← Mad Money w/ Jim Cramer
Mad Money w/ Jim Cramer
Mad Money w/ Jim Cramer 7/22/26
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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- [00:00]
Announcer
The board recommends approving regarding that seat on the committee.
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Jim Cramer
We're promoting quarterly earnings.
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Vanguard Advertiser
Every day, shareholders meet to discuss important matters about the companies you invest in. Now you can easily make your voice heard. Vanguard Investor Choice gives you a say in the companies you invest in. With just a few taps, you can set your proxy voting preference for your index funds. Visit vanguard.com investorchoice to learn more. Vanguard investors own shares of our index funds, which own shares of the companies they invest in. Available for Vanguard index funds that participate in Investor Choice. Vanguard Marketing Corporation Distributor how do you
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EY Parthenon Advertiser
turn your strategy into action and action into impact? Bold leaders do it through transformative strategy and transactions, ones that work in practice, not just on paper. At EY Parthenon, we use an investor mindset to help you create value.
- [00:47]
Caller
How?
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EY Parthenon Advertiser
By combining deep sector experience with AI powered technology so you can reimagine your business for tomorrow while building it today. Shape your future with EY Parthenon. Learn More Today My mission is simple
- [01:03]
Jim Cramer
to make you money. I'm here to level the playing field for all investors. There's always a bull market somewhere and I promise to help you find it. Mad Money starts now. Hey, I'm Kramer. Welcome to Mad Money. Welcome to Cramerica. Other people My friends, I'm just trying to save you a little bit of money here. My job is to entertain, but to do some teaching. So call me at 1-873CBC. Tweet me at Jim Cramer. The cross currents are roiling. This is almost always what happens during this particular portion of the earnings season. We have situations that are hard to understand, without much time to understand them. We have companies that expect us to look at metrics that seem made up to us. And we have all sorts of macro inputs, oil interest rates, war. And that's how you get open field running, where stocks reverse on time as can the averages, which traded all over the place until the dow finished down six measly points. SB declined.14% but the Nasdaq lost 0.57%. Now it may help to understand the backdrop. Okay, I'm back to waking up at 24 to 47am Again. I mean, not a lot of people up at that hour. So you fire up the machine and boom. What do you see? SK Hijinks. Oops. SK Hynix down huge and oil up gigantically. So you know at 2:49am it's going to be a bad opening. And it is. But things are so fluid and confused because we're in the fog of earnings season. The snap Judgments are whipsawing everything. I'm going to give you some examples. This morning we had a watershed moment we've all been waiting for. One model from Open Air, searching for an answer, hacked its way out of what was thought to be a contained testing environment known as a sandbox. Then went online and hacked into Hugging Faces serv. Come on, this was amazing. Then Hugging Face used the Chinese model to stop it. I mean this is insane. It means that the impossible has indeed happened. Agents went rogue. It's how. It's War Games. It's asthma. Hopefully it's not Terminator. I'll be back. I think this is one of the biggest stories out there. In a world where agents can go rogue, what do you do? We should just buy the stock and crowdstrike they have a cybersecurity product that will stop it. But the stock was down big and traders ignored their solution entirely. So much for that idea. And there's Renova. We're all sure of one thing in this world. There's going to be a surge in turbine production because we're short on power. The demand for these things insane. So you got on G for Nova, right? The biggest turbine company in the world. What I've been recommending kind of forever. And what happens? It misses the quarter. Not misses, it misses by a mile. You look underneath though, in the cash flows. Terrific. The orders are used to build out is gigantic. But the earnings are the earnings and Vernova didn't have them. So the Stock plunged nearly 9%. More on that one later. Meanwhile, we've heard nothing out of Nvidia of late. Right? Make no mistake about it, I think the world of Nvidia. I wore my Nvidia cufflinks for the morning show just for good luck. But lately there hasn't been any news. Perhaps we can say that Supermicro, a customer of Nvidia that then sells Nvidia product had great orders and therefore we can assume maybe the Dell and HP Enterprise Super Micro its competitors must have gorgeous to that market share things and that could be great. Then in video opens down a couple of bucks and well, there goes that theory. But wait a second. Out of nowhere, mid morning the Stock is a 180, ending the day up $4.77 or 2%. I searched all day. I can't really give you a reason why. Delay reaction bull confusion. That makes sense. I've been pounding the table on Johnson Johnson for days now. I thought the quarter was excellent. Nobody agree with me. Stock got hammered. I've been screaming at how terrific its technology is, saying perhaps it's okay to diversify away from disk drives into died jj. No, nobody seemed to care. Then today we found out that JJ got a green light from the FDA for its otava robotic surgical system. Next you know the stock's going bonkers. Investors realize that J.J. wow. They're a technology company. I say duh, no kidding. But the market's shocked. Look out, JJ is tech. Although it won't matter for a few years, it doesn't stop there. For months the markets hated enterprise software stock. Salesforce workday service. Now you have to think these darn things deserve a break, right? I mean these are some of the finest companies revered for. They keep getting savage. We're talking to Service now tonight to see if this core can turn stuff around. But it's amazing. The enterprise software stock simply cannot catch a bid. And Service now got crushed during the day before we even saw the quarter. This is not supposed to be happening. Then by mid morning oil starts to come down and we start thinking oh here it comes. Presidents going to talk about how the Iranians are begging for a deal, that the talks are going well, that they agree to be defeated and stop developing nuclear weapons. Same story from the spring. Instead we get the exact opposite. The President ratches up the stakes, talks about taking out bridges if the Iranians attack shipping. Secretary of State says there are no talks. Then oil reverses and goes down on that news. Now that makes no sense at all. It should be spiking like bad but it never visited the highs of the wee hours of the morning. Meanwhile interest rates are going higher anyway the 10 years testing its high. Oh well then that means all the interest rate sensor stocks should be going down, right? Oh no, not at all.
