← Mad Money w/ Jim Cramer
Mad Money w/ Jim Cramer
Mad Money w/ Jim Cramer 7/6/26
00:43:59
Listen to Jim Cramer’s personal guide through the confusing jungle of Wall Street investing, navigating through opportunities and pitfalls with one goal in mind - to help you make money. Mad Money Disclaimer
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- [00:00]
Jim Cramer
The board recommends approving regarding that seat on the committee. We're promoting quarterly earnings. 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.
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Commercial/Announcer
Visit vanguard.com investorchoice to learn more.
- [00:22]
Jim Cramer
Vanguard investors own shares of our index funds, which own shares of the companies they invest in.
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Commercial/Announcer
Available for Vanguard Index funds that participate in Investor Choice.
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Jim Cramer
Vanguard Marketing Corporation Distributor when the right
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- [01:02]
Jim Cramer
My mission is simple to make you money. I'm here to level the playing field for all investors. There's always a bull market somewhere, and I promise to help you find it. Mad Money starts now. Hey, I'm Kramer. Welcome to Mad Money. Welcome to Kramerica. Other people made friends. I'm just trying to make a little bit of money here. My job is not just entertain, but educate. Try to teach. So call me at 1807 for 3 CNBC tweet me at you, Kramer. Nothing throws off home gamers like you. Then a rotation, those huge swings in stocks that seem to make no sense whatsoever, at least when it comes to the fundamentals of stock shows. When you don't understand why your stocks moving, sometimes violently, it creates too much mystery. It makes you want to leave to run not just index funds, but to the sidelines entirely. I stand against that. And I want to demystify, mystify this, demystify what a rotation means. And I also want to tell you how to profit from it. So in a day when The Dow bids 156 points, S&P gained 0.72%. Nasdaq jumped 1.12%. Let me walk you through what's behind so many of these big moves so you can profit from them. First, you have to understand that there are huge funds that make their decisions based on key, key pieces of data. These money managers have what's known as a worldview, meaning a vision of what's going to happen in the near future. Often these people run so much money that they can't just pick stocks. Individual stocks are too small for them. Some they don't own the whole thing up. They have to pick broader Trends and use ETFs or self created baskets. The problem is the worldview can change on a dime. The biggest piece of data, at least for the stock market is is the monthly non farm labor report. We often see rotations based solely on that employment data. The labor report we got just last Thursday showed a pronounced slowdown in hiring. It's true that unemployment rates stayed the same. No panic here. But when taken granularly, the report suggests that consumer spending may indeed be weakening. That can trigger a major change in how these money managers see the world. If you're running tens of billions of dollars, you might want to de emphasize stocks that depend on consumer spending and overweight. Another maybe technology, where companies aren't that sensitive to the consumer because they're mostly business to business, not business to consumer like we're about to talk about now. Sometimes we get these rotations that are impossible notice because there's so much else moving a market. You get lost in it. This is not one of those times. This market is distinguished by how thin it is. Thin meaning there aren't many buyers or sellers. So if someone big decides to move money in a basket, just entrusting brokers to say get this thing done by
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Caller
the end of the day.
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Jim Cramer
That's how it really works. You're going to see some massive moves in real time for no reason whatsoever. Why do we care about this? Because these rotations create dislocations that seem to come out of nowhere. And sometimes those dislocations can give you incredible opportunities to high quality companies at a discount that shouldn't even exist. And it wouldn't if weren't for the rotation. Today we got a bunch of them. I've been recommending Johnson Johnson ever since they mostly got past the overhang from all those tax lawsuits. No, the special litigation has gone away, but JJ is now fighting each case individually. So there are really no major rulings that can impact the stock that much. Johnson Johnson reports on the 15th of July. Often the stock trades erratically on the report day. I know that, but then begins to run higher in stair step fashion. I think the company will have lots of good news about its myriad blockbuster drugs, especially its oncological franchise. I expect some good news about share gains in cardio. And I like the Johnson Johnson separating itself from the scrum that is orthopedic surgery. The knees, shoulders, waist that have become commoditized. Selling the orthopedic business simply gives the rest of the company a much higher price to earnings ratio meaning it goes higher just to get rid of something that's not so good. Today the stock closed down $3.70 at $259.33. The rotation took the stock all the way down to 256. This stock was 263 last week. Nothing's happened. What a great level to start a position a high quality drug company. The crazy thing about jj it is now pure play pharma business with no consumer exposure to begin with. It's so can view its over the counter business already and it's parting with Orthopedics which has a huge actually believe it or not consumer component because of the voluntary nature of what can be very