for today I widely it was widely perceived that intel and Nvidia might be doing it all any and all strategy I mean maybe with intel maybe AMD all partners together in PC Jensen doesn't think that it's going to work that well with the agents that these machines are meant for he'll be making his own CPUs ones that work well with Microsoft that's ARM based show that Jensen heard the cat calls knows that they have to run better and ARM is going to help him do it. I got to be honest I've been getting a little leery of all the Nvidia announcements that never seem to move the needle. I was heartsick at that botch rebalancing from some unknown index with on Friday afternoon they sent the stock down six points in just a few minutes. At the close the largest company Earth goes down six points in a few minutes. These index deals have to take place when there are still buybacks working. Buybacks stop at 3:50pm that rule needs to change and I've got to tell you I think there were some real shenanigans that should be investigated. What happened last Friday was just wrong. But the bottom line this time Nvidia truly delivered just when you least expect it. There's a reason I told you to keep an eye on this computer Conference video is going to break out now I think as its dominance reasserts itself and the investors realize that somehow it's now the least expensive stock in the entire group. Let's take calls. Michael New Jersey Michael. Hello Mr. Kramer. Booyah. Booyah. What's up? Hey.
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Now tell me your thoughts on bank of America under Mr. Brian Moynihan's leadership
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11 times earnings which means I don't know frankly there's something that's not that great happening there. But then again, Wells, which you own for the child press, is all 11 times earnings. These now are the cheapest stocks in the market, so someone must think they're just value chaps. I got to speak the back burner to find out what that is going on. All right now this is why I told you to watch the Computex conference. It's yet more proof that Nvidia will keep delivering and it will matter. It finally started mattering today and I think it's just beginning. Although we got that big Google deal we got to deal with. FedEx Freight officially began trading today. Highly anticipated spin off. I'm sitting sitting down with the new company's CEO. Find out what's more what's going to happen with that one. Then there's a lot of questions surrounding SpaceX's IPO, including how the heck it's going to actually work. I'm digging into unique lockup details so you can do your homework before investing. And the AI boom has led to pin action in some sorts of unexpected places, including Nokia. I'm taking a closer look at why this cell phone plan has suddenly become an AI darling. So 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@empower.com not an empower client, paid or sponsored. Geigo presents a 30 second podcast between your podcast Today's story is shared by one of our listeners. It's called Betrayed by Bill. It was in that moment I caught who was staring back at me in betrayal or more like what, my insurance bill. With trembling hands, I grabbed my phone and switched to geico, saving about $900 in the process and never to be betrayed again. Now that was bloody rive. It feels good when the story ends with savings. It feels good to Geico it's smart
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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 at discover.com/credit card.
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Today the long awaited breakup of FedEx finally arrived as FedEx Freight, their former less than truckload business began regular way trading on the New York Stock Exchange. That's under the ticker. Write this down. FDX F I've said repeatedly that I like this move for FedEx, one of the newest positions in my charitable trust. But what do we do with the spin off the largest less than truckload that's called ltl carrier in North America? Now we've spent years mired in a prolonged freight recession but in recent months the whole group's been making a nice move higher. So for FedEx shareholders who now find themselves holding some FedEx rate, what do you do with it? Let's take our question straight to the source. That's John Smith, the President CEO of FedEx Freight so we can get a better read on the situation. Mr. Congrats on the new gig and welcome to Man Body.
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Well thanks for having me on the show, Jim.
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Well, I'm so glad you're here John. First, maybe you can tell us what it means to be unlocked. I you know we think the world of FedEx. I know everyone does. But it's also good if you're going to run an independent company to be free of FedEx. So what do you see happening?
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Well, absolutely. And being part of a $90 billion company near about 9 billion of that. You know there are certain things that get prioritized before the 9 billion and the things that we are going to be able to control now, especially from a capital and investment perspective, be able to put it dollars into the LTL company that are LTL specific and that's going to get us back on and help us leapfrog the competitors out there in the LTL market. So we're super excited about being independent now.
