Mad Money w/ Jim Cramer 6/5/26

Summary

Mad Money w/ Jim Cramer – Episode Summary (6/5/26)

Overview

In this June 5, 2026 episode of “Mad Money,” Jim Cramer tackles one of Wall Street’s most turbulent days of the year, marked by a major market sell-off and worries surrounding mega IPOs, persistent high interest rates, and consumer headwinds. Cramer navigates listeners through today's pitfalls, seizing the opportunity to discuss market supply, sector rotations, Apple’s unique strength amid tech’s struggles, challenges in packaged food and athleisure retail, index composition changes due to IPOs like SpaceX, and the key lesson of portfolio diversification. The episode features Cramer’s call-in “Lightning Round” and an in-depth interview with AstraZeneca CEO Sir Pascal Soriot.

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Key Discussion Points & Insights

1. Market Sell-Off and Mega IPO Supply

• Cramer’s Opening Take (02:00-06:00)

  • Yesterday, Cramer was optimistic about market resilience; today, the market tumbled dramatically (Dow -695 pts, S&P -2.64%, Nasdaq -4.18%).
  • Main reason: Investors selling current stocks, mainly tech, to raise cash for upcoming mega IPOs (notably SpaceX, and potential ones from Meta, Anthropic, Amazon, and Microsoft).
  • Notable Quote:

    “Supply can be the reason why the bull gets killed. It looks like there’s a lot more supply coming down the pike than I bargained for.” — Jim Cramer (04:23)

• Interest Rates and Macro Headwinds (05:15-06:45)

  • Hot jobs report — good for economy, bad for rate-cut hopes.
  • “Rate hikes,” not cuts, may now be more likely; this is very “bad for stocks.”
  • Rising gasoline prices sting U.S. consumers, hurting the economic backdrop.

• IPO Supply Flood (06:45-08:00)

  • Cramer worries that “the deluge of new supply” (IPOs/fundraises) is simply too overwhelming and could damage the bull market.

2. Sector Highlights: Winners and Losers

• Apple’s Relative Strength (08:20-09:20)

  • Apple stands apart — doesn’t need to raise new funds thanks to its huge user base and ecosystem.
  • Hints at possible AI enhancements to Siri and the company’s wise restraint in AI spending compared to other tech giants.

  • “They were probably right to stay on the sidelines because the cost of this buildout is insane.” — Jim Cramer (09:10)

• Packaged Food Sector Problems (09:30-10:30)

  • Packaged food stocks suffer (e.g., Campbell’s down 22% YTD). High yields suggest markets doubt dividends are sustainable unless the industry consolidates.
  • “No growth, often unhealthy... almost every food stock out there. Only consolidation can save them.” — Jim Cramer (10:08)

• Pet Retail and Homebuilders (10:40-12:40)

  • Retailers including Petco and Chewy struggle; people are, for once, “skimping on their pets.”
  • Homebuilders need lower interest rates; higher rates crimp this sector’s upside.

3. AstraZeneca CEO Interview (14:37-23:06)

Company’s NYSE Move and U.S. Focus

• Largest British company to trade U.S. shares; $50B in American investment ongoing

  “We are going to be the largest British company with a US Share in the United States. And we did this because we wanted to show our commitment to this country... and US shareholders.” — Sir Pascal Soriot, CEO, AstraZeneca (15:23)

Ambitious Growth Targets

• On their $80B revenue 2030 goal:

  “When we announced this number... people told us it’s a bit stretched... Today... maybe you can exceed it. We still believe it’s ambitious, but we are on our way.” — Soriot (17:08)

Oncology and Metabolic Drug Pipeline

• New data in breast and liver cancer, hypertension, obesity, and combination treatments.
• On obesity drugs:

  “We are invested in new ways to deliver weight management medicines... and we’re working on longer-acting treatments... aiming to maximize fat loss, minimize muscle loss.” — Soriot (19:43–20:50)

AI in Pharma

• AI is rapidly accelerating R&D and improving the probability of success for trials.

  “The value of AI in our industry is productivity improvement... you can actually do it faster, come up with new targets, and optimize your molecule replacement.” — Soriot (21:42)

4. Athleisure Sector Analysis (24:18–31:53)

• Key Points:
  • Lululemon, Athleta, Nike all report disappointing results; Lululemon down 45% YTD.
  • Pandemic “pulled demand forward,” competition increased, consumers’ tastes shifted.
  • Premium pricing power faded—consumers cut back as expenses rise elsewhere.

  • “The bigger problem though is competition ... if people can get similar stuff for less money elsewhere, then they're going to go elsewhere. Including Costco.” — Jim Cramer (26:30)

  • Stocks (LULU, GAP, Nike) “cheaper than they used to be,” but not a buy just because they’re “down.”

5. Index Rule Changes and Investor Impact (35:26–39:10)

• S&P 500 Will Not Fast-Track Mega-IPOs (eg. SpaceX)
  • Unlike NASDAQ and Russell, S&P keeps traditional one-year and profitability waiting period.

    “For SpaceX specifically, it needs to wait a year before it can join the S&P 500. That means there’ll be less forced buying from index funds.” — Jim Cramer (36:55)

  • Result: Nasdaq 100 and S&P 500 will diverge more—S&P will be “lower risk, lower reward,” while Nasdaq becomes “more turbocharged.”
  • Takeaway: Younger investors might favor the more volatile Nasdaq 100; older investors may prefer the more stable S&P 500.