expensive surgery. Even after shirts being taken down by mistake people. That's why I think you have to pounce by mistake. Or how about Pepsico? Okay, last quarter PepsiCo reported a fantastic set of numbers that sent the stock soaring. Now in part because of this rotation, the stock's been knocked down all the way back right around where it was before it took off. Tapepsco dropped nearly a buck, sinking to a level where it sports a dividend yield north of 4%. I think the rotation has given you a terrific place to start a position ahead of Thursday's report. I am sure that CEO Raymond Laguarta simply cannot be satisfied with a stock that's flat for the year. That's not his style. Next we know that a cup of coffee at Starbucks might not be such a bargain. Oh, I like that new protein drink by the way, more than some of the other guys. But this rotation has put the common stock on sale. It got dinged for more than $2 today. 102. At one point it traded at $100. CEO Brian Niccol has been working hard on the turnaround, but you've rarely gotten a break in stock. Hey, speaking of coffee, for those of you who are junior growth enthusiasts, how about this one? Dutch Bros. Dropped 5.6% today. Now for those who want to take a risk, you might want to start a position and I'm being, I'm, I am. I'm out there on this one. Constellation Brands STZ Now I know there was a negative part of the street piece about spirits but it read some of pretty negatively. But the quarter Constellation just reported last week was one of the first that even remotely smacked up a bottom, especially in beer. I think there was enough here to say that we got a bottom in earnings. But this historic thin trader fell nearly $7 today. 130 and change. I think it's a steal down here. I remember was double that. Especially given the fact that the stock now has a 3% yield. And no, I am not worried about World cup sales being being down because Mexico lost in the World Cup. Hey, by the way, that defeat is now in the stock here today. Finally, a whole bunch of retailers got shelled by the rotation. I don't want earnings risk when I extrapolate someone else's worldview on my own stock picking. But if you think the consumer is weaker, that means the consumer could be in trade down mode. Trade down means TJ Max. The stock got walloped right at the opening, fell below $150 before rebounding. Finished the session. You're off nearly three bucks. 151. I can't think of a more advantageous place to buy this high quality stock. Down 20 points from its high. Very rare that you get that. Remember, there are two components to TGX earnings. The trade down and the amount of excess inventory they can pick up from struggling retailers for pennies on the dollar. When the last cops go, there's a ton of spare inventory sloshing around. That's exactly what we want. It's a key stock in the Chabot Trust. All you got to do is join my club, the CMC Investing Club, to find out more. I wish you would. Here's the bottom line. If you can spy a rotation and figure out what the theme might be, you can identify some incredible bargain stocks. I'm talking about JJ, PepsiCo, Starbucks, even Constellation Brands. And yes, TJX. They all took it on the chin today. I think this is a great place to do some buying because they're all collateral damage from this indiscriminate sector rotation selling. I want to go to Harrison in California. Harrison.
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Caller
How's it going? Jim? Coming to you from San Diego. And the stock I'm calling about today just underwent a massive stock split. And it boasts a tremendous. It boasts tremendous fundamentals, yet the share price has lagged in the last year. What are your thoughts on booking holdings? Ticker bkng.
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Jim Cramer
Okay, now remember this stock's last quarter. Glenn Fogel's terrific CEO. This stock's last quarter, it was not a blowout. And everyone's gotten so used to booking holdings doing the blowout that they decide to sell the stock market. I agree with you, Harrison. I think it's a buy. How about we go to Pete in Texas, please. Pete.
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Caller
Hi, Jim. Thanks for taking my call.
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Jim Cramer
Of course, Pete. Booyah. Right back at you. What's going on?
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Caller
Well, semiconductors have been doing well, but my interests are more down to earth. How's John Deere doing?
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Jim Cramer
Symbol D. Oh, my God. All right. So I was talking to someone this weekend. The guy said, what do you like? I said, dear. He said, why now? First it happened to be because there was a deer that had gone right in front of the road. So I said was in my mind. But deer is just on foot fire. The stock is incredible and it's not done going higher. All they have to do is talk on the conference call. They'll knock it down, though. They have incredible history being way too conservative. I'm a champion even more than they are. Here's a good stock. Hey, let's. Why stop here? Why don't we go to Fritz in Washington? Fritz.
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Caller
Yes, Jim. Thank you. It's a pleasure to talk to you.
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Jim Cramer
Same, same.
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Caller
Fritz, my curiosity is Costco. I. I've had Costco for decades. I start, I think I started in 93, early 90s, and I bought the stock for a reason. A friend told me once, he says, they ever see that parking lot full of cars and that store full of people buy their stock and you know, it's been that way since its beginning, but over the years, you know, I play with it, I watch it, but it stays. At this point in time, it's 800 to $1,000 and it kind of stays there up and down.