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There are some good companies. There's Old Dominion has really good margins and you've got a couple of companies that are scrappy that we know about. What should we be looking at to be able to measure your performance against say a JB Hunter against some of the other companies that like an ArcBest that we've all looked at.
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B
Yeah, that's a great point. In this industry, the LTL industry is a strong industry. And that's one of the reasons that, you know, from a value perspective, why we did spin this company off to be independent so that we can unlock that value. We, you know, we always watch our competitors, we respect our competitors, but we feel like that we have advantages, especially from a network perspective when we're the largest by far and the fastest, as well as the most reliable. So when you think about what we're spinning out with in that iconic FedEx name, we are really excited becoming independent.
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And I don't know, I think as someone who's used truckers to have priority versus economy. Economy when I'm not doing that well, frankly, priority when I am doing well, it's a great opportunity and a great. I think that something the other guys don't have.
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Absolutely. And it's a differentiator because it gives the customer choice. And we have several customers that use both, some that use all priority, some use economy. But a great example, we've got customers that ship from B2B warehouse to warehouse and use economy because they can plan further ahead. But we've also that same customer will ship priority because when they go to their customer from the warehouse, they want that speed that we give them and that reliability. So we've got customers that use both, some that use only priority, some that use economy. So it does give them a great choice.
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Okay, so what do you think we should be looking at as shareholders? Margin improvement, debt pay down, customer growth, new vertical success, whatever those are, some of that I've been focused on to be able to keep track of your progress.
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B
I think all the above. And when you think about back in 2009 when we integrated all the back offices and the sales team into the enterprise, we basically just run it. Been running this company as an operation. And so now we have, we're getting back control. We've hired an LTL salesforce, we have improving our customer, facing technology, all those things that we're doing that we know the website used to take five clicks to get to the freight website within the enterprise and now it's one and it's a lot more useful than it was in the past. So all those things that are going to level the playing field and also allow us to leapfrog, we've been working on those very hard for the year. Now we've got several things left to pull leverage out of this company to do and that's why, you know, over the next three years we laid out a plan to be at a certain point in 2029 with a 15% margin. However, that's not the ceiling. And you know, we've got a lot of work to do to get off the TSAs, the transitional service agreements and some of the technology that we need to build to really truly update our systems.
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Now there were some other things I read that would tell me that you're, that it wouldn't work unless you made changes. The dashboard they have where you would have customers and they would be seeing FedEx stuff and FedEx Freight. They don't need to see FedEx anymore. Obviously you've got to change their technology.
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Yeah, not only that, but when you we built a ton of new technology, but when your partial business is 80 billion of the 90, most of that technology spend is going to be in and rightfully so.
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Right.
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And so what we try to do with ltl company is try to work that technology in there. And we just basically made it more complicated. And that's what we're doing right now. We're, you know, we're untangling that plus we're leapfrogging because we're building two new platform type technology that's going to give us the ability to utilize AI and machine learning right.
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Now I know in all of your publications of course you always start with safety first, which is the way it has to be. And I was curious to know whether you thought that self driving trucks are safe because that maybe some people say that's the future. Can't find as many drivers like other people just say listen, drivers get tired but the machines don't. I'm trying to figure out whether you think they're safe.
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Well, when you think about the two types of drivers in the LTL business, you have a pickup and delivery driver that will never be replaced by an autonomous vehicle. The other the line haul. Right now we've been testing that technology at feco. We've been running retail business from Dallas to Houston and back Dallas to El Paso for the last couple of years. And I'm telling you Jim, that technology is there. We can leave that yard in Dallas and it navigates to the interstate, runs down to Houston, navigates to that facility. And 99.9% of the time drivers never touch one thing. Now that truck does have a safety driver in there. So what we're doing, we're looking at that. But what we like about the autonomous vehicle technology is the other safety technology that they had to develop in order to be autonomous. And we've got those all on our trucks now. So it's made our company drivers more safe.
