Deep Dive
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Hey, I'm Kramer. Welcome to Mad Money. Welcome to Kramerica. I'll be with my friends. I'm just trying to make you a little extra money here. My job, not just to entertain, but to educate and teach. Call me 1-800-743-CNBC. Tweet me at Jim Kramer.
When people think about an exciting time for stocks, they think of the next two weeks. That's when some of the most important consequential companies on Earth report, practically at the same time, throw in the actions of the new president, and all I can say is we are not going to have any idea what the heck we're doing until we have time, probably at night, to sift through all the data points and study all the consequences. Yes, eight times a year, two weeks, a quarter. You have so much information to deal with that it's impossible to not make mistakes.
Unless you take my advice and do nothing but listen. It's the only way you won't hurt yourself. Compared to the next two weeks, today was easy. Dow dipping 141 points. This beat declined 0.29%. NASDAQ losing 0.5%. And NASDAQ, did I mention in videos, Dan? Okay, there, I said it. All right, now, what is exactly the game plan?
Well, what I've done is truncated and just focused on some of the bigger ones. But there's so many others that I could have focused on. We don't have all day here. Next week starts out calm enough when we hear from fan favorite SoFi on Monday morning. Now, I've been championing this fintech company and CEO Anthony Noto for ages. But it was one of the most heavily shorted stocks out there, and they've been keeping it down for decades.
no reason. I expect good numbers and the shorts are going to continue to be routed. AT&T reports, too, and given that Verizon, it didn't stink up the joint, I have to think AT&T will be fine. Tuesday morning, we hear from General Motors, which delivers usual great numbers. And after a nice opening, it will drift down and remain one of the cheapest stocks of the S&P because in the end, it sells cars. And the market only has eyes for one automaker, Tesla. And that's got nothing to do with the car business.
After the close, we hear Brian Nickell lay out his vision for Starbucks. Now, we own the stock for the Travel Trust, and I think it might be worth buying after we hear the new plan. I believe in Brian. He did an incredible job turning around Chipotle, and I bet he can do the same thing with Starbucks. Remember, when I said this week's too difficult for snap judgments, the Federal Reserve doesn't make it any.
easier on Wednesday when it tells us its next move. There was a time when we thought that we'd be getting a nice rate cut right about now and the stock market would plow forward. But when American Express says today that its millions of customers are spending like mad, the Fed can't possibly give us a rate cut, can it? Now, if they do cut on Wednesday, it means Jay Powell has caved to President Trump's demand for immediate rate cuts.
Too crazy for this guy, people. Good day to sit on your hands because it's a no-win situation for Powell, and I don't want to get caught in a Trump-Powell dogfight."
At least Wednesday starts with the predictable, which is T-Mobile's earnings. Lately, the stock's been beaten down. That's precisely when you got that. That's the best setup for the stock. If you want to post quarter rally. Now, same goes for ServiceNow. Now, ServiceNow. Let's listen to this. This is the quarter where ServiceNow will report a number that sends the stock down in after hours trading and you have to buy it.
it right then and there because it will rally huge at the opening the next day, Thursday. Time and time again, this happens. It goes down after the evening report. Why? It's pushed down by short sellers trying to keep it down. And then it opens up gigantically when the shorts again are routed the next day. ServiceNow doesn't even know how to miss. Set your clock to this one, at least until some company actually attempts to compete with their artificial intelligence savvy.
Buy that tip. And I almost never advise buying after hours, but I'm doing it right now for service now.
How about two wild cards? First is Microsoft. Now, this has become a battleground stock because its aggressive data center built out a so far failed AI PC. Got to call them as they see them. A possible fallout with open AI and the possibility that Copilot is nothing but Clippy 2. Yes, that little paper clip that almost ruined Microsoft's office in the late 90s. I keep trying to figure out how CFO Amy Hood can be positive to her on her part of the conference call, which is really, frankly, the only part of the conference call. Matt.
because she handles the guidance, and the guidance is the guidance. We paired this one back for the Chabot Trust, and if it weren't for the fact that Microsoft has installed BASE to beat the ban,
I have to tell you, we would have sold our entire position. The second wild card, meta platforms. I think the company will talk about dominance, visceral, raw dominance, both on the top and the bottom line. Look out, TikTok. You think you're so darn hot, but Mark the Hunter Zuckerberg has you in his sights. I, for one, am glad that Zuckerberg's an American. I bet he does the quarter in Oakley A's.
You know the Oakley AIs? They're cool. I have the Ray-Bans. I don't have the Oakley's, apparently you can't get them yet. All right, then there's Tesla.
Now, I think Elon Musk, get this, I think he could sell tickets to this conference call. He could command $1,000 easy. The last time Tesla reported, it missed numbers badly. And then it proceeded to have one of the biggest runs ever. Just soared. Right when it reported that number, I've got to tell you, I figured it out. Actually, Morgan Stanley's Adam Jones figured it out for me. He calls Tesla after that quarter an AIETF.