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Memorable Quotes and Moments

• Cramer on IPO Overload:

  “Remember, higher rates, too much supply and lousy earnings can really sap the living daylights out of a stock market. Right now we got two out of three, and it ain’t good.” (12:18)

• Caller Sid (High Schooler) Asks About Lockheed Martin:

  “You’re such a smart fella. … Why don’t you buy two [shares] now, and if it gets below 500, buy the other three. I don’t want you to come in all at once.” — Jim Cramer (09:49)

• On Diversification:

  “When you’re diversified, at any given moment, you’re going to own some losers. Or at least some stocks that aren’t working. … But when you get a tsunami-like sell off in the hottest stocks out there... you’ll be grateful for your Johnson & Johnsons.” — Jim Cramer (44:08)

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Important Timestamps & Segments

• Market Recap, IPO Supply, & Interest Rates: 02:00–08:15
• Apple, Food & Retail Sector Talk: 08:15–12:45
• AstraZeneca CEO Interview: 14:37–23:06
• Athleisure Sector Analysis: 24:18–31:53
• S&P 500 Index Rule Changes for Mega IPOs: 35:26–39:10
• Lightning Round: 39:40–43:56
• Diversification & Parabolic Moves Discussion: 44:08–47:29

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Lightning Round Highlights (39:40-43:56)

• Starwood (STWD):
  Not recommended; “not been a good stock.” (40:33)
• Rally (RAL):
  “Stock’s going parabolic... just don’t seek parabolas right now.” (41:17)
• BorgWarner (BWA):
  “Another Parabola stock... could be at 60 in a heartbeat.” (41:43)
• Reddit (RDDT):
  “I like it... But you can’t buy all at once; it sells at 29 times earnings.” (42:34)
• OBDC (Blue Owl Capital):
  “I’ve not recommended anybody’s business development company. I can’t start now.” (43:33)

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Closing Lessons

• Diversify, Don’t Chase What’s Hot:
  • Selling down parabolic movers prevents regret when sell-offs hit.
  • Boring “defensive” stocks help cushion portfolio blows in wild markets.
• For Index Fund Investors:
  • The difference between indices (S&P 500 vs. Nasdaq vs. Russell) will become more pronounced with new IPO inclusion rules; pick an index to fit your risk appetite.

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Bottom Line

Jim Cramer delivered a sobering appraisal of a volatile market: macro headwinds, a glut of new supply from mega-cap IPOs, and sector-specific shakeouts mean investors can't ignore risk management. Now more than ever, diversification, patience, and careful attention to portfolio balance are crucial. The episode reinforced the importance of not chasing trends blindly, keeping cash and defensive positions ready, and recognizing that headline “cheapness” can sometimes be a value trap. Cramer’s tone was both pragmatic and supportive—a necessary guide for navigating rough market waters.

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For those who didn’t listen: This episode was a Cramer masterclass in navigating a choppy market—drawing on today’s market carnage, sector-specific challenges, and the shifting landscape of index investing—to arm listeners with realistic, actionable advice for weathering volatility and taking a long-term, level-headed approach to building wealth.

Transcript

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[Jim Cramer]