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That's great. Now, also, you mentioned something I think people should recognize that I think is a huge advantage for you. There is. You said that people, the first kind of driver, someone who can drop off pickup, they are wearing the uniform, which I think we like to see. I think that we are kind of like, who's that guy? I don't want to. Who's that guy in my house? You know what I mean? So it's a big advantage for you.
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B
Yeah. And all our drivers have uniforms and you'll know it's a FedEx driver. And I tell you, when you think about our workforce, we've got the best in the industry. Our drivers have shown that when we compete in the National Truck Driving Championships. Just last year in 2025, we had more than 50% of the total winners just from freight. And of course, we have the 2025 National Grand Champion at freight.
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So I read that competition. I got to know more. They should be showing that. I should be following that more. Now. Profitable growth is. Your North Star said twice in the conference call. How do we measure what profitable growth is?
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B
Well, I think, you know, when we talk about where we're sitting today and where we're going to go to 2029 from an operating ratio, we want to be able to grow revenue and take market share, but we also want to improve our operating ratio every year. And so that margin is really important for us. And one of the ways that we feel really good about that is the verticals that we talked about that we have not been able to sell in due to the fact that we didn't.
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Yes, really important.
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Did not have a dedicated LTL sales force to do that. Plus, the way we're incenting our sales team is a little different than what we've done in the past. We're going to incent them on growth as well as increasing profit by the area that they're in control of. So, you know, you got to do both. You can't just grow. You got to. You got to grow profitably.
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A
Obviously, I'm where I want the company to perform no matter what the environment is. But you do have to deal with the fact things have gotten slightly better, as you said in your own handouts, but things aren't necessarily strong yet. How do you feel about the economy and FedEx freight?
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B
Well, with our strategy, we feel like that we can grow in a down economy. That's why I like and that's why we feel good about our short, medium and long term strategy. We have been watching the truckload market capacity has been going out there because a lot of the regulatory break, you know, downs that we're looking after, the illegal CDLs, illegal CDL schools, the cabotage out of Mexico, non domicile drivers, all of that has been taking capacity and normally that will transition to help the LTL business. When the truckload capacity is tight, that's when we get the bigger shipments into the LTL industry.
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Well, I can tell you after spending a long time since we met personally when, when you had your day, we decided for the trust that we're keeping, we think it's a great opportunity. We think that there's so many ways to rationalize, we think you guys are amazing operators and we want to have some leverage to a better economy. And I think that this can, that would be cherry on top, so to speak, from what you're doing.
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Absolutely.
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All right, thank you so much to John smith, presidency of FedEx Freight. We think this is a keeper. For those of you who bought FedEx with us, we like it. My specific thanks coming up, It's T minus two weeks until a potential SpaceX IPO. So Cramer's breaking down a key technical component of its arrival for the markets next. Never bet against American Grit or American Energy through innovation. Venture Global is not only building some of the largest energy facilities in the world right here in the United States, but delivering American energy at a fraction of the cost in a fraction of the time. So while others are busy talking, we're busy building. That's Venture Global. That's unstoppable energy.