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Jim Cramer
Well, Fritz, we have to look at Costco is very important. There are periods of what I regard as underperformance coupled with new spurts up as it gets to where it should be. It's at 46 times earnings. If it drops to 45, you're going to see a major move up. It got a little too expensive. I too have had this from my travel trust. I don't know, maybe since the travel trust started, you can follow it. Yes, by joining the CNBC investing club. We write about it constantly, Fritz. It can be frustrating, but it will be rewarding. All right, now listen, if you can figure out the why behind a rotation, you can identify some incredible bargains that are definitely worth. We saw this today. Time to do some buying in the stocks. I mentioned Honeywell spin off Soul Stick. This announced it's buying Elements Solutions today. We know both. How is the company capitalizing on a data center demand? I've got exclusive but the solt is top Ranch Solstice is going to be the leader, then Trump accounts are officially live. But how should Americans approach these new investment hubs? I'm giving you a primer on how to maximize returns for the long haul. I didn't hear about it today. I'm giving it to you now in the cloud market has been evolving this lately. So what names should you be eyeing to send your portfolio to the disguise? Of course I got you covered so stay with Kramer.
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Commercial/Announcer
Don't miss a second of Mad Money. Follow at Jim Cramer on X. Have a question? Tweet Kramer hashtag Mad Mentions. Send Jim an email to madmoneycnbc.com or give us a call at 1-800-743-7-CNBC. Miss something? Head to madmoney.cnbc.com
- [12:32]
David Sewell
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Jim Cramer
In early May, we had two different specialty chemical companies on the show Solstice Advanced Materials, which had recently spun off by Honeywell and and Element Solutions, which came public via a SPAC merger roughly a decade ago. Both of them have exposure to some really hot themes like semiconductors, datacenter, and as we just learned, they're merging. Solstice is acquiring Element Solutions in a cash and stock deal value at roughly $14.5 billion. The market didn't see the love the transaction though as Solstice saw its stock plunge 15% today. Look, some that's just the arbitrage guys going to work when there's a stock based transaction, they short the buyer and they go on the target. I think this is a very smart deal though and this pullback maybe give me a terrific buying opportunity. I know we thought about it for our trust today, but don't take it from me. Let's check in with David Sewell. He's the fight. He's the president and the CEO of Solstice Advanced Materials. Get a better read on the situation. Mr. Welcome back to Mad Money.
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David Sewell
Jim. Great, great to be back. Thanks for having me.
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Jim Cramer
Well, thank you, David. Maybe you can just walk us through. I know there's some really good bullets about why you think it's the right time to do this deal.
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David Sewell
Well, we're really excited about it. Obviously we're at a generational growth opportunity in semiconductors and advanced electronics and the combination of our two companies we believe gives us a comprehensive product portfolio and really a world leading advanced materials business and semiconductors, data centers, AI. And we couldn't be more excited about it and the future and the position we have in this segment.
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Jim Cramer
All right, so tell me about what you think happened to the stock today because I felt that there was a chance, candidly, I've got to tell you some, David, I thought there was a chance, as I said this morning, that both stocks would be up because I look at this as a premium multiple enhancer.
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David Sewell
Well, we agree with you. I think when you look at the value of what these two companies bring, you're talking about, you know, strong high single digit growth, low double digit EBITDA growth, a really strong margin profile and the mid 25% EBITDA margins. So we agree with you. But as you said, I think you, you hit the nail on the head whenever you announce a deal like this. We, we know there was a lot of hedge funds, a lot of arbitrage in there. We've been telling the story, reporting has been very positive on the strategic rationale for the deal and we know we'll, we'll be back in the future. And as we execute on the transaction,
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Jim Cramer
maybe you can explain the ratio, who gets what, how much of it, of the, of the company only belongs to Solstice, how much to you?
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David Sewell
Sure. So it was a cash and stock deal. As you mentioned, Element Solutions received a half a share of Solstice stock as well as $10 in cash, which really accounts to about 44%. Element Solutions ownership, 56% Solstice ownership. And just two great companies coming together in a leading advanced materials business in semiconductors.
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Jim Cramer
Now, I think people may not realize, but you also have a fabulous nuclear business that you're staying. It's not becoming, it's not a pure play electronics. I don't mind that because I think the nuke business is so powerful. How is that doing?
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David Sewell
Nuke business is fantastic. And you're right. And it actually synergizes. So our nuclear business is sold out through 2030. As you know, it's uranium hexafluoride. We do the nuclear conversion for nuclear fuel and it all ties to the data center. So now we are in chip fabrication, advanced packaging, thermal management. We're in the data center with our refrigerants business doing all the cooling. We've got our nuclear business. So we're helping power the data centers to help solve the power shortage. So all of this ties together and we just think we are a critical infrastructure for AI and data centers and we're really well positioned for the future.
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Jim Cramer
There's a real scarcity value to the companies that make the material that semiconductors doctors are based on. We've been looking at this group with it, we thought that Element Solutions, also Kunity. These are remarkable companies with great secular growth. A lot of them are covered by chemical people. If it were covered by tech analysts, which they will be maybe now with merging the stocks would be much higher.
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David Sewell
Yeah, it's a great growth, growth proposition.
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Caller
Right.
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David Sewell
It's growing at unprecedented levels for the next decade. The demand is significant. And now we've got a complete solution in our product portfolio to help solve the biggest challenges our customers have. And, and we know that as we execute and deliver on what we promise, the share with the share price will follow.