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 Crame America. I other my friends, I'm just trying to save you a little money here. My job is not just to educate, but try to do some teaching your call me 1873 CBC tweet me Jim Cramer Last night I was confident. I spoke to some I thought the market was surprisingly resilient. Turns out today was the day when people started raising the money that I thought they'd have to participate in a bunch of upcoming mega IPOs. Give me how difficult would be to get them shares in the space xdlc. I thought there might not be as much mammoth sell off ahead. I was wrong. That drove a lot of today's selling by the way. With The Dow tumbling 695 points, S&P plunging 2.64%, the Nasdaq plummeting 4.18% as people wanted that money so you can go buy some Elon Musk. I was right about one thing though. Supply can be the reason why the bull gets killed. It looks like there's a lot more supply coming down the pike than I bargained for. Now today had a multitude of stress points. First we got an unemployment report that was way too hot, too strong. At least from the perspective of someone who wants the Federal Reserve to cut interest rates even though there's a gigantic underclass. This country desperately needs interest rates relief as they're being stung by tariff inflation, roaring price of gasoline. But the Fed doesn't cut. When we have this kind of decent job growth it's off the table. If anything, people are talking rate hikes. It was way too hot for the Fed, but too cool for the many Americans that are on the fringe, underemployed off of health care and now coping with needless cuts in food stamps. So interest rates go up. Terrible for stocks and not good for anything else. Except for maybe some of the people lend money for a living. That means some buyers felt that they should pivot and start selling tech and buying companies that do better in a slowdown. Why better on a slowdown? Because this labor was so strong that many bond traders are now betting the Fed will have to raise interest rates maybe several times in the next year in order to stamp out inflation that's going to lead to a slowdown. It'd be real bad for stocks. Stocks are not ready for rate hikes. Until today's sell off, they were prime for rate cuts. At the end of the day, the bull thesis for the market rests on the idea that sooner or later we're going to get some rate cuts because many Americans would benefit from it. But now rates might be going up and gasoline staying up. Not great for our service based economy. There's still one more crosscurrent. A report today said that Metta Platforms is considering a colossal fundraise to pay for its ambitions like the one we saw just from Alphabet this week. I've warned for months and months that the market can't handle the delusion of new supply and I'm looking right about that thesis. Even I was wrong about how quickly things would sneak up on us. One week ago we didn't know that Alpha was going to do a multibillion dollar fundraise. They did. We didn't know that it might do a fundraise. We didn't know a week ago that Anthropic would come public. Sure sounds like they're about to. We don't know if Amazon or Microsoft might do a fundraiser. How about OpenAI? Nothing would surprise me at this point though, other than a snide comment about what took you so long to Microsoft. But we know about the Space X deal and it's so large that, well, the money to pay for it has to come somewhere and right now it's coming from other stocks, particularly tech stocks, which is something I'll cover in depth later in the show. For now, let's just say you're looking at a market that's hostage to interest rates and and high oil, coupled with a monster amount of new stock offering and new stock coming through the pipeline that can't be bought unless investors sell something else. In order to do this, you got to sell employer people doing it. So we're in the house of not here, house of pleasure, a toxic stew. But then we have to say yourself because that's real gloomy. Is it bad for everybody? And the answer is, as often the case, no, it's not. For instance, it's not bad for Apple, which not only doesn't need to raise tens of billions of dollars for its ambitions, it's actually piggybacking off of Alphabet and getting them to pay for the piggyback. That's what happens when you have more than 2.5 billion active devices and your audience is too juicy for a competitive chat bot to pass up. They need to connect with Apple's peeps. Lots of people seem unhappy with Siri. Maybe we tune in and watch Apple Worldwide Developers Conference on Monday with my pal Scotty Watner who will be out there and I can't wait to learn more. I think Siri is going to get smart. For the longest time in question Apple's ambitions, the AI space. Why weren't they spending more money? Why aren't they hiring more talent? Did you switch to Samsung? Because it turns out they were probably right to stay on the sidelines because the cost of this build out is insane. It's a big reason why the stock's been flying while the buyers of big tech are getting crushed. And we start, we have to start thinking can they really keep the spending up? The food stocks have been unbearable. I mean they're just disastrous. Campbell's reports on Monday and here's the stock that's down 22% for the year, 7.2% yield. The sky high dividend yield though is really a sign that people believe Campbell's can't cover his payout. I don't know if that's true, but I do know this. If someone doesn't consolidate this whole packaged food industry, we're going to have a whole bunch of low dollar amount stocks that aren't worth owning because they won't be able to pay their dividends. No growth, often unhealthy in the crosshairs of GOP Dash once no pricing power. That's almost every food stock out there. Only consolidation can save them after close. We also hear from Vail Resorts all right, now they've been rebounding of that I don't know if you see the stock I want to find out that move is for real. I think it might be. But then again my Wife called me right before the show. Said she can't believe she just paid $110 to fill up the tank. Not exactly a great backdrop for taking a long trip to the skis. Do some skiing. The last time that J.M. smucker reported it jumped up on what turned out to be just an okay quarter and then it got smashed. The rally in the offbeat names like the Staples today swept up a company that makes Twinkies, coffee, dog food and uncrustables. I think it's going to get swept right back down when it reports Tuesday morning after the close. We are from two companies with totally divergent past. Casey's General Story and Cracker Barrel. Now Casey's dominates small town America and its love for its breakfast pizza was actually really tasty. Cracker Barrel is trying to remake itself. Stocks up 32% year to date but it's way down from where it was a couple of years ago. Stock closed at $33 and change. It was at 71 bucks less than a year ago. I'd love to be a buyer but we have to smear. Are people skimping on their pets? That's supposed to never happen, right? I mean I know when I interviewed Kevin Hassett the he's the director of the National Economic Council has I think he was really excited. Everyone's doing so well in the country. That's great. I don't although I said I took issue with the idea. It was everyone. But when I talk to the retailers they sound much more bleak. Including Petco symbol Wolf, which Blue Alice who Tutu too. I mean I got noises for every single one of these animal names. But anyway, Petco missed the quarter pretty badly. Maybe Chewy misses when it reports that stock is so cheap. I don't know. Now the big hyperscalers are all afraid of being left behind. That's why you keep seeing these fundraisers. So they keep spending and spending and spending. Oracle figured this out a long time ago and got in the business of building data centers. Is it working? I don't know. We'll find out Wednesday. Thursday 2 battery companies report Adobe and Lennar. Adobe is part of the software as a service cohort and that's a shrinking cohort. More importantly, there are some companies that make similar but less expensive software in order to be able to design things even after it's thrashing. I think it's not low enough to own. I'm not kidding. When I was going around with Hazard, one thing was thinking with I was thinking about Lenore. They need lower interest rates, sell more homes. And I said that to assert. I said, look, you know, we got to. We got to move more homes. A homebuilding is big industry in our country, or at least it punches above its weight. It's only 10% of the actual. Finally, here we are, back with a Space X deal IPO day. I hope by this point that all the money needed for the deal will have been raised and then some. And we don't have a sell off every single day this week like we had today. That way, madam, Microsoft and Amazon maybe are able to do deals without getting crushed or crushing their stock. Bottom line, let's get this over with so this market can resume its advance. Something that's going to be very difficult as long as we're being flooded with new stock. Remember, higher rates, too much supply and lousy earnings can really SAP the living daylights out of a stock market. Right now we got two out of three, and it ain't good. Hey, how about Sid in Colorado, please? Sid? Yeah.

[Caller]

Hey, Jim. This is Sid dad calling from Parker, Colorado. Sid has a question for you.

[Jim Cramer]

All right, sure, Sid. Hey, Jim. Yeah, hey, what's up?

[Caller]

Jim? I'm a high school. I'm a high school student here in Colorado, and I was looking to start a position into Locheed Martin. But with all this back and forth in the news about the US conflict, I was wondering if it was a good time to enter.

[Jim Cramer]

You know, first of all, you're such a smart fella, I think that you buy. Here's what I'd like you to do. Let's say you want to buy five shares. Why don't you buy two now and then if it gets below 500, buy the other three. I don't want you to come in all at once. The stock's been very volatile, but it's all. It's been all the way up to almost 700. Here is it 523. I want you to buy some and then below 500, you'll buy the rest. That's what I'm trying to do with my travel trust. Buy slowly. Let's go to Dave in Illinois. Dave.

[Caller]

Dr. Kramer, I'm torn between celebrating your 38th garden season or some of your finest CEO interviews, including Dell, Qualcomm, Federal Federal Express, intel, Amazon, and CrowdStrike.

[Jim Cramer]

Oh, man. Dave, settle for the garden. I'm gardening this evening. I'll get my best Brioni. This is right now. This is an ica. I can't garden. I see. I got to garden in Brioni. And have a little my wife's phosphoro and really just get stalkered after a day like today, you know. Anyway, are you allowed to say that? I just did. Dave, what's up?