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I've spent a lot of time talking about the upcoming SpaceX IPO, which is expected to start trading perhaps as soon as Friday of next week, now that anthropics also file to come public. So that today I want to stress that huge IPOs tend to weigh on the market because people need to sell something in order to participate in these deals. Remember, the stock market's like any other market. It's all hinges on supply demand. SpaceX represents a tremendous amount of supply, but thank heavens it will not hit all at once. And that's why tonight I want to walk you through this deal's incredibly complicated lockup lock up on insider selling. It's not being talked about enough. And when it is, the generalizations are mind numbing and wrong. We're going to clear that up right now. With almost every IPO there's some sort of lockup on insider selling. Typically, they're barred from selling their shares for three to six months after the deal. When the lockup expires, those insiders tend to ring the register, at which point the stock gets hammered. But the underwriters can also choose to allow for early releases from IPO lockups. Often you'll see this if a stock roars higher right out of the gate. The specific conditions for early lockup releases are usually disclosed in the IPO prospectus, but the details tend to be buried. I don't know, say like 456 of a 500 page document. Which brings me back to the stock of SpaceX. Back in the day, in a typical IPO, you'd see something like 20% of a company's shares offered to the public. But in recent years, we started seeing a lot more of what I call sliver deals. When only 10% or even less of a company's shares get offered, Space X is looking like it will be the ultimate sliver deal. A lot of these specifics will be determined during the IPO roadshow next week. But according to Bloomberg, they're looking to raise as much as $75 billion at a valuation of 1.8 trillion. Which would mean the company's only planning to sell a little more than 4% of the share count in the first few weeks after the ipo. That relatively small batch of shares is what everyone's going to be fighting over. That's a big reason why expect Space X to soar, at least initially. You know, I've been talking about a $4 trillion price that would be high, higher than anybody else I've heard, but I'm just putting it out there. Then we get these lock up expirations, then it becomes a Different story. So let me walk you through the details because they're very complex. First, Battery CEO Elon Musk, not complex. He's locked up for a full year following the deal. No parole, no early release for good behavior. It's a nice gesture, even if he doesn't need the money today. In an updated IPO prospectus, we learned that several other major shareholders have also extended lockups too. All the way to July or August of next year. SpaceX says that the shares subject to extended lockup periods, including the shares held by Musk, represent more than 60% of the share count immediately prior to the IPO. I like that. After crunching numbers, that works out to be roughly 59.8% of the share count after the IPO. Really good news. However, aside from Musk, the shareholders agreed to this extended lockup period also have some automatic early releases, but even those don't begin till the first quarter of next year. Also good. Still, the fact that 60% of SpaceX shares are locked up until at least early 2027 should help prop up the stock. The investors who agreed to this extended lockup are tying themselves to the SpaceX mass, so to speak. They don't care if they can't get out immediately because they're making a long term bet. I really like this feature. It shows that there are some people willing to think past the next quarter or two. Aside from the 60% of the shares that are restricted for about a full year, the other insiders have a standard 180 day lockup period. Six months. That's right. But crucially, there are several automatic early releases from that 180 day lockup starting in the third quarter of this year that you must know about. First, within a day or two of when SpaceX reports its second quarter results, up to 20% of shares under the standard lockup will be released. That's a lot. I am not crazy about that. It's a big chunk of stock hitting the market somewhere in mid to late July or August and the market might not be ready for it. You might not be ready for it. And if the stock's up at least 30% from the IPO price at that point for at least five of the 10 trading days before the earnings report, then another 10% of the shares under the standard lockup will be released. I think that's very likely. After that, there are five different points occurring, 70, 90, 105, 120 and 135 days after the IPO date where an additional 7% of the shares under the standard lockup will be released. After Those lot, those five different events, 55 to 65% of the shares will be able to trade freely. Then, when SpaceX supports its third quarter in October or November, another 28% of shares under the standard lockup get released. Wow. By the time the 180 day lockup ends, we'll get one more chunk of stock and SpaceX will have roughly 40% of its shares