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Jim Cramer
Now you're staying, obviously you're going to be the CEO. Now we had. He's a terrific guy and I know he was on the call, but he will just, he will just be a board member if I'm correct.
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David Sewell
That's correct. Ben has been an unbelievable partner through this. And I'm sure you know, sir, Martin Franklin, who started this company, he's been phenomenal through this process. We've really built this strategy together. We really believe in what these two companies can do. The innovation we have, the differentiation and we're just, we just can't wait to get started and work together to drive growth in this really, really attractive industry.
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Jim Cramer
Okay. There was one line that, that I thought was quizzical where you talk about how you want to maintain it's kind of maybe oxymoronic. Some of my critics have been saying a strong sub investment grade credit rating. How do you have a strong sub investment grade credit?
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David Sewell
Well, basically what we're saying is we're going to maintain our credit rating. We have a strong non investment grade credit rating. We are, we are only going to be three and a half times net leverage with this deal will be down below three times levered within 18 months. This deal is accretive in year one, so we're fully financed on the deal and we feel great about our cash position as well.
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Jim Cramer
One last question. I know that the tradition of Honeywell is to is from Dave Cody's days is to buy and sell and buys. I know he did more than 70 of them. Are you now happy with the Solstice map of what has to happen without making any more disposals or acquisitions?
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David Sewell
Well, I think our portfolio is really well positioned. We have a great blend of products. But this accelerates where we want to take our company. The vision and strategy we laid out for our board of directors right after the spin and I think it'll allow us to tailor, make the portfolio be maybe a little bit more streamlined and focused so we can just get down the fairway and grow faster than the market and really deliver for our shareholders.
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Jim Cramer
Couldn't agree more. That's why we emphasize it today to our club members saying that it's been in the bullpen. We've been waiting for it to come down. That's actually a positive positive when you have a great situation like this, not a negative. David Sewell's the Solstice Advanced Materials Presidency. David, thanks for coming on the show.
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David Sewell
Thanks for having me.
- [21:20]
Jim Cramer
Of course.
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David Sewell
Take care.
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Jim Cramer
Everybody's back here for the break.
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Commercial/Announcer
Coming up with Trump Accounts going live over the weekend. Should you be looking to open one for your child? Kramer's explaining what you need to know next. A History of the United States in 100 Objects is a brand new podcast from 99% Invisible and BBC Studios. Each week we're looking at a different object from across American history with a unique story to tell about who we've been, what we've built and what we've allowed ourselves to forget. Some of these objects are well known, many are not. But all of them carry the story of how we got to this moment. Find A History of the United States in 100 objects on the 99% invisible feed. Wherever you get your podcasts.
- [22:06]
Jim Cramer
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Jim Cramer
I love this story. A year ago, as part of the One Big Beautiful Bill act, the President created something called Trump Accounts. Now these are tax advantage accounts, designed like an ira, except they're aimed at your children. Those accounts finally went live this weekend, and whether you love the President or hate him, I don't care. I want to help you take advantage of these things because they're so good for you. I'm not trying to get political here. This is a simple case where there's money on the table and I'm urging you to take it. Let's start with the basics. Trump Accounts, formerly known as 5-30-A accounts, are tax advantaged, meaning your gains within the account will grow tax free. You can set one up for your kid in any year before they turn 18. Once the kid's old enough to vote, they can take control the account themselves. And at that point it operates just like a traditional individual Retirement account or ira, meaning they can withdraw money without penalty Once they turn 59 and a half, though, penalty free withdrawals will be allowed for some specific uses like tuition payments and first time home purchases. Very important. Under the current pilot program, children born between the beginning of 2025 and the end of 2028 will receive $1,000 initial deposit from $1,000. Like hitting the lottery. Okay? It's the moment their parents or guardians open one of these accounts on their behalf. Like I said, there's money on the table. All you got to do is take it Even if your kids are too old to qualify for that thousand dollars from the treasury, they don't give up. If they live in certain zip codes, they might be eligible for $250 seed deposits from some civic minded billionaires. If you live in a zip code where the median income is below $150,000. Michael Dell that's right Adele. He's got you covered. If you live in a state where Micron operates, they might have $250 for your kids. Remember Sergeant Miroji, CEO? He announced $250 million contribution on our show. Hey look, this stuff is just. You got to check it out. I've never seen anything like it. At the same time, families, friends and employers can contribute collectively contribute five grand per year per child to these Trump accounts. Many major firms are already providing matching funds for their workers like they already do with 401k contributions. By the way, none of this counts as taxable income.
- [25:33]
Caller
Wow.