[Caller]

Sounds good, Jim. This $80 billion company provides optoelectronic components and devices critical for the supplying of the A build outs. It's up over 100% on the year. You mentioned them recently in your compute index. In the infrastructure layer of the cake, the company's name means clear, logical, well organized. Of course I'm talking about Coherent Corp.

[Jim Cramer]

So yeah, okay, so here's the problem, Dave, and thank you for calling the Coherent I own for the jobs I show. I got a couple of stocks like this and I got a feeling that they could really get hit. I want you actually, if you own it, to sell half right around here, even if it's down 25 and then wait. Okay. I want to do that for some of the stocks that I had talked about on air and really couldn't, but I feel like they're going to get get really smashed and then you can buy back that stock that you sold. Thank you. I'll see you in the garden probably tomorrow. Anyway. I think we need to get through the SpaceX IPO before the market can make anything move higher. If there's a lot more deals, remember, supply can kill the bull. And here comes the supply and I don't like it. On my money today, AstraZeneca was a bright spot and an ugly day for the market and I'm sitting down with the CEO to find out more about the company's plans to generate $80 billion from 2030. Then I'm digging into what is ailing that at leisure sector of retail after seeing disappointing results from some of the leaders in the category and the S and P announced yesterday would not fast track the inclusion of mega IPOs in the indices. What, what could that mean for things going forward? I'll break it all down for you in a surprisingly bad situation of a day where it just turns out there is way too much supply. Stay with Kramer.

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[Jim Cramer]

This morning, pharmaceutical company AstraZeneca rang the opening bell to celebrate their transfer to the New York Stock Exchange. It's the largest transfer in the history of the 234 year old institution. The British pharma stock has rallied 30% over the past 12 months. But a couple and it's very much on track to hit the ambitious long term financial targets. They rolled out in 2024. That's largely thanks to the company's booming oncology business. After they rang the opening bell, I had the chance to sit down with Sir Pascal Soria. He's the CEO of AstraZeneca.

[Caller or Guest]

Check it out.

[Jim Cramer]

Well, to get started, Sir Pasco, you rang the opening bell today. This is the largest market capitalization transfer in 234 years. Why don't you tell us why you decided to move to the New York Stock Exchange?

[Sir Pascal Soriot]

Jim, thank you for having me. And it's really exciting and a great moment of pride for all of us at AstraZeneca. We are going to be the largest British company with a US Share in the United States. And we did this because we wanted to show our commitment to this country. We wanted to show our commitment to innovation to patients, to bringing our medicines to the many patients around the country that benefit from it. But importantly, we also wanted to make sure that US shareholders were not comfortable. I'm not able to buy any can buy our shares. I'm so glad that they can benefit

[Jim Cramer]

from our growth right Because I've been recommending your stock, but people always say, Jim, it's from overseas, I don't know where it is. You've made it so that we can all embrace it. I think is a very smart move. And you've also embraced America with the plan to invest $50 billion in American manufacturing, including a research center in Kendall Square, Massachusetts.

[Sir Pascal Soriot]

Yes, exactly. I mean the 50 billion is not only a pledge, it's reality. We've started investing four and a half billion dollars in Virginia and a new plant. We have a new cell therapy plant in Rockville in Maryland. We're investing $2 billion in Maryland, we're investing half a billion in Texas, we're investing in Santa Monica and we're investing in manufacturing sites around the country. And we are investing in R and D with this new site in Kendall Square in Cambridge, Massachusetts where we will have 3,000 scientists working on pipeline.

[Jim Cramer]

I live there. So I think it's very exciting because that is the hub. People think Silicon Valley is the only place we do anything interesting in this country. Untrue. Let's talk about the 80 billion in total revenue by 2030 year goal. I think it's ambitious, but you're already pretty far along.

[Sir Pascal Soriot]

Yes, absolutely. And when we announced this number, this target in May 2024, a number of people told us, oh my God, it's a bit stretched, you can't get there. Today we have some people telling us maybe it's a soft target, maybe you can exceed it. We still believe it's an ambitious target, but we are on our way to getting there. Not only with the products we have on our hands today and that are growing, but also because we are launching new products. This week. We presented data this weekend at the, at the ASCO for new breast cancer treatment we've launched two or three weeks ago in the U.S. i was at the sales launch meeting in Las Vegas. We're launching a new treatment for hypertension. People who are, I think that's what talking about.

[Jim Cramer]

Because it's a silent killer.

[Sir Pascal Soriot]

Yes.

[Jim Cramer]

And to me, anybody that has done like Bax, Fendi, anyone who can bring this to light and both awareness and what your drug is, you'll save hundreds of thousands of lives.

[Sir Pascal Soriot]

Absolutely. There are like tens of millions of people who are on 3, 4 drugs but their blood pressure is not controlled and the time is, the clock is ticking because that blood pressure affects their kidney, affect their hearts, affect their body. So you really need to get them under control.

[Jim Cramer]

Very much so. Now you have a really amazing oncology portfolio. There's another company that we have on a lot that is also interested in some of the same medications. You are Johnson and Johnson with their Ribrovant and Las Clues. Excuse me my inability to press on these, but are you concerned about the competition or is it just something you have to expect if you're in that business?

[Sir Pascal Soriot]

Well, let me just say first of all I've been to the escrow for 26 years, every year. It's always a very exciting time to be at the school. Lots of great data that are presented. We presented good data, great data in breast cancer with chemistry on your product. We presented data in liver cancer. Really new way to treat it. In terms of your question, yes, we always focus on competition but we believe we have a great product in Tagrisso. We are combining it with chemotherapy and in first line lung cancer. Great results. We have new combinations coming. We think we have what it takes to defend our position in lung cancer treatment and continue improving the treatment of this condition.

[Jim Cramer]

Well, that's excellent. Now I do want to talk about. You do have a big meeting this week in ada. I'm not sure exactly what you're allowed to say and what you're not, but you do have something that might compete, compete against a company that we've been recommending very strongly. Eli Lilly with the perhaps a GOP dash one obesity space pill. Are you, can you talk a little bit about that?