People want an AI ETF, so they buy the stock no matter what, especially if it's down the next day. I want you to own Tesla. Just own it. Thursday morning starts with Caterpillar, which is a conference call stock, meaning you can't make a decision until you hear the call because that's where you learn about the future. I think the stock's had an amazing run, but CAT's no longer cyclical. It's a secular grower because CEO Jim Humbleby has maneuvered his business into more consistent end markets. I said this yesterday at the beginning of the CNBC Investing Club conference call.
After the close, we have the most widely anticipated disappointment that I've ever seen. I'm about to be facetious. I want you to hear this. It's facetious. But here's what we're going to hear. Let's see. We have horrendous Chinese cell phone orders, no lift from new AI, a surprising slowdown in service revenues, lackluster vision pro sales, and of course, a radical chop to the forecast for the rest of the year.
way below the consensus. There. That's everything I've heard about Apple for the last two weeks. I just hear, and since the year began, I just keep hearing that over and over again. But if everyone knows it's going to be worse than expected, can it still be worse than expected? How can it be a surprise? If everyone expects the worst and we get the worst, will the stock still get clocked? Kind of, yeah. Because Apple's priced for slightly better than expected set of numbers and we won't get one. But
But so then why not dump it? No, I still say own it. Don't trade it because I believe Apple's an amazing company with amazing management. Whatever goes wrong will be fixed. I just don't know when it will be fixed. Historically, you're better off sitting tight than trying to trade this one. My travel trust has such unbelievable performance in the stock precisely because Apple controls its own destiny. Not that hard to do when management's fantastic and the product's superb.
Oh, Intel reports, too. Let's hope they have a way to raise cash. Different story than from Apple. They need it. Their balance sheet's heinous. You can't own the stock until they fix it. Finally, Friday brings numbers from oil giants Chevron and Exxon. I don't want to own the oils here because who knows if they cave to President Trump and start drilling like mad. I think they're going to stay disciplined. But if Trump wants more drilling, do you think he'll pick on the little guys? No way. He'll go straight to...
to Exxon and Chevron. Oh, and if it weren't enough for this week, we get the Fed's favorite inflation gauge. That's the PCE deflator number. I think it won't be cool enough. Too much spending for that to happen. The exhausting bottom line, look, it's a sheer hell week. Our heads will be spinning swivel-like, lazy Susan even, as each day you can expect a flood of earnings and a sound bite from President Trump that upsets whatever order they might take.
Like I always say, don't try to make decisions during this part of earnings season. Just listen. It's too hard, and I don't want you to lose money just because this is one of eight super exciting weeks of the year. Bob in Tennessee. Bob. Jim, good to talk to you. Same. I'm one of the founding members of your club. We love founding members of the club.
All right, let's hit it. Bristol Myers. It's up 40% over the last six months. The market value is $120 billion. The enterprise value is $163 billion. Do I hold it?
You bet you. No, no, you don't hold it. You buy more. This Cabenfi, I'm telling you, this is a radical new drug. It's the first new drug for schizophrenia we've seen. It works much better than the others. No weight gain. And I think it's remarkable. Four percent yield and a guy, Chris Berner, who I think is dynamite at the helm. I'm not telling you to schnitzel, buy, sell, whatever. I like Bristol Myers. Let's go to Alex in my home state of New Jersey. Alex.
Jim, I got to thank you for all that you do for us novice investors. But I want to ask you about Hershey. Hershey, what do you think? I mean, they have a lot of pressure with the cocoa prices going up. We know they're hedging against it.
supply chain crises. We know the energy prices. 52-week low. 52-week low today. 3.6% yield. That doesn't protect against any because you know you can get a lot more for interest rates. The stock is, the numbers can't be made. Still sells at 16 times earnings. Wake me up when it sells at 14 times earnings and then I might even consider it. If you have to own sweets, go own Mondelēz.
Okay, just on Mondays. I like the Tate's cookies. They're very good there. And I had Toblerone. They had Toblerone in the office today. I didn't have any. They took it right from me. I did have ice cream. First time in the office in maybe 19 years. Let's go to Ben in Florida. Ben! Mr. Kramer, I appreciate your call. From Monmouth County, Georgia to Montgomery County, Pennsylvania. Oh, my. Springfield High School to the championship. Let's go. There you go. There you go. Hey.
Hey, can you tell me why nobody has any respect for PayPal? And go birds. Oh, co-eagles. Look, I tell you, this person does have respect for PayPal. They have a meeting in February that is going to blow your socks off. I have to tell you that I think that this guy, Alex Chris, is the real deal. It's at $89. Buy some now, and if it does happen to come down before February, buy more then.