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Jim Cramer
So what will these Trump accounts be invested in? Last week the Treasury Department announced the default investment LineUp along with 4 Low Cost Index funnel turners is good. At launch though, all contributions to Trump accounts were will be invested in the State Street Spider Spider Caps Portfolio S&P 500 ETF. It's a cheap exchange traded fund that mirrors the performance the S&P 500. When you're investing for someone very young, oh, it's hard to go wrong with an index fund. The four additional options include ETFs from BlackRock's iShares subsidiary, Vanguard and State Suite which track either the S&P 500 or the S&P 1500 or the entire stock market. But it's not clear exactly how soon these other options will be available. For now you can only put your kids money in that default SB 500 index fund from State Street. It is a pretty darn good way to get your children started investing. Now there are some open questions here, but they're positive ones. Last week treasury announced that it would accept large philanthropic gifts of individual stocks. This morning the President and CEO of SpaceX announced that she and her husband will be donating roughly 2 million shares to the Trump accounts of children of children between the ages of 1117 who live in areas with lower average household incomes. So good. It sounds like these basic shares will be going right into the Trump accounts for the children who qualify. But again, we don't really know the details of this. So is there some catch? Honestly no. I mean this is a very straightforward tax advantage account. If you take advantage of an Iraq, you should take advantage of a Trump account for your kids, especially if they're eligible for that $1,000 initial deposit from the federal government or one of the small deposits from philanthropists and employers. Those could grow though. Free money. I'm calling it free money. Of course, these Trump accounts aren't the only option for parents looking to save and invest on behalf of their kids. In some cases, you might be better off putting money in a 52529 college savings plan for children who earn their own income. A Roth IRA might make sense. If you want to look at the terms of these, please go to how to Make Money in Any Market, because I spend a huge amount of time distinguishing among these. Finally, you can always set up a custodial account for miners under the Uniform Gift of Miners act or Uniform Transfers to Minor Act. Most brokerages offer these type of accounts. They'll lack some of this tax advantage of the Trump accounts or 529 accounts, but your investments will likely be taxed at the long term capital gains rate, which tends to be quite a bit lower than the tax rate on ordinary income. Plus, you can actually pick individual stocks for those accounts rather than being locked into a set of index funds. But the free money that will come from many Trump accounts, including $1,000 for every child born between 2025 and 2028, makes them an actual no brainer for anyone whose kids are eligible for these grants. If you're talking about a savings vehicle for your own contributions to your children's savings, there are plenty of other high quality alternatives. Doesn't hurt to have one more option though, especially when it comes with free money, and I'm going to emphasize that till the Cal School bill. With that in mind, how do you actually get a Trump account for your kid? Write this down the formal answer is that you need to complete IRS form 4547. That's something you could have done with your annual tax return, or you can do it next year. But if you don't want to wait, you can set up a Trump account over the web through the IRS's individual online accounts portal. That said, the easiest way to open a Trump account now is through the program's website, and that's www.TrumpAccounts.gov, www.TrumpAccounts.gov or through the Trump Accounts app, which is now live. You can fill out and submit the IRS form 4547 right there through the app. Then you can view and manage your kids Trump accounts right in the same place. My recommendations do it that that way. So here's the bottom line on this very exciting day and just a terrific story. Trump accounts are now live. I encourage all parents and custodians to explore opening one for their kids, especially if they're eligible for initial seed deposit, either the $1,000 deposit from the government for kids born in 2025-2026 or one of the donations from a growing number of philanthropists and companies that a Trump account is a must create. And in any case, I love the goal of getting kids started with investing early, which is what this program is designed to do. Regardless of how you feel about the president, I'm now begging you. I mean, I get on my knee. Help I get on my knees to take advantage of this tax advantage vehicle for your children. I wanted this for years as the kind of equalizer our country needs. Larger pie. I can't believe it's actually happening. Take calls. Let's go to Tom in Wisconsin. Tom.
- [30:13]
Caller
Hi, Jim. I talked with you on your show about eight years ago about Goldman Sachs. At that time, Goldman Sachs was $180 a share and you said buy, buy, buy. So I did, did, did. And now Goldman Sachs is over $1,000 a share with rumors of a split. What do you think?