[Sir Pascal Soriot]

So we are invested in weight management near term and long term. So we are invested in new ways to deliver weight management medicines or all drugs. And we're also working on new treatment, new injectable treatment for patients who are at a higher end of body mass in the index. People are so called obese. And we're also working on long acting treatments to make it simpler. Long acting, injectable, monthly injectable instead of weekly. Monthly injectable, monthly injectable instead of weekly. We are working on mechanisms that will reduce the muscle loss. When you lose weight, you lose fat and you lose muscle. So we want to maximize fat loss, minimize muscle loss. Now going back to your question at the ADA, we will present data, Phase 2B data with our overall Gleb 1 and very exciting data. We're moving this product into phase three. The way we are addressing weight loss in the weight management segment is not only addressing weight reduction but also addressing the metabolic events, the metabolic syndrome. So we have a drug for hypertension, we have an old PCs cannon in development for cholesterol management. We have combination drugs with this group one. So we really want to address not only the visceral deposit but also the metabolic complications.

[Jim Cramer]

Well, that would be great. We talk about wanting competition right there. We need it to keep prices down too. Now this I want to discuss is something that a lot of people are talking about. There's not a good return on artificial intelligence. And I can telling people there are people in science who they wouldn't even take on a drug because it might take years to develop, but maybe now the research would have it. So maybe only takes a month or two and it is very positive. Are you seeing AI helping how long it you know, choosing drugs because you know you can fix that to beat the disease because of AI or is it just something is pie in the sky?

[Sir Pascal Soriot]

Yes, actually, I guess people, the people who say that to some extent it's because the product, the value of AI in our industry is productivity improvement. So it's not really reducing cost. It's becoming more, faster, smarter in the way you do it. So in the way you design a new medicine, a new drug, you can actually find, do it faster. Of course, doing smarter, come up with new targets, but also you can optimize your molecule replacement, remove what you think is going to be potentially side effects from the molecule. And AI helps you do this. AI also helps us making smarter choices in how we develop drugs. We have a partnership with a company called Tempus based in Chicago. We've done a joint venture with them called Pathos and we are developing, we have developed an agent, that target that takes all this data to get clinical data, laboratory data, and helps us predict the probability of success of a phase three trials. You know, think about a phase three trial. We spend 300, 400, 500 million on the trial. If you increase the probability of success, the productive improvement is enormous.

[Jim Cramer]

Well, that's lives, that's lives saved and that's what we want. That is Sir Pascal Soria. He's the executive director and CEO of AstraZeneca AGN listed here and a company that we have supported for a very long time. Thank you.

[Sir Pascal Soriot]

Great to see you.

[Jim Cramer]

Money back.

[Mad Money Announcer]

Coming up, what has knocked at leisure stocks down in the standings? Kramer is studying the tape to find out next

[Venture Global Representative]

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[Jim Cramer]

Can I get a second opinion on stocks in the Fidelity app? With Fidelity, it's easy to get an outside opinion from independent experts in a single score. And then, when you're ready, trade US stocks and ETFs with no commissions.

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[Jim Cramer]