I have total respect for PayPal and total respect for Alex. It's a good stock and a good company. All right, leave it to Ben to know that. I want to thank Ben. Next week brings a flurry of earnings. Pair that with the Trump news cycle, which happens every day. It's a spin cycle. It's kind of like my washing machine. And you're going to have to practice patience. I know it's hard, but it's going to be a virtue.
On Mad Money Tonight, Intuitive Surgical, ISRG, fell on yesterday's report. So is this chance to buy a dip of one of the greatest companies, one that I love? And what's the investing club doing to take action on this move? Because, man, are we ever tempted. Then, NVIDIA backed this little-known AI stock. But should you? I'll reveal the new name of it.
And tell you whether it's worth eyeing. Plus, I'm giving you a behind-the-scenes look at the CNBC Investing Club as I take some members' questions left over from our monthly meeting yesterday. So stay with Kramer.
Don't miss a second of Mad Money. Follow at Jim Kramer on X. Have a question? Tweet Kramer. Hashtag Mad Mentions. Send Jim an email to madmoneyatcnbc.com or give us a call at 1-800-743-CNBC. Miss something? Head to madmoney.cnbc.com.
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Last night, Kramer Fave Intuitive Surgical reported what I thought was a good quarter. But this minimally invasive robotic surgery play saw its stock fall 4% today in response. So I figured we got to get to the bottom of this one because I really like the stock. In fairness, Intuitive Surgical's stock is up almost 55% last year and going in today.
It had run nearly 17% year-to-date, even after this pullback. It's still up almost 12% in 2025. But I still hate to see declines like this. And Toyota Surgical caught fire last week because it preannounced strong top-line numbers ahead of its presentation at the JPMorgan Health Care Conference. That sent the stock up nearly 8% last Wednesday. And I've got to tell you, I thought that ISRG was the star of the whole show.
So how in the world did they disappoint investors so much last night, given that they'd already pre-announced great numbers last week? Did something big happen? Well, in yesterday's monthly meeting call for CNBC investing club members, I briefly mentioned to a surgical saying that we were thinking about adding it to the portfolio. I'm glad we waited. But now I'm wondering if it's time to buy the dip. Do we have to pull the trigger? Why?
Why did this happen? First, last week, they really did pre-announce some tremendous fourth quarter results. 25% revenue growth, much higher than expected, and an acceleration from 17% growth in the previous quarter. Madman said that they placed 493 of their DaVinci surgical systems in the fourth quarter, and 174 of those were the latest generation DaVinci 5 systems.
Finally, worldwide DaVinci procedures grew roughly 18%, which is important because they sell consumables for each procedure. I want you to think of it as kind of a razor, razor blade business model. Intuitive Surgical followed that up with a bullish presentation at the JPMorgan Healthcare Conference, citing their growing total addressable market, a strong launch for the DaVinci 5 system, and excellent supplemental growth from the company's Ion platform for bronchoscopy procedures.
Intuitive even showed a little leg with its 2025 outlook, guiding for 13 to 16 percent worldwide procedures growth this year on the DaVinci platform. These are all very good numbers.
So what the heck did the company say last night to make so many investors give up on the stock today? It certainly wasn't the earnings. They made $2.21 per share this quarter. A company, well, analysts were looking for $1.79. They also ended the quarter with $8.83 billion in cash and cash equivalents. That's a nice war chest. The issue, it seems,
was management's full-year forecast. Remember, the forecast, not the numbers that it just reported. Intuitive Surgical reiterated the procedure growth guidance that it issued last week. However, the company also issued gross margin and expense guidance that were new, and it seems incrementally negative. Intuitive Surgical said the expected gross margin was 67% to 68% this year. That is down from 69.1% last year and below the 68.4% consensus estimate. At
Additionally, they're talking about operating expense growth of 10 to 15 percent up from 10 percent last year. Those are important. I got to say, any concerns about rising costs here, I feel, are overblown, if not totally misguided. If investors had bothered to listen to Intuitive Surgical's conference call, they would have heard some very reasonable explanations for the modest step back in profitability. First, management explained that the expected gross margin decline reflects, quote, significant incremental depreciation, quote,
end quote, as they bring on new facilities, as well as, quote, the impact of growth in newer products and the impact of the stronger U.S. dollar, end quote. Now, let's take some time. Intuitive Surgical is opening several new manufacturing facilities this year, two in California for the DaVinci 5 and then Ion Systems, respectively, and then the new Endoscope manufacturing facilities in Germany and Bulgaria.
Once those facilities come online, these assets will begin to depreciate. And this is a cost that will be reflected on two of the surgicals income statement. As these new facilities come online, they plan to move manufacturing for some mature products to other facilities. And as a result, it expects elevated inventory levels. Now, I think that comment, anytime you hear elevated inventory levels, that comment always spooks people.
going to. But anyone who's focusing on this minutiae, I think, is missing the point. What matters is that tourist services have such strong demand that they have to build all kinds of new manufacturing facilities all over the globe in order to keep up. Any pain from that on the cost side will be more than made up by the company's incredibly durable demand.