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Caller
Wrong.
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Jim Cramer
Best performing sectors, utilities, AP Semper, Dominion, Duke. It gets even crazier. Pultegroup, one of the biggest homebuilders supports a strong quarter. It's incredibly counterintuitive, especially if the president stops a big tariff on Canadian lumber. It gets even nuttier people. The consumer goods stocks should be getting clobber and higher rates. Their dividends aren't worth as much as when you get better returns to the bond market. Risk free. Plus they're being hurt by inflation. Higher oil really stymies their earnings power. They should be going down. Yet it turns out to be a progress and gamble day. Kimberly Clark Colgate rally. J.M. smucker is breaking out. Kraft Heinz is starting to craft Heinz fantastic chart. You can't make this stuff up. Then tonight Albert reports and this is a perfect example of how confusing things are these days. The company reports an absolutely enormous earnings beat with earnings per share of more than nine bucks. Wall street was expecting less than three bucks but you must forget about that immediately because the quarter included $99 billion. Just $99 billion in other income which relates to the company's investments in SpaceX and Anthropic. Good hunting the rest of the quarter mix Google Cloud Terrific. Up 82% versus last year. That's incredible. This is a small division but the bread and butter Google search business Tad Light which is what the Bears are mourning about as a move to the year. But the most important line might have been free cash flow or actually negative free cash flow. Much worse than expected, down nearly 6 billion. That's a result of the company's enormous capex spending and it helps explain why the company is issuing $85 billion in stock. They'll pay for all these investment the stock's been all over the place after hours. But the cash flow might have been the swing factor and the reason shares ultimately move lower after hours. Somehow I don't think we've heard the last word on this one yet. Though you can say that these moves make a ton of sense. You just need to think through them. Or you can say forget it Jake. It's earnings season. You can't possibly figure this stuff out on the fly. Information is on overload and you can't just go to the chat bots for answers because they don't know either. You know what I think these things have the mind of an intern. But the language of a CEO, it's is it just too hard? Here's the bottom line. There's a reason I tell you to sit on your hands during earnings season. Just try to take it all in. Except the market is its own secrets that will be revealed over time. Don't expect or demand rationality. Don't play the best this. Bet the house on the earnings numbers and in the end you know what? You don't need to. You just have to own good companies long term. Block out the short term noise. Except when it gives you sweet buying opportunities that are certainly worth taking. Now let's take questions. I'd like to start with Craig in Florida. Craig.
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Caller
Hey, Jim Craig in St. John's County, Florida. How are you?
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Jim Cramer
St. John's I love St. John's oh man, I hope it's not too hot down there right now. I really like it in the winter. What's going on?
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Caller
It is too hot. I'M going to try and fit this all in. This is my third time speaking to you about so far over the years. I believe the future for this company is very bright. Each time I've spoken to you, you've supported my case and incredible off the bottom. But since its IPO it is still down 30% and it's a battleground stock with what looks to be incredible earnings and growth. The stock has re rated from 30 plus. While each quarter improves substantially, the recent allegations from Carson Block and Muddy Waters in my opinion have not been addressed properly at sofi. There is a large amount of shareholders in this name and a majority of the shareholders are also members. What's your thoughts on these allegations? We get Anthony back on the stage.
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Jim Cramer
I mean, look at the allegations again. I looked at them earlier. We talked to Anthony Nodal a lot and I think that there's not they don't hold a lot of water. I will tell you this. A lot of the stocks, I've just been kind of locked in a range right now. It don't really have explosive earnings power and we know that Fintech has been a very tough place to be and it is a fintech par excellence. If you want Fintech that's working, you have to own a firm.
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Caller
All right?
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Jim Cramer
You can't always expect rationality in this market. Just make sure you own good companies for the long term. That's what this is about. It's not a game. It's for real. Well, maybe tonight I'm digging deeper into his latest quarter that I just mentioned. After that big miss. Don't miss my take on this club stock then General Motors. I don't talk about that one enough. Report an incredible quarter. So is now the time to get in on the stock as we look for non tech opportunities? I'll take a closer look. And ServiceNow is on the move after earnings. I'm sitting down with the CEO amid a busy day for AI and for enterprise software. So stay with Kramer.