count trading freely. Now, I know that's a lot. That's a ton to follow. I get that. So let me do this. Let me break it down a little. SpaceX float how much can trade feeling will go from 4% at the time of the IPO to more than 11 to 15% later this summer when the company reports its first quarter as a public entity. After that, it will steadily increase throughout the fall, reaching the mid 20% range by October and then the mid 30% range after the company's third quarter earnings report. After 180 days, the port will reach 40% of shares outstanding. That is the longer term lockups expire. That will rise to 100% by July or August of 2027. Now, there's one more layer of complexity. Remember how the NASDAQ changed those rules to allow Space X early entry into the NASDAQ 100? The weighting of the stock within the index will depend on the size of the float. When SpaceX comes public, it'll be weighed like a $225 billion company. Now that's much more than if you just multiply the price by the shares traditional market cap capitalization. But as the lockups gradually expire and SpaceX's fluid increases, so will its weight within the index. That means we'll see several smaller waves of buying from index funds to trade the NASDAQ 100, which could put pressure on the overall market each time. By the way, we just learned that we'll see something similar for the Russell 1000. And even the S&P 500 has started the process of changing its rules so that SpaceX could be added the index as early as December. I mentioned this alongside Space X's unorthodox lockup release schedule because we're looking at a scenario where there'll be countervailing forces acting on the stock. On the one hand, more shares being unlocked would normally put downward pressure on this stock in question. On the other hand, in this case, each incremental lockup lease also increases Space X's weighting some major equity indices, which will trigger more forced buying of the stock. And come December, when the first lockup is fully expire, then we could get another wave of buying as SpaceX gets out of the S&P 500. Keep in mind, each one of these waves may weigh down the rest of the market, especially the stocks that are expected to be bigger than Space X by that point. Now here I'm thinking in Video or Apple. I don't know how all these things will play out, nobody does. But they are major cross currents that you need to watch if you want a piece of this one. The bottom line, with a deal like SpaceX, where demand is off the charts, I think the specifics of the company's float will end up being a major factor in the stock's performance over its first three, six or even 12 months of trading. At least now you know what to keep your eyes on and we promise to help you along the way. I want to go to Chip in Mississippi, please. Chip. Jimmy, what's checking, partner? Not much. How about you, partner? What's going on with you?
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B
Oh, man, everything's great.
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A
But first, look, I gotta thank you. I gotta thank you. You got me into Nvidia Post split
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B
at about 16 bucks.
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A
I got somewhere between 15 and 20,000 shares now. I mean, I can afford the building my daughter lives in in Hell's K now.
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B
So thank you so much.
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You made a lot of money and I'm very proud that we've done that and I'm very proud that you held on. It's your money. You've done a great job. How can I help you again right now? You bet. You told me to keep buying as it went down. Listen, I've got some Exxon, I've got some Fang Diamondback I'm thinking about. I've been wanting to ask you, if
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B
these prices are maintaining $110 range in oil, would you suggest maybe selling half those positions and going into something like Bloom Energy?
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I actually like that idea very much. Now I know Bloom has moved up a lot, but I am a huge believer in Bloom because remember this is that non combustible fuel and a non combustible fuel. Obviously we're going to be less worried about the environmental damage. I think that situation makes a lot of sense and you should do it maybe even as soon as tomorrow. And thank you for the kind comments. That's exactly what we strive to do here. I think the specifics of the SpaceX float will be a major factor in the company's performance. Now you know what to pay attention to. Remember, 4 trillion is my target of what it could be. Much more made money ahead, including my deep dive in how Nokia became a huge AI infrastructure play that everybody loves. All of a sudden then Wall street spends a lot of time debating just how overvalued tech stocks have gotten. But are they really expensive at all? Oh, I got an idea. Contrarian take you won't listen, you want, you got to see. I mean frankly, took me a lot of time yesterday and calls rapid fire. Tonight's just the lighting raps this day with Kramer. All sorts of old tech