As for the other two, I'm not worried about the, quote, impact of new products, end quote. That likely includes the company's ION system. Maybe it's a couple percentage points less profitable than the classic DaVinci system, which Intuitive has been refining for decades. But it's also pulling up their overall growth rate, and that's more important, I think, to a growth stock. Finally, the $1 trillion is something that all U.S.-based multinationals have been dealing with. It's on every single conference call that I listen to this week. While it's not ideal, it's totally beyond their control. Now, there's one more wrinkle here.
which is that Intuitive Surgical added the following disclaimer when discussing its gross margin guidance. Quote, our actual gross profit margin will vary quarter to quarter depending largely on product, regional and trade in mix and pricing. The range does not include any potential impact of new tariffs on our business, which could be material. End quote.
Huh. We think that that last bit about the potentially material impact of tariffs, that definitely spooked some people. Intuitive Surgical makes a significant portion of their instruments in Mexico, which President Trump has been threatening with blanket tariffs as high as 25%. This is the kind of ambiguous threat that investors and analysts hate precisely because they can't model it. But my feeling is that we'll deal with tariffs as they come. Once we have information about what's actually happening, we'll recalculate. Try and anticipate Trump's next move. I think...
On trade, actually on pretty much anything, so fools are. Because every word he says may be part of negotiation. How about Intuitive Surgical's higher operating expense guidance?
Look, pretty much everything I mention here has to do with investing to grow the business. In my view, that's money well spent. Most companies don't have that much opportunity. The companies you should really worry about are the ones that can't grow. Intuitive Surgical has the opposite problem. It is some of the best growth that you'll find, not just in health care, but everywhere, especially big cap health care. If you have to sacrifice a couple percentage points of margin in order to keep their growth rate solidly in the double digits, great deal. Put
Put it all together, and I'm glad Intuitive Surgical started selling off today. In fact, I hope it keeps falling. The only problem with this stock is that it's too expensive right now. Currently selling for 62 times the extra earnings estimate. Very high. Like three times the average stock here. Granted, these guys have a long track record of crushing those estimates.
But still, nobody likes to pay up, right? Today's decline helps cool off the stock's valuation. Maybe they'll come on the show when they came on the show last time. Talked about DaVinci 5. It was fabulous. Bottom line, like I've told members of the investing club, we've been waiting to start a position into a surgical. And nothing about this quarter makes me like it less. You're simply getting a chance to buy the dip here, which is why I'm now praying for more weakness to give you an even better entry point. Maybunny is back after the break.
Coming up, an under-the-radar AI player with an NVIDIA kicker. The stock has soared, but is the move artificial? Kramer reveals the name and what's ahead for the stock. Next.
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Last night, we got a call from Joseph in North Carolina who stumped me when he asked about Nebius Group, which he described as a preferred partner to Kramer Fave NVIDIA. And in fact, NVIDIA has taken a position in the company. I was pretty intrigued by this. But alas, I never even heard of it. So you know what I did? I came clean. And then I promised to circle back. Now, this one was tough.
Tough because Nebius seems to have come out of nowhere just a few months ago. In mid-October, just before the stock started trading, the company announced what looks like its core product, an AI-native NVIDIA Cloud platform. By November, Nebius was calling itself a, quote, preferred cloud service provider, the NVIDIA Partner Network, end quote. And then in early December, we learned that they'd raised $700 million from a private fundraising round that included...
In the process, the stock has surged from $14 when it started trading in October to $41 and changed now, including a monster 7.9% gain today, seemingly came out of nowhere. So we got to ask, what the heck is going on here? Now, first, the reason I never heard of Nebius is because this company changed its name in August. It used to be known as Yandex. And Yandex, I know. It's basically the Google of Russia, a stock that came public in 2011, but we never paid much attention to it because who cares about the Google of Russia?
Now, the stock was suspended in February of 2022 after Russia invaded Ukraine, and it only avoided being delisted from the Nasdaq by promising to divest its Russian business. That deal finally happened last summer when Yandex sold its Russian unit and then started with a pot of around $2.5 billion in cash from that sale. The company announced a new name, Nebius.
and a new mission, quote, to become a leading provider of infrastructure and services to AI builders globally. I love that. Yandex founder and former CEO Arkady Volov, who resigned from his position in 2022 after the EU sanctioned him for the company's role in promoting Russian propaganda, had his personal sanctions lifted in March of last year, and he rejoined the newly branded Nebius as CEO last summer.
So here's the deal with Nebius. In a nutshell, the company's planning to acquire as many high-end GPUs as it can and then build brand new AI data centers, essentially selling a robust, modern cloud platform to customers.