I am always right. Investing involves risk, including risk of loss. $0 commission does not apply to customers designated by Fidelity as a professional equity trader. A limited number of ETFs are subject to a service fee of $100. See [e-mail] commissions Fidelity Brokerage Services LLC Member NYSE SIPC. How much worse can the Athleisure space get? If I say this group's going out of style, that is putting it lightly. Last night Lululemon reported, yet still one more disappointing quarter and the stock got crushed today. Tell me more than 8% at this point, I'm no longer surprised when Lulu misses numbers. Comes with a stink pants, I guess. Stocks down 45% year to date, 65% over the last 12 months. And they're hardly alone. GAPS Athletic division just reported net sales down 12%. They brought in some former Nike executive to write the ship. So far it hasn't worked, certainly. In fact, Nike itself has become a real something tall. Too real for me because we own it for the charitable trust. My bad. A few years ago, Athleisure was one of that was it was the best consumer trend out there. Athleisure now better than disco. Back when Athleisure seemed unstoppable, it felt like a lifestyle shift. People were wearing sweatpants while working from home, wearing workout clothes and sneakers to dinner. Lululemon was the premium winner. Athletic was supposed to be GAPS growth engine. Nike was the behemoth that owned athletes performance. Sports culture once Covid hit, Athleisure practically became the uniform of the pandemic. Maybe that made this trend look more durable than it really was though. But once the world went back to normal, people went back to the office and started wearing regular clothes again. They don't seem too eager to shop at Lululemon Athleta when they already have clothes closets full of leggings or expensive workout gear. The bigger problem though, is competition. And that goes double for Lululemon. Years ago, Lulu felt unique. Now everyone makes trendy workout apparel and performance clothes. Aloe Vera on Hoka, Nike, Adidas, Athleta, and the list goes on and on. When everyone wants a piece of a given industry, you got to race to the bottom. Unless your brand is truly untouchable. And at the end of the day, the Lululemon is not Louis Vuitton. They may have a great brand, but if people can get similar stuff for less money elsewhere, then they're going to go elsewhere. Including Costco. Especially when gas, groceries and rent have all gotten more expensive. You can see the shift in the numbers. On the surface, Lululemon latest quarter was it wasn't a disaster though. Expectations were pretty low. Their sales and earnings both came in a little higher than expected, but the guidance was dismal. For the current quarter, Management expects to earn A$76.81. When Wall street was looking for $2.68 that hurt it. For the full year, management cut the revenue forecast and totally slashed their earnings forecast and that's what killed it. What exactly is the problem here? Okay, is international business still holding up? Same store sales up 13% or 8% on constant currency basis. But the Americas, their largest and most important region saw Same store sales down 4, 5 or 6% on a constant currency basis. Magic Species declines to continue falling by a low double digit percentage in the current quarter. The kiss of death for retailer and by high single digit performance for the full year. Awful. Hope they can do it though. This used to be Lululemon's fortress. Now North America is dragging down the whole company. Matt talked about headwinds, the tariff impact on decline in gross margins. They need to strengthen the product engine and the work they still need to do in order to reignite the growth that they also have to speed up their whole system of developing new clothes. That's not what investors want to hear from a stock that already been cut in half. Now Athletic tells the same story. The Gap overall has been doing better, but Athletic remains the weak link in the gaps. Latest quarter Athletics net sales fell 12% same store sales were down 11% awful in the previous quarter. Athletic same store sales were down 10%. Gap says it's rebuilding the brand launched a reimagined assortment in the second half, which I guess is better than doing nothing. Athleto was supposed to be a growth brand though, but now it seems like a long turnaround project. We don't like those on Wall Street. Okay, then there's. Then there's Nike. Not just another apparel company. Nike used to be a global machine. The biggest logo in sports. But even Nike's been struggling with the same broader issues. Competition, stale products, not enough freshers. And a consumer is no longer willing to pay up for anything with a swoosh and jacked up prices. In its latest quarter, Nike's revenue was down 3% on a currency neutral basis. Nike Direct revenue fell 7%. Currency neutral. Nike Digital was down 9%. Converse was down 35%. That's catastrophic. Their profit, their gross margin fell 130 basis points to 40.2%. This is not the Nike investors fell in love with. It's not the Nike I knew. Now I know that Elliot Hill, the relatively new CEO, is trying to turn things around to give him a little chance here. But the turns turns take a longer than we like. And part of that is the overall weakness in athleisure. It is a depressing situation. Maybe this all should have been obvious. We're talking about fashion year and fashion always changed. Hey, look at Victoria's Secret. Five years ago they seemed in danger of going bankrupt. Took a while, but eventually got hot again. The stock came roaring back. The younger consumer is not dressed in the same way millennials did. When Lululemon was becoming a modest stock market became oversaturated with light fitting. Light fitting, I'm sorry, with tight fitting leisure wear. And now younger shoppers wear different styles like denim and baggier clothes. Leggings and sweatpants didn't disappear, but they are out of style. That's why this is not just a Lululemon issue, an athletic issue or Nike issue. Covid pulled demand forward. Competition exploded. Pricing got harder, styles change, got more selective. And the companies that used to own the athleisure trend started to look a lot less special. Now at these levels, Lululemon is obvious a lot cheaper than it used to be. Stock now trades at about 10 times this year's earnings estimate, which is not something you could say about Lululemon. The glory days used to trade it more like 30 times earnings and even higher in its prime years. That's what growth can do for you. But nobody pays up for non growth. Meanwhile Gap, the parent of LED, is even lower, trading at 9 times earnings. Nike on the other hand, sells for 24 times earnings. That's a little high. That's in part because it is doing better. So yes, eventually could get interesting if the business turns around a little bit. But it hasn't. Cheap alone is not enough and the estimates are still coming down and, and the stock's acting like a falling off. I spent a huge amount of time talking about what's cheap and what's value in this book because I didn't want people to buy value traps, as they call them. Same goes for the rest of the group. Nike can work if the turnaround becomes visible and the product feels strong again. Athletic can work if Gap rebuilds the assortment. But right now, the burden of proof is on them. The market's not going to reward Athleisure stocks just because they used to be great. This is a what have you done for me lately kind of business. And lately this industry's only lost you money. So here's the bottom line in a very sobering situation. Athleisure may not be totally dead, but it's a technical example of what happens when something goes out of style. Category went from under penetrated to over competitive. The pandemic created huge pull forward of denim of demand. Then the consumer change and the premium pricing power vanished. Lululemon might eventually be worth a look again because it's gotten so much cheaper. But I bet that happens at a lower level. Maybe much lower. For now, there are just a lot better places to go bargain hunting. I need to speak to John in Arkansas.

[Caller]

John, Booyah. Happy Friday, Kramer.

[Jim Cramer]

John, great to have you on on the line. What's happening?

[Caller]

Well,

[Jim Cramer]

I'm worried about.

[Caller]

Not worried, McDonald's.

[Jim Cramer]