companies have reinvented themselves thanks to the AI data center boom. Like everybody from Dell to Intel to Cisco to IBM, you need an immense amount of physical infrastructure to build out these warehouses full of servers. And that's breathing new life into some really long forgotten stocks. Take Nokia, a river in Finland that seemed to run dry nearly 20 years ago. Back in the pre smartphone days, Nokia, also the name of the company, dominated the cellular space. But once Apple and Android came along, people stopped thinking of as a growth company and it became more of a history lesson. One of the many companies that missed the smartphone revolution, this stock was written off and left four dead a long time ago. But in the last 12 months, Nokia's more than tripled because it's become an AI infrastructure story, a networking play. Data centers need networks that can move data around with speed, reliability and low latency. Nokia's hardware is what enables that. And that hasn't gone unnoticed by the heavy hitters in the industry. Last October, Nvidia announced a strategic partnership with none other than then Nokia to build commercial grade A radio access network. You probably missed it. I did. I didn't see it. Nobody also agreed to invest $1 billion in Nokia at $6.01 a share. The stock's now at $16 and change after surging nearly 10% today, which means Nvidia is already up roughly 170% in about a half a year. Pretty much all their public investments though have skyrocketed. Intel, Lumentum, Coherent, Core Weave, Navius, and now Nokia. So it's not necessarily. I mean they tend to go up even after the money came in. If Jensen Huang loves it, you know what? Good enough for me. But this is not just Nokia getting a check from Nvidia. It's an endorsement of Nokia's role in the AI ecosystem. From Nvidia, the new Nokia is about the infrastructure that lets data move closer to where it's needed. They enable what's known as edge AI, meaning they get compute closer to the device where it's being used instead of being sent all the way back to a distant cloud data center. A lot of future AI use cases won't tolerate delays. You need local compute, local networking and carrier grade reliability. That's what these AI radio access networks are all about. Nokia's technology helps integrate AI directly into the hardware and software of wireless telco networks. Basically they can make every cell tower into a distributed AI node. That's why Nvidia so eager to work with them. Now. You may not have noticed, but Nokia has been making this transformation for a while now. Last year they acquired Infinor for $2.3 billion giving them more scale and optical networking in the data center. That was a tremendous buy. It really turned things around. AI clusters are getting connected across buildings, campuses, regions and and eventually networks, optical systems and high speed data center interconnects are becoming a bigger part of the capex cycle. Nokia's now got more exposure to that. It's no longer just a telco equipment vendor waiting for carriers to spend on 5G or Neville 60 and that's what investors are waking up. That's what I thought it was doing. And Nokia's AI and cloud business has grown fast. In the first quarter of the year, Nokia said its AI and cloud net sales were up 49%. It also booked about 1 billion euros worth of AI and cloud orders. Now look, that's still a small part of the total company, but it's now the piece that everybody cares about because it shows Nokia has exposure to the fastest growing part of the infrastructure market. And the broader business is doing fine too. Last year Nokia generated about 19.9 billion euros in net sales, delivered 2 billion euros of comparable operating profit, 1.5 billion euros of free cash flow and made €29 cents per share. Now that is pretty good for a company that was left for dead nearly 20 years ago. There's also a new management angle here that I like. Last year Nokia brought in this fellow Justin Hodder as its new CEO. Before that he ran Intel's data center and AI group tells you exactly what kind of direction they want to go in. Now you can see that in the long term targets, Nokia has laid out a plan to grow annual comparable operating profit from 2 billion euros last year up to 2.7 billion to 3.2 billion euros range by 2028. It's also reorganized itself into two businesses, network infrastructure and mobile infrastructure. That's not the kind of spectacular growth we normally expect from the datacenter places. But for Nokia transformation, if the Company can grow its profits meaningfully while investors start viewing it as part of the infrastructure stack, then you better believe it's going to keep getting a higher price to earnings. Multiple rerating as we call it. Of course, we're a little late to the story and I don't like that the stock's up 151% year to date. I'm a little embarrassed by that. Nokia is no longer undiscovered. The stocks already got a big video halo. The semis roll over, this thing will get hit along with them. The stock's now tied to a sentiment. So from here Nokia has to deliver. Plus, the legacy telecom business is also still a very large part of the company. We know carrier spending can be choppy. 