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Show Host/Producer
Don't miss a second of Mad Money. Follow imkramer on X. Have a question? Tweet Kramer Madmentions. Send Jim an email to madmoneynbc.com or give us a call at 1-800-743-CNBC missed something. Head to madmoney.cnbc.com
- [11:18]
EY Parthenon Advertiser
the board recommends approving
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Jim Cramer
regarding that seat on the committee. We're promoting quarterly earnings.
- [11:23]
Vanguard Advertiser
Every day shareholders meet to discuss important matters about the companies you invest in. Now you can easily make your voice heard. Vanguard Investor Choice gives you a say in the companies you Invest in With just a few taps, you can set your proxy voting preference for your index funds. Visit vanguard.com investorchoice to learn more. Vanguard investors own shares of our index funds, which own shares of the companies they invest in. Available for Vanguard index funds that participate in Investor choice. Vanguard Marketing Corporation Distributor when you're at
- [11:49]
Dell Advertiser
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- [12:19]
Indeed Advertiser
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- [12:54]
Jim Cramer
This morning, GE for Nova, the power spin off from the old General Electric, reported a widely panned quarter and it stock it got eviscerated. This had been one of the best performers out there because its equipment is essential for powering the data center or bolstering the electric grid. But the stock plunged 9% today. It is a big position for my child trust. I think that certain decline is actually an overreaction and in fact I think we're looking at one of the great buying opportunities of this quarter so far. But first, let me walk you through the numbers. Cheaper Nova reported a healthy revenue beat 22% growth year over year, but earned just $2.47 per share when the analysts were looking for more than three bucks a share. Now that is a major earnings mess. So you can understand why the stock got punish even after it already pulled back pretty hard from its last June highs, late June highs, but that was along with the rest of the infrastructure plays. But you know, I think it would be a mistake to sell G Vernova here based solely on the earnings miss While it looks bad when you look under the hood going through the orders, gigawatts pricing, production, expansion, enormous backlog extending to 2030 and beyond, well, I think you see a very different, much More positive picture. As CEO Scott Strange explained on the conference call, the real story here isn't earnings. It's gigawatts, the expansion of turbine output and a massive backlog. Now look, I'm not saying we should just abandon earnings per share for gigawatts per share. We can't have another wingstop situation where the earnings were supposed to not matter anymore. But not every line item is equal. In some situations, earnings may not be the most important, important metric when you think of the future. And I think this is one of those cases. Just look at the backlog. Finished the quarter with $176 billion backlog. That's up 13 billion sequentially, nearly 48 billion from a year ago. That's year over year. Those are monster numbers. Representing about four years worth of revenue. Management expects the total to reach $200 billion by next year, providing an extraordinary amount of visibility to the company's future business. Specifically, g. Vernova has 116 gigawatts of gas equipment either in backlog or covered by slot reservation agreements, up from 100 gigawatts three months ago. Magic now expects gas equipment under contract alone to reach at least 125 gigawatts by the end of this year.
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Show Host/Producer
Wow.
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Jim Cramer
The orders do not stop. Utilities, developers, data center operators are making commitments years in advance because they're worried they won't be able to secure the equipment when their facilities are ready. In terms of production, G. Vernova is making the jump from about 3 gigawatt of gas turbine output per quarter to 5 gigawatts per quarter starting in the current quarter. Going forward, that means we're talking 20 gigawatts per year. They plan to grow that to 24 gigawatts in 2020, 3 gigawatts in 2030. They're making these investments because they see the data center as a generational opportunity, as do I. And hey, they know G. Renova can see years of demand ahead. Just looking at their backlog, they're currently getting orders for many years into the future and that's given the company real pricing power. Again, that speaks to long term earnings power. Plus, every time these guys sell a turbine, their services business gets bigger. Remember, they don't just sell machinery. They also make money from long term service agreements to keep this stuff running. As the installed base grows, the higher margin services division grows with it. The other major line shareholders need to watch is electrification, which is basically the orchestration of electricity from generation to consumption that requires transformers, substations, switchgear, grid software, power conversion equipment and high voltage transmission systems, all GE Vernova's bread and butter. Hugely lucrative. The electrification division saw orders increased by 66%. Stunning. That's organic growth. Growth revenue up 68%. Rapidly rising margins. The segment recorded a book to bill ratio of about 1.7, meaning it received A$70 in orders for every dollar of revenue. It recognized its total backlog reached 44.6 billion. Now I think they're not getting enough credit for that. Red hot electrification business really didn't even exist a few years ago. But it's also a key part of the data center story. Of course not every part of G Renova is firing on all cylinders. Why you wouldn't be down this much if that were the case. The earnings miss did not come out of nowhere. Wind power remains the weak link here. With wind orders down 40% Organically, revenue off 11% the segment lost 275 million of earnings for