Think of it like the Amazon Web Services, except instead of normal servers, they got servers powered by NVIDIA's best chips, ideal for building cutting-edge AI applications. Now, earlier this week, for example, Nebius announced the general availability of a number of leading text-to-image AI models through its Inference-as-a-Service platform. Inference-as-a-Service.
There are a couple other parts to this business, but the core of Nebius is the AI infrastructure business. Even though it's still getting up to speed, it already made up two-thirds of the company's revenue in the most recent quarter. And it's pretty much all they talk about. Now, this idea of basically acquiring as much NVIDIA computing power as possible and then leasing that to customers, nothing new.
One of 2025's largest IPOs could potentially be from a company called CoreWeave, which is a much larger version of the same story. Used to be a cryptocurrency miner, this CoreWeave, but they pivoted to AI infrastructure because these applications all use the same chips from NVIDIA. Lots of startups are moving in the same direction. It's easy to raise money for this right now. Back to Nebius.
We have limited financial information on this company, but here's what we pieced together. In the third quarter of 2024, they had $27 million in revenue in the quarter and a run rate of roughly $121 million in annual recurring revenue, with their earnings for interest, taxes, depreciation, and amortization coming in at negative $7 million. You know I don't like to recommend stocks that aren't making money, but bear with me here.
In October, the company was also stating some lofty goals for 2025. They were talking about $500 million to $1 billion of annual recurring revenue by the end of this year, and they also expect their EBITDA to turn positive. By early December, when they did that private fundraising round, Nebius raised its forecast, talking about an annual recurring revenue run rate of $750 million to $1 billion by the end of the year. So numbers are coming up kind of like this. However...
There's also some stuff that raises eyebrows. During that week in December when Nebius shot up 67%, the stock was promoted a couple of times by Citron Research, a.k.a. Andrew Left. He's a well-known former short seller who was charged with fraud by the SEC last summer. While Left maintains his innocence, the SEC claims that he was basically running a pump-and-dump operation.
Second, Nebius got its first analyst coverage last week when a firm I've never heard of called BWS Financial rolled out a buy rating and a $51 price target. Again, the stock closed at $41. They're very enthusiastic about the AI infrastructure business. Who isn't? Third, Nebius has repeatedly claimed to have a close relationship with NVIDIA. But in December, Bloomberg published an interview with CEO Arkady Vlas, who says he might not necessarily be able to get early access to NVIDIA's new Blackwell chips.
More importantly, he mentioned that the company wants to do another much larger capital raise sometime this year. Now, if they do a secondary offering, shareholders could take a real beatdown. Now, putting it all together, while I like that Nebius has given us some hard financial targets, this is already a nearly $10 billion company. Meaning it's trading at roughly 20 times its full-year revenue forecast. That's incredibly expensive.
Yeah, if you hit the company's targets, it might be justified, but that's really a big if. I honestly don't love the idea of recommending Nebius now if the stock's had this big run. Not when we're likely to get another fundraising round this year. I don't want to be a chump here. I didn't like the bit about that NVIDIA Blackwell chips where Nebius said they're coming, and then that CEO later said basically, we hope they're coming.
I don't like that there's no real institutional support for the stock either. I'd rather have analysts from Goldman Sachs, Morgan Stanley, J.P. Morgan put their name and their reputation behind this one rather than Andrew Leff and BWS Financial, whoever that is. Secondly, you might want to wait to see how the CoreWeave IPO goes before sticking our necks out on similar nebulous.
But more generally, can I just say this? Given that the core business here is acquiring NVIDIA's best chips and then essentially leasing them to customers, why not just own the stock of NVIDIA? Do we really need this middleman with a checkered Russian history to invest in the idea that people want access to these chips? I get that NVIDIA has distribution partners. Many of them are great, like Dell or HP Enterprise. I like both of them.
But what's the point of buying a company that talks about itself as a pure play on NVIDIA's chips? Keep in mind, Nebius and Coreweave aren't necessarily doing anything special here. The traditional cloud infrastructure hyperscalers have the same darn hardware and much bigger budgets. Let me give you the bottom line on this one. I want to thank Joseph in North Carolina for putting Nebius on our radar screen, but I am not ready to start recommending a stock here. Now, if you want to invest in the idea that companies want NVIDIA's best chips, you know what? I got an idea.
Why don't you simply buy the stock of NVIDIA? Let's go to Phil, also in North Carolina. Phil! Jim, how are you today? I am well, Phil. And how about you?
Jim, I'm fair to Midland. You know, I call every once in a while and that's what I say. I'm fair to Midland. Not too high, not too low. Yeah, I know Phil. Phil's always fair to Midland. I always fair to Midland. Anyway, I know you, I normally call on lightning round, but I wanted to spend a minute with you. I know your time is valuable, but you know what? My time is valuable too. You bet. And that's how I feel.