5G spending hasn't exactly been a straight line boom. If operators delay spending, Nokia will feel it. The story is exciting, but it doesn't erase the company's old cyclicality overnight. At the same time, these AI radio access networks are still early. Turning telecom networks into distributed AI compute platforms won't happen in one quarter, two or even three quarters. There will be trials, standard spending cycles, proof points and a lot of execution risk. The market's already starting to price in some of that future, but but the revenue will have to follow. Still, Nokia is now a player in the fourth industrial revolution. The first phase is about building giant AI factories. The second phase is about connecting. The third phase about pushing intelligence out into the real world use cases. Eventually the AI build out starts to look less like a cloud story and more like a full infrastructure story. And that's why Nokia is back in the conversation. Because the world moved toward the exact kind of infrastructure that Nokia still understands. The same DNA that once helped repel help carry phone calls and mobile data can now help carry AI traffic, edge inference and next generation telecom workloads. The boring stuff become valuable again. The network, the edge, the plumbing and Nokia at the table. What a break in. Thinner in the portfolio and an AI data center CEO in charge. And an AI and cloud business that's growing 49% with solid earnings growth projected. It's not crazy as the E stock deserves the higher multiples we get. Here's the bottom line. If you're willing to do the homework and stay on top of this one, you got my blessed. You put on a small position in Nokia, although you might want to wait for a pullback before you pull the trigger on anything, anything more than just a little bit. Because we're beginning to get overbought. In the end, I never want to bet against Shenzhen Wang but he did buy no get 6 bucks and now it's at 16 so you can afford to be patient here you might get a better lower chance man. Money's back after the coming up you've got questions. Kramer's got the answers. Get charged up for a fast fire lightning round Next. It is time for the white rail stock for and then the lightning round is over. Are you ready Ski? Dad Tom Lorraine comes to with Mark of New Jersey.
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Mark.
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Hey Jim, what's up man? First time caller Love the show and all that you do buddy. I appreciate that. Thank you so much. My question's on Zim integrated shipping service ticker Zim and what's your thoughts? Yeah I hadn't liked the shipping stocks but then all the stuff that that's come up with the war we recognize a little more valuable I thought 14% yield I would buy some let's go to Bruce in Washington. Bruce hi Jim. Mysteries very early on in development but Eagle Nuclear Energy owns this is 100% it's 100% spec. I don't know if it's really true or not. I would not necessarily bet my farm on that one. It's a spec let's go to Adam in Tennessee. Adam, I Jim, hey, this is stock has been around for a while. It's had a rough five years but the last three months it's running really hot. I want to know if you think it's going to keep running. The ticker is BB for BlackBerry. It's got some really interesting technology in the auto world and I've got to tell you I've been looking at it. I was going to do a piece on it kind of got away from me. I think it goes higher. Let's go to Rob in Georgia. Rob, Booyah from Professor Kramer. Booyah. What's happening? I'm from Atlanta, been a club member for years. Oh, thank you. Currently reading your books. Oh, thanks a lot. I'm trying to explain why why a stock goes up and down a whole book about how can I help? Yeah, well I have a position in a stock that was beating estimates each quarter until the last quarter which was terrible and they lowered guidance so should I hold for another quarter to think about it Buy or just sell it? Power Solutions psia. I tell you when you miss a quarter as badly as they did I gotta tell you I would cut my losses. I'm not kidding. It's gonna have to wait a full quarter before you ever want to buy that one again. Let's go To Joe in California. Joe.
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Hey, Jim.
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Good afternoon. Greetings from Huntington Beach. Thank you. Good to have you on the show. What's going on? Oh, it's great. Thank you. It's an honor. Hey, Jim, I wanted to ask you about D Wave. Where do you see it going from here? You know, this week we're going to see Quintinium come public. That's a Honeywell spin off. And I think that because that one's going to be red hot, your stock will go up a couple of bucks. It might be worth owning. And that, ladies and gentlemen, is the conclusion of the Lightning Round. The Lightning Round is sponsored by Charles Schwab. Coming up, it's no secret that tech stocks are dominating this market. But are they actually overvalued, as the naysayers claim? Kramer's countering next. Booyah. Jim Cramer.
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I'm a first time caller, a happy club member.