interest, taxes, depreciation, amortization compared with $165 million loss a year ago. Ever since the Trump administration rolled back the tax credits for wind power, the demand for windmills has fallen off a cliff. Still, that's a relatively small piece of the piece compared to the incredible demand for turbines and electric equipment. You know, I honestly wish they could just get rid of it. I mean, just spin it off or something. Except I know under a different president it could be a terrific source of renewable power that could get sponsored again by the government. It's terrific as long as you aren't a whale off the coast of Nantucket or Wayward Bird pretty much anywhere. Now the main reason I'm not freaking out about G Vernova's earnings misses that their guidance was excellent. The company raised its full year revenue forecast by $1 billion while they maintain their EBITDA margin forecast of 12% to 14%. They dramatically raised their free cash flow outlook to between 11.5 billion and 12.5 billion. That's up from 6.5 billion to $7.5 billion range. That's an incredible increase in cash generation. A metric every bit as good for this company is EPS Matric now expects organic power revenue growth to come in between 18 to 20% up from 16 to 18% in the previous forecast. They raised their outlook for electrification too. So then, okay, let's go back because stocks tell truth. Why did it fall 9% today? The earnings miss was real and the stock had also gone practically power bond. You know, I think about parabolic situations mean GE Vernova needed to deliver something spectacular to keep climbing. Instead, they reported a quarter that was disappointing at first glance, even if it looks pretty strong under closer examination. Plus the broader infrastructure. Trade has been under pressure for weeks now as investors question how long hyperscalers can continue to spend. Some people feel like drunken sailors. Those are legitimate concerns. G for Nova certainly isn't a cheap stock up here at 33 times earnings after gaining more than 74% in 12 months. I think you could argue was due for a pullback. But I don't see anything in this quarter that breaks the bull thesis. Orders increased 88% backlog rose by 13 billion in three months. The company expects at least 125 gigawatts of gas equipment under contract by year end, turbine outputs increasing from about 3 gigawatts per quarter to 5 gigawatts. Electrification revenue grew 29% organically, margin expanded by 700 basis points and data center orders have already more than doubled last year's total. Look, it's only that wind business that's weighing this thing down. Here's the bottom line. Sure, even though it did miss its earnings and I was upset by that. But it was because of when it's got an incredible backlog thanks to the strength in turbines electrification. When you look at the order book and how the company's expanding production, it makes me very confident the future. Which is why I see today's decline actually. Yes indeed is a buying opportunity, but Wall street can't seem to look past the earnings miss. I would say this though. If G Renova keeps getting hammered, you've got my pleasure to keep buying or weakness. And you might find my capital trust buying right alongside you, even as we have a much lower cost basis from long ago. That money is back after the break.
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Show Host/Producer
Coming up With GM revving its engines following its latest report, Kramer's going under the hood to see if the stock is ready to race higher. Next,
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EY Parthenon Advertiser
the board recommends approving regarding that
- [20:57]
Carl's Jr. Advertiser
seat on the committee we're promoting quarterly earnings.
- [20:59]
Vanguard Advertiser
Every day shareholders meet to discuss important matters about the companies you invest in. Now you can easily make your voice heard. Vanguard Investor Choice gives you a say in the companies you invest in. With just a few taps, you can set your proxy voting preference for your index funds. Visit vanguard.com investorchoice to learn more. Vanguard investors own shares of our index funds, which own shares of the companies they invest in. Available for Vanguard index funds that participate in Investor Choice. Vanguard Marketing Corporation Distributor I'm honored to
- [21:26]
Announcer
make history and to make my community proud.
- [21:29]
Jim Cramer
Oh, what a brilliant tackle from Naomi Kerma.
- [21:33]
Announcer
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Jim Cramer
All right, what do we make of this incredible quarter that General Motors reported yesterday morning? Here's the stock that's done very well long term and even in the last 12 months is up over 50%. But pretty much all those gains were in the second half of 2025. Year to date GM is only up a percent coming to this year a lot of people expected we get Fed rate cuts and I thought I was one of those people. And those are a gift to the auto industry because they make it cheaper to get financing when you buy a car. But we've had no rate cuts and instead we got this war of the rand that's caused a spike in both oil prices and long term interest rates set by the bond market. Rate increases could be the agenda when the war wound down in April, GM was about to mount comeback. But since we once started shooting again last month the stock got slammed, fell from 85 to 75 where it was sitting right before yesterday's earnings report. Fortunately when GM reported yesterday, they shot the lights out and the stock shot up 5% for tacking on another 3.3percent today. Yet this company posted a sizable revenue be putting up nearly 2% growth. Wall street was looking for a small decline. Even better, GM earned $3.57 per share and it's all expecting to earn $3.19. That's 41% earnings growth year over year. Much tanks. You know. Mostly it was because of higher than expected margins. Now Wall street loves margin growth when it comes to the complicated auto earnings reports. Best of all, management raised their full year forecast for the second straight quarter, taking up its guidance for