Okay, so this stock, I just can't get an entry point. As much as I want to get in every day, it seems like it's going up. Today it was flat. So in order to get it, though, I'm going to sell my Verizon, and I'm going to wait until the beginning of February because I'll get my yields. I think it's like February 3rd. Now, this next stock, Shane, I'm going to give you a new term. It's called a reverse schnitzel. Reverse schnitzel?
A schnitzel? Oh, a schnitzel. Reverse, you mean buy a little, buy a little instead of sell a little, sell a little. No, I mean sell a little, sell a little bit. A schnitzel, a schnitzel is fine. A schnitzel means we let some go. Well, no, I mean, in the business, what we say, we schnitzel it. We do a little schnitzel. You can buy it, sell it, buy it, and sell it. I'm going to tell you what to do. But what's the stock? Right. The stock is Palantir. All right, Palantir's going higher.
All right. Palantir is going hard. That's the way it is. I think that it's a meme stock. I think it goes to 100. They push it up every day. I think when you get a down day, you just buy it. That's what they're going to do. And I got to tell you, Phil, it is really an unbelievable thing. This is GameStop, except for it has actual revenues and earnings. Let's go to Bruce in Pennsylvania. Bruce. Hey, Jim. First off, long time, first time. Sincerely appreciate all that you do. And go birds.
Oh, man, go Eagles. Go Eagles. I mean, honestly. I mean, I don't even think they should have to play. They have to play. That's unfortunate, but they have to play first. Well, they do. I'm not looking through the commanders. I'm not looking through the commanders. I think the commanders are an amazing team. I think Josh Harris is an amazing owner. I have actual friends who like the team.
Yeah, you know, I understand. And they've got a game to play on Sunday. They get paid, too. They get paid, too. All right. That's right. So my stock that I'm curious about is Twilio. And I have been in and out of Twilio literally since they went public. Generally done pretty well. However, I took a position, you know, several months ago. And my question is, you know, this...
I think I want to sit on it and hold it forever, given that. Yes, I want you to. And I went over the quarter and then I searched through the website. I cannot believe how this company has really become one of the great assistants to small businesses trying to build their business. It's a great customer relation management tool. I agree with you. I would own it. And if it came down, I would buy more. That's a strong endorsement. But that quarter was really incredibly good.
all right i'm not sure nebius is the best way to play a chip demand thesis right now if you want to invest in the idea that people like it in the video in video ships match just so you buy the stock of video which is being knocked down apparently by a story out of china that may or may not be really important that was in the new york times now much more mad money ahead including my answers to some fantastic questions from our investing club members and the
And later, Texas Instruments ended the day as the worst-performing S-3500. I'm looking at the road ahead for the chip company. Oil calls rapid fire in tonight's edition of the Lightning Round. So stay with Kramer. ♪
Yesterday, we held our CNBC Investing Club monthly meeting. Now, once a month, Jeff Marks and I get together to walk club members through our thought process of how we make decisions for the portfolio. We discuss our current holdings and then we take questions from our club members. My favorite part of the whole darn thing is taking your questions. And since we didn't have enough time earlier to go through all of them, I
I am going to give you an inside look at what we do for the club right here, right now. Remember, if you want to get in ahead of next month's meeting, you've got to make sure you join the club first. So I want you to scan this QR code next to me. I know how to do scanning, so I know you do, too. Or you can go to CNBC.com slash investing club.
up is Ron in Georgia. And he asked, I thought Jeffries had a good print on their last quarter, but they got clobbered. I am holding on to the stock and it's come back a lot since then. What's your opinion? Let me just tell you, first of all, because my mind is on football. I thought he was talking about Jefferson. No. But let me just tell you this. I think that Jeffries had a surprisingly bad quarter.
I think Goldman Sachs had a surprisingly good quarter. So here's what we do. Even as I just think the world of the CEO of Jeffries wants you to sell Jeffries and I want you to buy Goldman. Goldman's cheaper. Goldman's better. Rich Handler won't mind that I said that. And David Solomon will be thrilled. Now let's go to Steve, who is in my homestead in New Jersey, who asked many times to talk about ringing the register.
Can you give me a sense of a percent gain to start? And you do this more than once. Many thanks to you, Jeff, and Ben, Jeff's our chief scientist, for all you do for us home gamers. And also research director. OK, so this is really important because it's not science. It's more of an art. Let's take NVIDIA. OK, so NVIDIA became about 7% of the fund.
So we had to trim it back because it's just way too big. We became the NVIDIA fund. So we cut it back to say around a little bit north of 5%. Then there'll be other situations that go up so fast. And here I'm thinking about something like Best Buy, where it went up so fast that it didn't reflect the current fundamentals. So we trim some. And then there's just situations where we have such big gains that I feel like bulls make money, bears make money, and pigs get slaughtered. And we take some off there. But we never take off more than around 25% if we like the situation.