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I want to thank you for being the people's champion of investing. Thank you for helping me become a millionaire. We spend a huge amount of time around here pondering the supposed overvaluation of tech. It's right at the heart of what's allegedly wrong with the stock market. Right, but I challenge that on two different fronts. First, how expensive is tech really? Just consider Dell. One months ago, Dell was at $114 and there were plenty of firms thinking it was way too expensive because it was going to have a huge problem on its hands thanks to rising memory prices and a pesky super micro, a difficult, well connected competitor. Any generalist who was looking at the company certainly wasn't all that attracted to it. Dell was buying back a lot of stock. It seemed like a decent situation, except the intelligentsia kept coming on air and was busy telling everyone it was a gigantic bubble. Turns out this stock was selling for only eight times forward earnings, perhaps one of the cheapest 10 to 15% of stocks. And in the entire S&P 500. We just didn't know it yet because the company hadn't reported yet. We shouldn't have been scared of Dell. We should have been buying it. That $114 stock now trades at $465. Micron seemed ridiculously expensive on trailing earnings when 2025 began. The company earned just over $1 per share in fiscal 2024. 2024, and the stock was trading in the mid-80s. This is a commodity chip maker representing. Way too expensive. Now though, it looks like Micron is going to earn over $100 per share in fiscal 2027, which ends in August of next year. How could it only been traded $100 going into 2025? That's crazy. So only trading about 10 times earnings even as the stocks rally tenfold and trades at $1,035. Perhaps instead of talking about a bubble in tech we should be talking about how these stocks were way too cheap versus what they were really worth. None of the so called smart money was always so negative would ever do that. It's too embarrassing for them. Now let's talk about some legendary growth companies and what's happened to their stocks. There are three really high quality med tech companies. Abbott Labs, Boston Scientific or Medtronic. The price journeys multiple compression these stellar stocks is extraordinary. No one disputes the science of commercial smarts of Abbott. But it trades at just 16 times earnings now the stock was at 133 this week. Last year it's now at 87 and change. Boston Scientific was long held as the premium part device company. Stocks being cut in half in half and now sells for 14 times earnings. Medtronic reports this week it's down 23% for the year and yields almost 4% trades is just 13 times earnings. And all these stocks they. They just seem to fall in time. We've long bid up the prices of our best precision instrument companies in the science lab. These are companies that are loaded with technology, intellectual property property. But their stocks are now disliked. And given their actual growth rates perhaps they should be because they just can't compete with the datacenter place. Danaher once among the most revered companies in the entire market still trades at 21 times earnings but at these prices is clearly overvalued. Is only putting up 4 to 6% organic growth. Thermo Fisher trading at less than 20 times earnings but it has a 1% organic growth rate. Match was guided 3 to 4% later. GE Health Care is to be a 4% organic growth sells at 13 times earnings. Maybe too expensive. These once premium growth stocks are now selling at ever growing discounts to the broader market. What the heck is going on here? We focus so much on how tech may be a bubble. But Dell and Micron are at the heart of the data center. It turns out they were ridiculously undervalued on future earnings growth because the companies are making fortunes. On the other hand, the medtech industry in retrospect clearly overvalued. Yet I never heard a peep about that overvaluation. I know I can't convince people we're not in a bubble Terry territory but at least that maybe some of you but I think that's because most of us are looking at the situation all wrong. When you consider the financials of a company that works in data center cohort, you're going to see some very high organic growth. That market will pay up for growth. It always does, especially when it's being underestimated. When you focus on what used to have high growth and no longer has it, you realize that the overvaluation of an Abbott Labs a year ago was the real conundrum, not the supposed overvaluation of Dell when It was trading 106 a full $360 below today's closing price. I like to say this always more market summer. I promise I'd find it just for you right here. Mad Money I'm Jim Cramer and I'll see you tomorrow. All opinions expressed by Jim Cramer on this podcast are solely Kramer's opinions and do not reflect the opinions of CNBC or its parent company or affiliates, and may have been previously disseminated by Kramer on television, radio, Internet or another medium. You should not treat any opinion expressed by Kramer as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. Cramer'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 Support comes from
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