automotive free cash flow and earnings per share. Now here's the cadence. At the start of the year GM Flutter would earn $11 to $13 per share in 2026. After the first quarter they went to $11.50 to 1350. Now they are saying 12 to $14 at the $13 midpoint get this represented 23% increase from last year. How they do it GM's strong quarter is driven by its core North American business. With earnings before interest and taxes up almost 43% in the region. Again, that's all about much higher margins. On the conference call, the self effacing CEO Mary Barr explained that, quote, customer demand in North America remains steady, including for our pickups and SUVs and pricing is consistent, end quote. She goes on to say, despite lower than larger, lower than target inventories for most of the year, our share of the US full size pickup market stands at more than 50, 42% through the first half of the year, which is more than 10 percentage points above our closest competitor. And we grew share year over year in both the second quarter and the first half, end quote. Wow. Honestly, GM rarely gets enough credit for the strength of its pickup truck business. Look, the Ford F150 has been the best selling pickup in America for nearly five decades. But between the Chevrolet and GMC brands, generally extremely competitive. The company said yesterday that it's on track to lead the industry in full size pickups for the seventh straight years. That's a long time. And in the full size SUVs, GM remains dominant. When you combine the Chevy Tahoe and Suburban with the GMC Yukon and Yukon xl, those SUV sales are three times the size of the nearest competitor with very low incentives and tight inventories. Overall, GM is on track to lead the industry in full size SUVs for the 52nd straight year. Their crossovers are doing great too. GM also remained number one in total US fleet sales, capping off its best first half in more than five years for fleet sales. That includes its highest government sales since 2009 and record full size pickup sales driven by strong commercial demand. Now, earlier this year, GM announced that it was scaling back its electric vehicle ambitions and the company's taking cumulative charges of nearly $11 billion related to this restructuring, including $2.3 billion in the quarter they just reported. But the move away from electrics is exactly what saved GM's margins. Plus, even though they've made this a much lower priority, there's still the number two player in the American electric vehicle sales. 13% market share. As GM explained the overall strength of the business. There were a couple of things that stood out. First, GM is separating itself from the pack with its technology, the company's OnStar business, their safety and connectivity platform. 800 million in revenues up 20% year over year. And its deferred revenue was up nearly 50% year over year. Some of that's thanks to GM Super Cruise Semi autonomous Hands free Driver assistance Technology this quarter recognized revenue for Super Cruise was up 70% year over year and the company added about 70,000 new subscribers. Second, GM continues to be very competitive on pricing. The company said it had three consecutive years of pricing discipline which in turn is why they now have some of the lowest incentive spending in the industry. They don't need to cut prices deeply in order to lure you in because their pricing never got insanely out of hand to begin with. Finally, GM has been aggressive about improving its cost structure. They've seen 70 basis points of total company margin expansion over the past few years. I know that doesn't sound like much until you realize that GM's major competitors have seen their margin shrink by 400 basis points over the same period. Get it all told, everything seems to be going pretty darn well for gm. But the best part of the story frankly is that the stock's cheap. Can't find a lot of cheap stocks right now, right? Even with its 8% gain over the last two days this thing sells for 6.2 times the midpoint of full year earnings forecast. Yeah, 6.2 B. That's the kind of multiple you expect from a boom and bust cyclical business that's about to go bust. GM is very cyclical but its earnings are going higher, not lower. And I'd expect that to continue unless the war of the Rand gets much more extreme sending oil to to the triple digits. The analysts who cover this thing certainly expect more growth in 2027 and 2028. Now if GM stock can get what we call re rated higher just a little bit the gains they'd be enormous Even if it only starts trading at 8 times earnings based on next year's estimates which seems reasonable this now $82 and change stock would go to $119. Of course that doesn't mean the market will change its mind. As we saw in the first half of the year the stock is hostage to macro forces especially the volatile price of oil. But the bottom line at a time when we're looking to diversify away from checked at least to some degree I think General Motors terrific idea. Despite a tough environment. GM just reported an amazing quarter fueled by automakers phenomenal execution. Given that the stock sells for barely more than six times earnings I'm betting there's plenty of upside here. Especially if piece breaks out in the Middle east and the high higher the price of oil goes, the more likely it is that our government will cut some kind of deal. Now we want to Go to Don in Ohio. Don.
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Caller
Hi, Jim. I started a position in Allstate at $220. It's now over to 50. Where do you see it going?
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Jim Cramer
Look, Allstate is a steady Eddie. I don't talk about it much. It's been good. The reason I'm talking about is, Frank. It's a low multiple stock and in a business, it's really hard to understand for a lot of people, but Allstate's been a winner. And all I can say is congratulations. You did a good job. Let's go to Rebecca in New York. Rebecca, Hi.
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Caller
Good evening, Mr. Kramer. I'd like to know what your opinion is. Ford. It's like what was really thinking the past year.