If we, I think the situation has played out. We just get rid of it. Now let's go to Antonio who asked, hi Jim and team, given their stable dividend income and their lower interest rates, what would you think about adding REITs such as realty income or VG properties? I have been toying with the idea of owning realty income because they play monthly checks. I think it's a really, really good situation. VG, I don't like the last few things that they bought. I'm not going to touch VG, but, uh,
But realty income, I really like the idea. Next up, a question from Phil, who asks, during campaigning, Trump had mentioned rolling back credit card usury fees. What would you expect the impact on Merck's fees and other card companies to be? Don't worry about Visa. Visa is just kind of a...
transfer system. American Express, not that much worried there. The one you'd be focused on is Capital One. Now, let me tell you a funny thing here. Capital One is actually my favorite. I put it in the bullpen, so to speak. I'm thinking about buying it because of this Discover merger, which is going to be so bullish and because I don't think there will be usury fees. So I want to go against what the president's musing was right there and buy Capital One, COF, a really well-run, really, really well-run credit card company. Next up,
Albert asks, my family has been shopping at Target for years. The stores are attractive and busy, but I continue to be disappointed in their stock performance. Is it time to put my money to work elsewhere? You know what? I actually think that there's going to be like an activist at Target eventually because it does have a good balance sheet and it's very cheap. But here's the problem. They do food and food is something you need scale on and Costco and McDonald's.
Walmart do much better food. They do delivery. And that's something you need scale on in Walmart and Amazon do a much better job. They need more pizzazz. And that is something that Brian Cornell can control. And they haven't had it lately. You don't hear like, I got to go to Target. I got to go to Target. They need to bring the excitement back. And it doesn't have it right now. Now, let's take a question from Ram, who asks, love the show and everything about your style and format style. I guess he likes it.
I don't know. This is an ICA with the upcoming AI and robotics impact. What is the investment potential of Rockwell Automation as an investment opportunity? I'm looking to gradually invest 10,000. OK, to be fair, I have been disappointed in how much they're really doing in robotics. They've done something. I'm going to tell you they do have a lot of robotics, but I'm going to just put it out there. I know you're not going to buy this, but the one if you want to buy robotics, here's what you do.
You buy the stock of Tesla. You can wait till they report. The stock usually goes down when they report. They report this week, get an opportunity to buy it the next day, take advantage of it. Now let's go to Steve who asks, my sons think Facebook is for old fogies who don't have a life, but they are on Reddit all the time. I saw Reddit share price go up 40% in one day not long ago and it seemed very volatile.
Is this a real company that should be considered for investing or is it a meme stock? It is very much a real company. Steve Huffman, the CEO, does a fantastic job. You're not an old fogey. I like Matt ahead of the quarter. Reddit just went up huge this week. I think you got to wait for a pullback Reddit. I would prefer to buy it in the 150, 140 range. Thanks again to all the club members for your insightful questions. And if you want more of this, make sure to join the club ahead of next month's meeting. Man, money is back after the break.
It is time! And then the lightning round is over. Are you ready? Let's start with the lightning round. I'm going to start with, how about David? David! David!
Hello, Tim. I've been following you for many years, and I want to ask you, is Tetra Technologies coming up from the ashes? It's a very good company. It did come up from the ashes, but as a matter of fact, it's come up so much, it's up 28% for the year, so I cannot sanction buying it, given the fact that it has incredibly high price earnings. Let's go to Anne in Indiana. Anne. Hey, Tim. I just renewed my club membership, so thank you. Oh, thank you. Thank you. Of course.
So do you think we should be concerned about Abbott's new lingo? Because I was reading about the smart ring. So would Abbott still be a bifolder spell? Abbott was, along with Intuitive Surgical, one of the stars of the JVC.
of the J.P. Morgan Healthcare Conference last week. I'm glad I went out there. Regina Goetz and I went and really kicked the tires on Abbott, and we love what we saw. Robert Ford is doing a remarkable job, and the stock is up in a straight line at 125. I can't recommend anything on a straight line, but pull back a couple bucks, so it's good.
because this should be one of the great pharma stories because it's got the best growth in device and pharmaceuticals. I think it's great. And the market finally seemed to realize what Robert Ford and I believe. Abbott is a great company. Big position for the trust. How about we go to Jim in Texas? Jim.
Jim Kramer, hey, thanks for taking my call. I'm here with my grandchildren in Texas. Oh, fabulous. Lucky guy. Oh, those kids all have horse sense, don't they? They sure do. Hey, I appreciate the call. I'd like to thank you for three things real quick. One, your expertise. Two,
Two, how you educate people. And three, you educated my wife to the point of she's now our family financial manager, which frees me up for a lot more golf. So thanks. Well, it is about teaching. I mean, I say it. Look, I'm done with the making. I like to make money. Everybody likes to make money. I like to teach. I would be teaching in a classroom if I weren't here. And believe me, there's no way I'd retire from classroom. No way I'm going anywhere here. Let's go to work.