Worry about McDonald's? Nah, you don't need to worry about McDonald's. Look, McDonald's, it does have. It has beef issue. Beef is too expensive, but it yields 2.6, it's got a great reputation and it sells at 21 times earnings. It can get down to 1890. Here's the way you do McDonald's. You want to buy 100 shares, you buy 25 at 280. This is what I'm doing, by the way, with some of my stocks in my chapel charts. I'm buying really small amounts way down. Get a better basis. 25 at 279. 25 at 270, 25 at 265 and then 50. If it does get to 260 and then you have a great basis and you'll be doing just terrific. Look, the Athleisure story has changed for the worse. And I think there are better places for you to put your money to work in this market. Much more money ahead. The S and P won't be adding the mega IPOs to the S&P 500 as quickly as some other indices. So could this change the way investors approach index index funds? I'm sharing where I come down then it always pays to be diversified. And I'm using today's meltdown in the tech sector worst point to climb in NASDAQ history to highlight just how important that lesson is for you home givers and oil calls rapid fire. Tonight's just a lighting route, so stay with. Last night S and P Dow Jones Indices announced that Unlike the NASDAQ 100, they won't be changing the rules to allow for the upcoming Mega IPOs to quickly join the S&P 500. Now this is something I talked about before and I want to walk you through it because the announcement changes the calculus for Space X and the mega IPOs that will follow it. Remember, I always said that a deluge of supply is going to really kill the bull if we're not careful. This is part of the story. Remember, NASDAQ Global Indices decided to change the rules to give giant companies like SpaceX and Anthropic and OpenAI that list on the NASDAQ early entry into the NASDAQ 100. Basically, if your market capitalization is big enough to be in the top 40 of the index, you can join the index within three weeks of your IPO. Last week Footsie Russell, which manages the well known Russell 3000, 2000, 1000 indices, followed suit, creating its own fast entry process. Again, they're making room for the three mega deals. Morningstar and MSCI already had fast track rules in the place. S and P was the last holdout and a lot of people expected they do the same thing, especially after the company said they were considering it at the end of April. But last night S and P said basically that it's not going to change anything did surprise a lot of people. Instead, they're standing on principle. When Nasdaq announced its rule changes a few months ago, many cynical voices said they were just doing that in order to win the the Space X listing from here the New York Stock Exchange and put themselves in a stronger position to get anthropic and open AI. I think the cynics here are mostly right. But there's another side to the story. As Nasdaq's chief economist Phil McIntosh articulated in the weekly Market Makers newsletter last night, the major indices are supposed to be representative of the market, and if a $2 trillion company comes public, well, you're not very representative. Keep it out of the index. Apparently that argument alone was not enough though to convince the S and P, which crucially doesn't have a stock exchange to run. Unlike Nasdaq, they have no reason to butter off Space X. They aren't trying to win a listing from another exchange. And they make that very point that these rules exist for a reason. So what's it mean? What's it mean for you? First, what we saw earlier. First for SpaceX specifically, it needs to wait a year before it can join the S&P 500. That means there'll be less forced buying from index funds. Previously we thought they'd shorten the seasoning period to six months, which would have let Space X in around December, right when their first big lockup on insider expiration instead of selling its buyers. Now we know Space X won't be in the S and P until next June at the earliest. So the lockup expirations are more likely to be to hurt the share price. Does that mean we're looking at a bunch of forced index fund buying sometime next summer right around when the full lock up on insider selling expires? Including Lockman's own Elon Musk? Not so fast. SB500 also has a profitability requirement for new interest. Based on the numbers in the SpaceX prospectus, the company's got a long way to go from gap profitability. And if they plan to keep investing heavily in things like their Starship rocket program, Starlink satellite constellation, most importantly infrastructure, the company will keep losing money. I honestly have no idea how long it'll take for Space X to achieve gap profitability over a trailing 12 month period, which is what they need to do to join the S&P 500. A lot of requirements there by the way. The same goes for anthropic and OpenAI for the broader stock market. There are some big time implications here. For starters, we're likely to see an even larger divergence between the major equity indices. This is something we already deal with every day. For example, in today's beat down the Nasdaq did much worse than Dow or the S&P 500. Remember lots of people might want to sell like for like grooming their old tech for the more say go go mustache. And I think by the way that's happening everywhere. That's one of the reasons why we're down so much today. We often talk about the stay Dow Jones Industrial Average or the tech heavy Nasdaq, which is more of some way of putting it. Essentially the Dow is a lower risk, lower reward index and the NASDAQ is a Higher risk, higher reward index. That's obvious from the numbers. The dow is up 5.8% year to date, but it's only down 1.4% today. Nasdaq 100 is up 14%.7% year to date, but it was down a hideous 4.8% today. Sell, sell, sell. The S&P 500 historically falls somewhere in the middle. It's technically is representative of the entire market, but at the same time it has ton of tech exposure. The tech sector officially accounts for 38.6% of the S&P 500, but that's without counting Amazon, Tesla Output and metal platforms. The first two are considered consumer discretionary stocks and the latter two are communications names. Throw those in and the S and P is more than 50% tech. But with the NASDAQ 100 changing its rules to make room for Space X and its ilk, while The S&P 500 stays the same, I think that means the S and P will end up trading more like the Dow Jones and Industrial Average. It'll be lower risk, lower reward index compared to the Nasdaq 100, which may be really good for younger investors. The Nasdaq 100 because it's going to. It's when you can spend, let's say you put some money in it now, you got your whole life ahead of you. Could be a real, real win. But even for passive investors who just want to park their money in an index and forget about it, they'll have to think harder about which index they want to put the money in. Do they want the higher risk reward index as I like the Nasdaq, which I recommend for younger people, or the safer, potentially lower return S&P 500 which I recommend for people who are a little bit older? If you're parking your money in an index fund, you don't necessarily want high risk, high reward. Only younger people should choose that. Here's the bottom line. Last night S and P Dow Jones broke from its index keeper brethren and elected not to change its rules to allow these upcoming IPOs to quickly join the S&P 500. It's a move that could mean that these stocks do incrementally worse in their first year of trading with or longer because they're also keeping the profitability requirement. And it means that even if you're a passive index fund investor, you're going to have to think a lot more about what your risk profile is and thus which index you want to be at. Now that the NASDAQ 100 we even more Turbocharged than ever. They have money to be back after the break.

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Coming up, he's the fastest mind on Wall street. So we're putting him to the test with your help. Bring on the lightning round next.

[Jim Cramer]

It is time. It's time for the lightning round.

[Charles Schwab Representative]

Cream,

[Jim Cramer]

of course, I consider my Tempest. And then the lightning round is over. Are you ready, ski daddy? Turn the light on. Chris Metzador. Bob in New York. Bob.

[Caller]

Hey, Jim. This CEO might be the first candidate for the wall of shame should you decide to bring it back. And I hope you do. I listen to conference calls, as you suggested. Over the years, this CEO seems to have checked out and offers nothing but excuses. Hasn't raised the dividend in over 12 years. Let me repeat that. Hasn't raised it in over 12 years. You've been a support reporter of his, yet he chooses to go on other CNBC shows, but not yours. Maybe you intimidate him. Jim, what on earth is wrong with Starwood and Barry Stern lick?