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Jim Cramer
You know, Ford. Look, I have a long standing belief that Ford is very undervalued. Okay? It needs to get the warranty thing better. I think it's doing that. It sells for only 8 times earnings. My problem is GM is cheaper. But I will say that I think that, that Jim Farley's doing everything he can to get it right. The legacy of what he inherited is a lot tougher than people thought. But he's getting it right. And over time. I can't see why you buy it with a 4% yield. How you're going to get hurt. I know that may not be enough for you, but the stock is up in the past year and I don't think it's expensive anyway, if you're looking to diversify away from tech, I think General Motors is a great way to do it. Not sliding Ford, but gm a little cheaper now. Much more man money and including my post earnings exclusive with ServiceNow. Then I give you my blessing to. Oh boy. Speculate. As long as you do it wisely. One stock of last night's lightning round reminded me of that. I know how smart you guys are. I listen, I'll reveal it. And of course, all your calls, Matt and Fire tonight stay with Craver. For over a year now, the enterprise software stocks have been crushed by worries about competition from. I take the stock of ServiceNow, a once beloved company that helps businesses automate all sorts of IT and back office processes. As of today's close, this stock was down almost 38% year to date and more than 60% from its all time high in January of last year. Nobody expected anything good here, which is why the stock got pulverized today in anticipation of earnings. But after the close, ServiceNow reported a nice top and bottom line beat. With its revenue growth accelerating for the first time in Four quarters. On top of that, they raised the full year forecast for subscription revenue. Turns out this is pretty good, which is why the stock bounced in after hours trading. Earlier tonight, I got a chance to speak with Bill McDermott, the chairman and CEO of ServiceNow. Take a look. Mr. McDermott, welcome back to Bad Buddy.
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Bill McDermott
Jim, great to be with you.
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Jim Cramer
How are you? Fine. I hope you are too, sir.
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Bill McDermott
I am. Jim, great to be back on your show.
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Jim Cramer
Okay, so Bill, revenue growth, growth. Some serious acceleration. People were concerned maybe the last couple of quarters they didn't have the growth that they wanted. This seemed to be the quarter where you definitely have pretty strong bookings. Looks good.
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Bill McDermott
It's been great, Jim. You know, we're the fastest growing major enterprise software company and now cybersecurity company and we're operating at the rule of 56. So the companies firing on all cylinders. This AI control tower for business reinvention, really driving AI, but keeping these companies secure with all the agents, all the critical infrastructure, networks and devices. We're in the cyber business, Jim.
- [32:30]
Jim Cramer
Yes, look. The ServiceNow's blueprint for agentic business. After what happened today with OpenAI and Hugging Face, I thought that this was a brilliant document. And I did not know that you do this, what for a huge percentage of the Fortune 500, you're involved in this?
- [32:44]
Bill McDermott
Absolutely. In fact, Right now, the AI control tower is really taking the Fortune 500 from AI chaos to AI discipline. For example, you know, this token consumption has become a big issue. As you know, we manage that, enforce those policies and the kinds of things that are happening in the media today around AI, we have a kill switch that stops AI agents that go rogue. So those things don't need to happen and they wouldn't happen when companies run ServiceNow.
- [33:15]
Jim Cramer
Okay. Now we do have to try to figure out there is a puzzle because the stock has been going lower. There's been a pushback by some. I'm just going to read you one. One Analyst said, sure, ServiceNow is doing fine now, but customers are going to sign shorter contracts and negotiate better terms for their deals because of the emergence of a competition. Now you push back on this point, haven't you?
- [33:40]
Bill McDermott
Of course. Because all you have to do is look at first of all our renewal rate, which is the best in the industry at 98%. You look at the term of our contracts, they've actually gotten longer and that is measurable in crpo, the current remaining performance obligations and the remaining performance obligations in the company, which are growing as fast as our subscription revenues. So that is actually factually incorrect. And you know Jim, when you think about the big picture here, what is the big question for investors? They want a company that has a system of record with the IT system of record for the biggest, most successful companies in the world context. We have 100 billion workflows, 8 trillion transactions a year. We govern and regulate all the AI in the major enterprises in the world and everything around pricing is outcome based. But yet even as we do outcome based and half of our revenue in our net new cases are going to consumption, our customers love that we give hybrid predictability and the pricing and they also love that we're managing the pricing on everyone's agents because we're controlling everyone's agents. Okay, so think about it this way, Jim. There's going to be more AI, there's going to be more incidents and all these things drive more and more volume to ServiceNow, which drives revenue, it drives RPO. And that's why we increased the full year guide. That's why we told the markets will be a 32 billion plus company between now and 2030. And we couldn't be more confident. Okay, we're in the bull's eye of everything.
- [35:31]
Jim Cramer
I hear you on that. I just want to again be sure that our viewers are getting what people are saying because they're probably saying, why is the stock down? I'm going to read you something from KeyBank analyst Jack Snyder. He published a review of your report on Monday and he said, quote, we have heard from customers that they renewed large contracts early, nine months early in one case in order to avoid the large pricing increase that was going to be imposed upon them. Had they made the switch over to the new pricing model on July 1. Is there a chance that you pulled forward some of these contracts?
- [36:03]
Bill McDermott
No, there's no chance. And I don't know what that reference is to a price increase. In fact, the only prices that I can see increasing are the ones that are associated with, with how much more business that we're doing. So we're increasing the volume and when people do more business with us, we actually lower the price. So I'm unaware of these cherry picking stories, but I can tell you this, Jim. The proof is in the pudding. Who else put out a print like we put out today? Who else has beaten the high end of their guidance and raising their annual guide? You know, there's a lot of talk out there in the enterprise and there's a lot of experts, but you know, the enterprise is a little bit like politics. You know, lot of Talk a lot of progress at service now, not a lot of progress everywhere else but. And I would like to say.