- [30:34]
Jim Cramer
I think that at 17 times earnings. I know this sounds strange, Tom, but know what? It may actually be just as cheap when I recommended it at $100. When I look at the earnings, this company could easily go to $1,700 without a problem and still not be expensive. I want you to hold on to that tiger, just as we're doing for my Channel Trust, which has been involved in it for a very long time. Thank you for the call which reminds people how much money you can make in individual stocks. All right, people. I love the goal of getting kids to started with investing early, which is what the Trump accounts are designed to do. Free money. Much more mad money ahead when it comes to the cloud. Can all dogs learn new tricks? I'm taking a look at some companies that are evolving to fit the new world and some that are just getting started. Sound like very good, very good investments then. We know short sellers love to hate tech stocks, but sometimes the media encouraged it too, and I don't like that. I got a bone to pick with some recent coverage on display, of course, all your calls. Rapid fire. Tonight's just a lightning round, so stay with Kramer. Last week we learned that Meta platforms might pivot some of its AI business and join the ranks of the neoclouds These are companies that basically sell computing power externally, not just use it for themselves. Now that is great news for shareholders because Meta needs to monetize more of that investment Now. Matter is similar to the major cloud infrastructure players like Amazon Web Services, Google Cloud and Microsoft Azure. Oh, but there are some big differences. For years these three firms dominated cloud computing and they had every advantage. They had the best data centers and the best infrastructure because they're the ones who who built all of this stuff out to begin with. But over time it became clear that artificial intelligence requires a different kind of Data Center. These AI companies aren't renting one GPU inside a 72 GPU rack. They want the rack and the whole cluster. That's changed the game. Amazon Web Services was great for the old cloud, but their data centers were not ideal for AI, which is why they've had to spend fortunes upgrading their infrastructure. Just like Google and Microsoft. Which brings me to the Neo clouds. These are alphabets with only one priority. Get the AI factory online and make the GPUs usable. They exist to deliver reliable compute faster than the competition. Honestly, this whole edifice exists because of Nvidia. One of the major reasons why stick with the stock. They've been major backers of the big Neo class because they want to stave off a long term competitive threat from the hyperscalers themselves. Google, Amazon, Microsoft, those have all developed their own chips to to compete with Nvidia. They all want to reduce their dependence on Jensen Huang's chips. And Jensen actually doesn't want a world where all AI computers controlled by three cloud giants that are actively trying to build their own custom chips. That's why Nvidia has helped create this new customer class investing the likes of Core Weave and Nebbyous. Jensen wants an ecosystem that runs through Nvidia and that's why he helped this entire industry develop. But the business now getting crowded. Which is why tonight I want to explain the differences between the major Neo cloud alphas. You hear about them all the time. Let's learn about them. The first bucket is the major players. We can skip over the old guard hyperscalers, aws, Google, Microsoft, because we're already familiar with them. I mentioned that Meta Platforms is wisely using its spend to go well beyond that current usage. I regard that as found money. So let's go straight to the new AI age hyperscalers like Oracle, like Core Weave, like Nebulous and maybe a few other private companies. Now we know Oracle's been getting killed lately, but it has the biggest Market cap in this group is one of the only companies that can raise the type of capital needed to capitalize on this new type of market for premium short term AI scale rentals. It's a very expensive proposition. As my colleague David Faber said this morning as Walking the Street, some analysts are expecting Oracle can earn more than $15 per share in 2029, nearly $20 per share in 2030. Now if the company can hit those numbers, that means it's now trading at just over seven times 2030 earnings. Geez, that's cheap. Now it could work as a stock with a little more surety. I don't know, but my head picked up when I heard those numbers. Now maybe founder and chairman Larry Ellison can take advantage of the compute shortage and sign a premium deal with anthropic like Elon Musk did, sending his stock soaring. Even though Oracle stock is now back below where it was when we learned about its massive open air deal last September, it's tough to bet against these guys big opportunity. But Oracle also has the most to lose in terms of market cap, even after the hideous decline. Now next is Core Weave. It's a pure play new cloud firm. I talk about it quite a bit.
- [35:23]
Caller
Core.
- [35:24]
Jim Cramer
We are going to be the best in the business with a strong diverse client base for its massive warehouses full of servers. Now the stock came public in March of last year at $40 a share. In a sea of pessimism, the stock shot up above $180 last June and since dropped back to the 80s, more recently dinged by the meta news. These things are all wild traders. Core. We've ended the first quarter of 2026 with a backlog just under $100 billion, giving incredible level of visibility into future business. The expected revenue ramp is aggressive from just below 13 billion this year to just under 25 billion in 2027 to more than 40 billion in 2028. Earnings are expected to reach $3.36 per share in 2028, $6.90 in 2029. Not bad if those estimates come true. And a big swing from the losses the company currently generates. And correct is currently cheaper than the last price where Video invested in. Intriguing. The key question here, like with Oracle, is whether Corey's backlog can convert into profitable revenue. After debt, power, depreciation, construction and customer concentration, I think it's one of the stronger players in the new space. Many people has got to start thinking about at least generating some profit. Next up is Nevius. It also has the Jensen long seal of approval and videos took a $2 billion stake in this March. Its