[Jim Cramer]

Barry's a good guy. It's got a lot of properties that are, you know, commercial real estate properties in cities that aren't that good. But you know, it's not that he doesn't come on my show. I'm sure if I call him and ask him to, he's very polite, great, grateful guy and graceful. But no, it's not been a good stock and what can I say? I have not been recommending it. That's the best thing I can say about it. Let's go to Alex in Oregon. Alex, thanks Jim, for taking my call. Of course, that spun off in Fortress about a year ago. They just had a great quarter, not some buyback. They operate in the aerospace utility and semiconductor testing equipment space. I'm calling about RAL Rally. That is a good company, but you know what? It's going parabolic. The stock's going parabolic. And I've got to tell you, the show's dedicated idea. If you don't seek parabolas right now, just don't seek them. How about we go to Sam, Massachusetts.

[Caller]

Sam, Jim, got an interesting one for you. So everyone knows Ford Warner for the custom electric drivetrain, you know, the engine components that they make. The stock is in a 10 year breakout and that's because of a pivot and a gap gas turbines. So I'm curious what you think about Borg Warner, given the need for these gas powered turbines that they're going to be.

[Jim Cramer]

It's been an absolute winner. But again, it's another Parabola stock. So what will happen is it's at 72. It could be at 60 in a heartbeat. And that's when we're going to have to look at it. Let's go to Sunshine in Florida. Hey, Sunshine. Hey, Jim.

[Caller or Guest]

This is Sunshine from Florida, School counselor, a second time caller and an investor by night. Before I ask my question, I just want to thank you. I recently read your new book, how to Make Money in Any Market and I've learned so much from you as a school counselor. I truly appreciate great teachers. My late mother was an incredible teacher and you've been one for countless investors. My question is about. You're welcome. My question is about Reddit Ticker rddt. Is it a buy sell?

[Jim Cramer]

Sunshine? I like it, I like it. I think it's got a very, very good, unique property. But you can't buy it all at once because it sells at 29 times earnings. Thank you for putting me in the league with your mom. That is terrific. I had someone stop me in the street and said, you know, I read your book. It's filled with education. That's what it was. That's what it is. And you got that too, and I really appreciate it. But we're going to buy Reddit very slowly, not aggressively. I need to go to Jared, New Jersey. Jared.

[Caller]

Hey, Jim, good afternoon. Thanks for taking my call.

[Jim Cramer]

All right.

[Caller]

Got a question for you. I'm working towards building a high yield dividend portfolio. I love the MLPs, Energy Transfer and so on, but too heavily concentrated. Need to start diversifying a little bit. A company I'm looking at in the private credit space. Currently trading about 20% discount to net asset value. Trading slightly above its five year high. Pays about 11% annual yield. Company is OBDC Blue, Al Capital Corporation Blue All Capital.

[Jim Cramer]

That's their. Wow. I gotta tell you, it's their business development company. I've not recommended anybody's business development company. I can't start doing it now. I'm sorry. I don't know what they own and I don't want to. That's how bad these things have been. Maybe this is the exception, but I'm not going to put my head in that line and that legend Jump Conclusion of the Lightning Round.

[Mad Money Announcer]

The Lightning Round is sponsored by Charles Schwab.

[Jim Cramer]

Not that long ago we had a CNBC Investing Club meeting. That monthly thing we do. I was lamenting that bad managers like to throw all caution to the wind and just go with whatever's really hot. What was hot, of course, was the data center. The stocks connected to anything. It helps make the era of artificial intelligence work. Now you can make good money for a while if you go all in on what's hot. But I never do it because I know it will eventually blow up in your face. The house of pain. That's why we run a diversified fund for the investing club. When you're diversified at any given moment, you're going to own some losers though. Or at least some stocks that aren't working. These stocks will lag while the data center roars, but they preserve your sanity. But when you get a tsunami like sell off in the hottest stocks out there. Well, the tsunami of data center selling is here. And today's the day I'm kind of patting myself on the back for keeping the charitable trust diversified, not going all in on the data center complex. That's today's the day when we're grateful for our Johnson Johnson great new drug profits. Yeah, Triple A balance sheet better the United States. Today's the day that Procter Gamble sure plays well in the trust. Sure, it's not like doing not doing as well as we'd like. But that means nothing new in this tape. Today's the day when I'm proud that we held on to our FedEx freight. The new spin off that could go from a decent less than truck low play into one of the best operators in the world. Remember, we don't care what kind of company makes the money. Doesn't have to be a data center moneymaker. The other side of the equation. All right, well, let's talk about parabolas. Now I have been warning you endlessly to the point you're probably sick about hearing about what happens to stocks that make parabolic moves. If it goes up probably in a straight line, then eventually it's going to come down in a straight line. In fact, they tend to come down a lot faster than when they went up. I know club members get confused when we trim some of the winners, but we have no choice. What goes up must come down twice as fast, if not as faster. So if you don't take something off the table, little schnitzel as I call it, well, you can give the whole thing back. Now, when you're up nine weeks straight, you start taking a lot of things for granted. Take Arm hold, it's one of our favorite stocks. Been a huge winner for the Travel Trust. So we sold some at 310, but then it went up to 400. We lost discipline though, and we didn't do any more selling. That was bad. Just plain and simple. Mesmerized hypnotized. No, we just didn't earn enough of the ARM to start with. It would be too small a matter if we sold more, but it sure feels like it mattered today with arm down more than 12%, I wish I kicked it out altogether. I'll tell you though, the decline has been so heavy and almost to me, artificial people are dumping these stocks to raise money for make room for space X that it might be too late to sell some of the stocks even I think they're selling to go on until all the hyperscalers raise the money they need. And that's going to make for an ugly tape. We got to get used to it. See the lessons clear people, the PNGs and the J&Js. Your portfolio allow you to safely own the tax. They're kind of like permits, but if you don't take something off the table, the tax when you're up big, I think you live to regret it. I'm not saying we handle this move perfectly from the trust. Far from it. I'm saying that despite this sell off, I'm not kicking myself. I did was right and it paid off for my chapel trust and hopefully it paid off for club members alike. Like I said, there's always a market summer and I promise I'd find just for you right here made money. I'm Jim Cramer. See you Monday.

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