- [36:58]
Jim Cramer
I'm sorry. Go ahead. I'm sorry, please. Well, I was just like Jensen Wong. I think Jensen has a good line. He says ServiceNow is destined to be the best platform, the operating system, enterprise, AI agents in video. To me that's somewhat dispositive of how things are going.
- [37:17]
Bill McDermott
I would say, you know, the ultimate voice of the AI generation is Jensen. And the most valuable publicly traded company we've been building with Jensen AI for the seven years that I've been here. We beat every single quarter that I've been here. We beat this one. We raised full year guidance. We have so many customers that love service now. We have six unicorns now, Jim, that are at a billion or multiple billions. We're about to launch another one. I told the market AI control tower was going to be a big thing because there's 2.2 billion agents entering the global workforce in the next couple of years. So how are you going to manage all of these identities? How are you going to manage the other very good software companies in the enterprise that have big install bases and their agents? Well, there's only one company that goes all the way through from workflow now to cybersecurity. You know, we're the fastest growing cybersecurity company in the enterprise and now we're the eighth largest cybersecurity company in the enterprise. So think about managing literally 100 billion workflows, 8 trillion transactions, 7 billion devices in real time and then the critical infrastructure of the most important companies in the world like the great J.P. morgan and Jamie's building at 270 Park Avenue that's running on Armis. Vesa is managing the identities and we're running all the workflows for the most important companies in the world.
- [38:54]
Caller
Jim.
- [38:54]
Bill McDermott
We're just getting started.
- [38:55]
Jim Cramer
Well look, you know, look, I want everyone to know all sides. I mean the stock has gotten hit, the stock goes up, the stock goes down. But I know you are true north when you talk about your company. I appreciate the pushback on those comments that I read because those may have been driving the stock down. And yes, I do believe that if Jensen Wong believes that you are number one, he does not award that lightly. Bill McDermott, thank you so much for coming on the show. Chairman CEO of Serviced Out. Good to see you Bill.
- [39:25]
Bill McDermott
Thank you Jim. Good to see you.
- [39:27]
Jim Cramer
May have money specifically coming up.
- [39:30]
Show Host/Producer
You've got questions. Kramer's got the answers. Get charged up For a fast fire lightning round. Next.
- [39:47]
Jim Cramer
It is time for the white round cruiser wrapper across the same the stock said about sell. Celtics not question my stamps on playing the sound. And then the lightning round is over. Are you ready, Steve? Dag time the light round because I'm going to start with Scott in New Jersey.
- [40:02]
Show Host/Producer
Scott.
- [40:04]
Caller
Hey, Jim. I wanted to know whether you think this stock is a buy, sell or hold. It's down over 80% or more in the last year.
- [40:12]
Jim Cramer
Symbol F I Gigma. No, I mean, look, Figma came public. It just had this moment. People loved it. It's a very competitive market. I don't want to be there. Let's go to Mary in Texas.
- [40:24]
Caller
Mary?
- [40:26]
Jim Cramer
Yes.
- [40:26]
Caller
Hi, Jim. How are you?
- [40:27]
Jim Cramer
I'm good, Mary, how are you? It's hot here, but I'm good. Okay, fair enough. Good point. Power generation, what's up? I wanted to find out what your thoughts are on solaredge technology. Solar stocks are not doing that well right now and unless you have some earnings to to go on. But with higher rates, it's really tough to make some money in the solar situation right now. Let's go to Brett, Maryland. Brett.
- [40:57]
Caller
Jimbo. How are you?
- [40:59]
Jim Cramer
I'm doing okay, Brett. How you been doing?
- [41:02]
Bill McDermott
Pretty good, thanks. Yeah, I had a question about Ionq Ion Quantum.
- [41:07]
Jim Cramer
I know the AI and the quantum
- [41:10]
Bill McDermott
industries are merging together.
- [41:12]
Caller
The stock has a high
- [41:16]
Jim Cramer
ratio, high beta as well. Just Ionq. Yeah. The problem with IOQ again, I mean, we're dealing with a rate. When rates go up, these stocks are very tough to own. So I am going to steer clear of it because I see what the rates are doing and it just. They're not going in the right direction. Let's go to Jeffrey in Massachusetts. Jeffrey, how are you? Jim, Happy hawk day. Oh, yeah, absolutely, man. How about you? What's going on?
- [41:43]
Caller
Not too shabby, but got a good one for you here. After Q2 earnings report, would right now be a solid time to support Buy More in db?
- [41:52]
Jim Cramer
You know, Good. Yes, good. Regionals and I really support the regionals. I also think there could be a lot of, you know, don't forget some consolidation. But the regional banks have been a fantastic place to be. I look at your purchase. Take a look at key. I mean key. We had number cuts. We people didn't like it. What's the stock do? Go up. That's what I like. Let's go to Isaac in New York. Isaac.
- [42:15]
Caller
Hey, Jim.
- [42:16]
Jim Cramer
Isaac from New York City. My family's been watching you for over 20 years. Thank you for Everything that you do.