revenue is also set to ramp even more aggressively than core weaves. Nebulous has Met assigned to a five year deal worth up to $27 billion to including 12 billion of dedicated capacity and up to $15 billion of additional capacity with delivery starting in 2027. It also has Microsoft as a major customer. All the stock's been a juggernaut too, up more than 150% year to date. While it's gotten a bit more expensive on some metrics, the growth is incredible and the biggest question now remains execution. All of these new cloud stocks got crushed last week when they heard that Metta wants to get in on the action. Met has been one of the industry's biggest clients. Now it wants to become a competitor. The Bears ran wild response arguing that we built too many of these data centers and it's the dotcom collapse all over again. How many times have you heard that? But I think that is just doing the smart thing. They've spent fortunes building out data center capacity, so they might as well rent out at least some of that compute to generate a return on investment in the process. The fact that they can rent out computers computed at a huge premium tells you that there's a shortage of data center capacity. Not too much a shortage, others agree. The stock is now up about $50 since the announcement. SpaceX is now in the same business as well and it's allowing them to totally change the economics of their business. Normal neo cloud contracts average somewhere between 12 to $15 to $12 to $15 per billion, 12 to 15 billion per gigawatt. But when you look at the Space X deals with Anthropic and Google, they're pestering out to three or four times that. She's just a lot of money. Of course most of the new clouds can't play that game. They need long term offtake agreements to finance the building. But SpaceX, Meta and Oracle have deep enough pockets to make this happen. How about the small operators? You hear their names all the time. These are more like hybrids between neoclouds and specialized real estate cars Location service this bucket includes former cryptocurrency miners and raw power companies. They're not always selling a complete cloud services suite. This group can still generate strong returns and some are strong takeover targets too. But they are certainly less proven here. I want you to think Iran Hot 8 Cipher Digital Terror Wolf on today on our network Bit Deer Technologies Core Scientific these companies are more like actual landlords of compute than full stack AI clouds. Now look, they're promising ones. Here I runs more of a hybrid, supplying the real estate, power and shell while also running workloads. It's an Nvidia strategic partner too, and it's going like a weed. Keep in mind, if you have spare compute, someone like Anthropic will equally snap it up. Just today, Terror wolf signed a 20 year $19 billion deal with Anthropic which sent their stock up nearly 5% of employees at blood work. Here's the bottom line. When you look at what SpaceX has been able to charge Anthropic and Google for spare computing power, it's no wonder everyone else wants a piece of the new cloud action. Oracle, Core Weave and Nebius are in the high performance full stack AI cloud bucket that can command better pricing. Iran's a bit more of a hybrid. Then there are more speculative names like Core, Scientific and Terrible. It may seem like these companies keep coming out of the woodwork, but the level of demand remains off the charts. Net money's back after the break.
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Commercial/Announcer
Coming up, you've got questions. Kramer's got the answers. Get charged up for a fast fire lightning round. Next.
- [40:27]
Jim Cramer
It is time. Time for the white round. Crushing rides are at practical. Bye bye bye Japan. On the core stock question at a time. My stamp. Here's the graphics from the pot. You're playing this down and then the lightning round is over. Are you ready, Steve Deads? I'm Lightning quiz Red. Marty. Let's start with Walter in Utah. Walter. Hey, Jim, how's it going? This is Walter. Just wanting to ask you about Chewy stock.
- [40:50]
Caller
Stock.
- [40:51]
Jim Cramer
Okay. I think the chewy it is, it's down. It's down so much. But I got to tell you, every time I say it goes down too much and then it bounces, it goes right back down. I think we have to say Chewy too hard to own. Now we're going to Paul in Texas.
- [41:04]
Caller
Paul. Hi, Jim. It's a pleasure to speak with you.
- [41:09]
Jim Cramer
All right, same. What's up?
- [41:12]
Caller
Appreciate everything you do. First have to mention that I am the president of the biggest and only Philadelphia Eagles fan club here in Dallas. Power.
- [41:20]
Jim Cramer
Holy cow. Watch your head. Watch yourself. Watch yourself. Look out, man. Wear some disguise or something when you go out there. What's happening?
- [41:28]
Caller
There we go. So there's this ultrasound imaging company that has basically has MRIs with with handheld scanners that IPO'd several years ago. A little over $20. It's steadily tanked. I really love their technology. Getting kind of Getting rid of them organic MRI machines. And I bought them late last year for $2.50 a share. Now they're trading at around 8. $58.50. 825. They're cutting their losses slowly getting FDA approvals, adding partnerships, etc. Should I hang on to what I have? What are your thoughts on Butterfly Network?
- [42:07]
Jim Cramer
Okay.
- [42:07]
Caller
Butterfly.
- [42:08]
Jim Cramer
Surprised? Never fell. Very surprised. Never fell down to 2.
- [42:11]
Caller
4.
- [42:11]
Jim Cramer
I thought it was a very interesting spec from day one. It doesn't make any money, but at $8, you can buy some. You can buy some a little bit lower, but it is a very promising company. I looked at it, I looked at it extensively and asked a lot of doctors about it. I couldn't find any flies on it. Let's go to Charlie in New Jersey. Charlie.
- [42:25]
Caller
Hey, Kramer.
- [42:26]
Jim Cramer
Booyah. Booyah. Charlie.
- [42:30]
Caller
I'm wondering about NXT Next Power Inc.
- [42:33]
Jim Cramer
I think I've lost the right to be able to say anything about this.
- [42:36]
Commercial/Announcer
That.
- [42:36]
Jim Cramer
Because that's Sug's company, Dan Sugar. And we had. We made money on it, but you know what? We left it way too soon. That man is a miracle worker. I like that company very much. But again, I lost the right to say that because we sold it so low. Go Sam in Matthew, just. Sam.
- [42:53]
Caller
Jim, how are you?
- [42:54]
Jim Cramer
I'm good. How are you, Sam?
- [42:56]
Caller
I'm good. You know, Jim, I've been looking for a way to invest in the energy infrastructure of this country. It's being upgraded. Whether it's for air or for new energy, the grid is very much so being upgraded. So looking at PLTC, this is a $1.8 billion stock. Sales is nearly 700 million. It looks like it is undercovered in terms of analyst coverage. And the stock's just been doing phenomenal.
- [43:18]
Jim Cramer
I've been in it. It's one of. It's. It's right. I mean, it's in that same category. It's a little. It's a mini Quanta Services. You have a winner there, I think. Continue to go higher. Barring communities saying no more data centers and that ladies, inclusion of the Lightning Round.
- [43:39]
Commercial/Announcer
The Lightning Round is sponsored by Charles Schwab. Coming up, Kramer's had enough of stocks tumbling on a single press release. Now he's sounding off on who's responsible next.
- [44:02]
Jim Cramer
This past Thursday, there was a devastating article in a trade publication suggesting that Anthropic, the privately held AI firm, was planning to go into chipmaking with the help of Samsung, conveniently, at least for the short sellers. The story appeared on Thursday. Impacting that day's trading and sending down almost every single semiconductor stock because Anthropic is going to make its own chips. Well, that could be devastating for the entire industry. Plus, the article never specified what kind of chips. So people sold all chips first and then didn't bother to question. The most obvious target, of course, was Nvidia, the stock short sellers love to hate. Given the fact that the 700 giant owns a big stake in Anthropic, if committing to invest up to $10 billion this year, we. Well, you might think they'd be hesitant to compete with Nvidia. But I took the whole story with more than a pinch of salt because there was no way to confirm or refute it. And that's actually precisely what I'm angry about. It's true. We have a lot of weak shareholders in this market. People would sell out of these stocks at a moment's notice because the only reason some of them like the stocks is because they go higher. So whenever there's a bit of headline, these same people sell the stocks and blast them lower. But what raggles me is that when you have a story that can't be proven or denied that. That perhaps, maybe, just maybe, that story shouldn't run. After all, any companies in the process of buying chips from an Nvidia or, say, an AMD or an ARM would like to pay less for them. And the best way to pay less for them is to float that maybe you're planning to make competing chips unless the price comes down. The media may buy this rap. The uninformed may buy it. But the pros know that when a company like Anthropic floats the idea of making its own chips, chances are it's just a stalking horse to get better pricing. There's another way to look at these leaks, though. We've seen over and over again that Anthropic loves to play a role as spoiler in entire industries. Few months back, in the dead of winter, Anthropic let people know it was developing the best cybersecurity software. The best. I don't know why. Everything that Anthropic says everything gets somehow turned into gospel. But the ensuing stories crushed two cybersecurity stocks I happen to like very much. Palo Alto Networks and CrowdStrike. Oh, it was brutal. So what do we do? We brought George Kurtz on the show, the CEO of CrowdStrike, several times to say that point blank, Anthropic simply wouldn't be able to offer a truly competing product. That it would. It would be up to the cybersecurity companies to do it that it would be up to CrowdStrike no one listen except for CBC Investing Club because I was giving giving them Maoist levels of indoctrination on this one. And the club caught nearly a double in CrowdStrike when people realized that not only would Anthropic not be able to offer workable product, no insurer would insure any company that used an AI model and also provided cybersecurity for that model. Coverage will be denied. Anthropic will cause more cyber hacks than it will prevent unless it's matched with a CrowdStrike or a palo Alto Networks listen. I have tremendous respect for Anthropic, but its claims are rarely scrutinized hard enough by the press. We in the media tend to give them a free pass. I don't share the same level respect for the news outlets that literally play for dinner. They can be the bane of your analysis. So don't be fooled. We'll work together, you and me, to defrock those who want to make waves where there's no ocean and keep you from drowning where there's no water to drown in. I like to say, as always, bull market summer. I promise you man money. I'm Jim Cramer. See you tomorrow.
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Sponsor/Advertisement Voice
All opinions expressed by Jim Cramer on this podcast are solely Kramer's opinions and do not reflect the opinions of CNBC or its parent company or affiliates, and may have been previously disseminated by Kramer on television, radio, Internet or another medium. You should not treat any opinion expressed by Kramer as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. Cramer's opinions are based upon information he considers reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Mad Money disclaimer, please visit cnbc.com madmoneydisclaimer A History of
- [47:57]
Commercial/Announcer
the United States in 100 Objects is a brand new podcast from 99% Invisible and BBC Studios. Each week we're looking at a different object from across American history with a unique story to tell about who we've been, what we've built, and what we've allowed ourselves to forget. Some of these objects are well known, many are not, but all of them carry the story of of how we got to this moment. Find A History of the United States and 100 objects on the 99% invisible feed. Wherever you get your podcasts.