- [42:21]
Caller
Oh, my.
- [42:22]
Jim Cramer
Thank you. Okay, look, I like these old carp. These stocks have given up the ghost. They've come down all the way. I think we got to take a look at them. I think that that was. That's a very good situation all the way down here. I mean, are you taking a shot at it? No. We know that power's in short supply. Constellations got it. Oh, and that, ladies and gentlemen, concluded of the Lightning Round.
- [42:46]
Show Host/Producer
The Lightning Round is sponsored by Charles Schwab. Coming up at the week's halfway point, Kramer's giving his top tips to help you get over the hump.
- [42:57]
Jim Cramer
Next.
- [43:05]
Show Host/Producer
Tomorrow, kick off the trading day with Squawk on the street live from post nine at the nyse.
- [43:13]
Bill McDermott
Jim, we're making our way.
- [43:15]
Jim Cramer
What do you want to talk about? Enjoy the game. Never my father. All right.
- [43:21]
Show Host/Producer
It all starts at 9am Eastern.
- [43:25]
Caller
Jim Cramer, the die hard of the doll. Hey, Jimmy. Love the show.
- [43:29]
Jim Cramer
My five year old grandson loves to watch your show.
- [43:32]
Caller
I have to thank you for making us money when it's there to be made. Our world is a better place with you in it.
- [43:50]
Jim Cramer
I've been fixated on speculation for ages. In fact, I'm pretty much the only person on TV who consistently recommends buying a speculative stock. Why? Because when you get it right, you can hit it out of the park. That's why. And if you get it wrong, well, you can be grateful that stocks stop at zero on the way down. We know that if you own a stock and it gets wiped out, it hurts. I owned a two dollar stock in my hedge fund years ago, Memorex Telex, thinking, hey, all I can lose is two bucks. But I kept buying on the way down and by the time it did go to zero, I had lost $2 million for the fun. It hurts something awful. But as I say in how to Make Money in Any Market, you can own a portfolio that starts with a bedrock position in S&P 500 index fundamentals. Always start with that. Then build out a portfolio of five stocks which you buy gradually over time. That's the program of the book. One of those stocks can be speculative. I think that a 1:10 of your portfolio is in a speculative stock. There's nothing wrong with that level of risk. It's a long shot. We accept long shots in many parts of our lives. You're on cowshe. You probably gone for a long shot. I know you may do some of the parlays on DraftKings. Whoever really wants to buy the favorite Belmont or Kentucky Derby. Impossible Games of chance. Now some good opportunities that have an excellent risk reward as long as you just pick one. Is that wrong? Hardly. Some of the biggest winners over the last hundred years have been long shots. We know that the government has waged war against big tobacco for decades. Surgeon general after surgeon general has railed against smoking. But the stock of Philip Morris, which rebranded and divided into Kraft, Altria and Philip Morris international in the mid 2000, has still been the greatest performer of the past century. Which brings me to last night's show and a call I got from Chris in New York who asked about Keel infrastructure. Simple K E L I know at first I'm thinking Keels. I mean they make the astringent. I used to take off my makeup every night. They aren't public. As Chris goes on, I see it's a $4 stock and it, for lack of a better term, is the ultimate long shot. It's a data center play that's got 650 megawatts of approved power but hasn't yet secured a hyperscaler as a customer. And I'm thinking of the time a couple of years ago when I saw this company Nebulous and videos extravaganza GTC. I didn't know them either. Stock was about $20 when Nvidia CEO Jensen Huang took me across the floor to meet these guys. Nebulous is now at $218 and Nvidia owns 9.3% of the company. Could kill be the Nevada ex Nubius. That was easy House of pleasure. I looked into it and I know the hyperscalers are indeed racist buyers of power. As you heard from Google tonight. Keel has it. I know the situational awareness. The high flying hedge fund that's been early and right owns 20 million shares of this thing at least as of the first quarter. Of course nothing is perfect when you're speculating or wouldn't be speculation. Keel has negative free cash flow, $577 million in debt and a ton of crypto exposure. Yep, it's a crypto miner. The former Bit farms. At least it didn't grow lettuce. Change the name in April. This one has it all done. Plus BTIG. A reputable broker says they could nearly double from $4 to $8. What can I say that I don't wish I caught Nebulous that I dislike core weave. A huge win because of stars of Bitcoin Miner? No way. I did. All I can say is Chris in New York, I think you might be on to something and leave it at that I like to say as always the bull market summer I proud side by just for you Radio Man Money. I'm Drew Kramer. See you next time.
- [47:32]
Jim Cramer Disclaimer Narrator
All opinions expressed by Jim Cramer on this podcast are solely Kramer's opinions and do not reflect the opinions of CNBC or its parent company or affiliates and may have been previously disseminated by Kramer on television, radio, Internet or another medium. You should not treat any opinion expressed by Kramer as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. Kramer's opinions are based upon information he considers reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy and it should not be relied upon as such. To view the full Mad Money disclaimer, please visit cnbc.com madmoneydisclaimer yeah, maxing is
- [48:05]
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