Great. You do a great job there. Thank you. Stock is new holding. And you. Thank you.
You know, this is a fintech company, and it's a really hard company, fintech. It's very expensive. I actually would prefer, I prefer SoFi or Sports on Monday morning. And thank you for those nice words. Holy cow, it makes me feel good. It's going to be a weekend. Got a tough game on Sunday. My wife would say, oh, you have a tough game? What, are you like suiting up or something? Just shut up. She wouldn't say shut up. She would just say be quiet because she's really sweet. Let's go to Jeffrey in Massachusetts. Jeffrey. Jeffrey.
Happy Friday, Jim. How are you, pal? Oh, man. Yeah, I can't wait till Sunday. What's going on? Not much, buddy. Quick question I can tell away. 900 P.D. Take out the trash or what do you think?
You know, this one has been around forever and it just caught fire. I think it's good. But you know what? I am going to go back to WM. I think WM is terrific and just had a dip and it's a little bit cheaper. That's the one you should go. We got to speak to Jim Fish. That's the one you want to be in. Let's go to Carl in California. Carl.
All right. The now 7% yield has got me taking a serious look at Wendy's here. I'm worried about Wendy's. That should not have a 7% yield. That to me says something may be wrong here. McDonald's is kicking butt. I saw an upgrade today for burger cream quality. I've got to take a quick survey. And I got to tell you, you know what?
Wendy's, no. They have not demonstrated that they can pull it off in a very competitive world. I feel bad about that because I happen to love, my wife loves that bacon burger. I don't know if you knew that. And that, ladies and gentlemen, is the conclusion of the Lightning Round! The Lightning Round is sponsored by Charles Schwab.
Sometimes being the best in this business is not good enough anymore. And that's now the case with Texas Instruments, which fell 7.5% today, the worst performing S&P 500. Now, I have always loved the stock of Texas Instruments from the days when I felt they were the only semiconductor game in town. Of course, that was in the 80s. The July call options I bought while I was studying for the bar exam were my first $1,000 trade. And that's when $1,000 bought you more than a dinner for two in Manhattan.
These days, though, Texas Instruments kind of feels like a relic, a company that makes really good industrial automotive chips, so good that the Chinese insist on using them for many different things, especially their cars, and that's now become the benchmark of quality around the world. But there's a problem right now with Texas, as we call it on the trading desk. The auto and industrial markets are down in the dumps. Maybe they'll get stronger if the Fed keeps cutting interest rates.
But maybe they won't. Maybe they languish because these markets are weak. Texans earnings disappointed the Wall Street community. Now, Texas Instruments is an unusual company. It wants to be the best at what it does. And I'd argue that it is the best industrial and auto chip maker. What can it do if its end markets are weak? It's not the fault of Texas, for heaven's sake. They're just busy being great.
But the analysts, they want more, much more. And they can't understand why Texas Instruments is content to remain the best house in an inconsistent neighborhood. I get the sense that Texan doesn't really care what the analysts want. This company sees them as nothing but armchair quarterbacks who don't know squat about the semiconductor business. Who's right? Look, if Texas Instruments were a private company, the answer would be easy. Management's right. Go bother someone else. They wouldn't even have to do a conference call. Privately held businesses are only accountable to themselves.
But Texas Instruments is a public company, and a public company's job is to make money for its shareholders, and they're the owners. I'd argue that Texas Instruments isn't serving those shareholders well at the moment. If it wants to persist like this, management should just find a financier and take the company privately.
I prefer the way that Sanjay Mehrotra runs Micron, another semiconductor company. For as long as Micron's been around, it's been stuck with the rap of being a commodity semiconductor play, making non-proprietary chips that are as good as everybody else's non-proprietary chips. But that wasn't enough for Sanjay. First, he tried to make his chips more special. Toll order, the other guys do that, too.
But then he decided enough is enough. Micron started moving into high bandwidth memory chips for the data center. He makes the best of them. Sanjay wasn't content just to make them. He makes it so that everybody likes them, including NVIDIA. Micron's stock was at around nine bucks when it introduced its first high bandwidth memory chip. It's now over $100. Now, I'm absolutely convinced that if text instruments wanted to, it could go beyond its typical nature.
But it won't. It's content to remain as it is. It's just not content with the critics. It's kind of like they're an NFL team that's happy to have the best defense in the league, but no offense. Micron puts out both the offense and the defense. To me, the decision is easy. Go for Micron. After all, Texas Instruments doesn't seem to care for you. It doesn't seem to care if you don't like them.
So there's no reason to own the stock unless you think that the company is really going to take itself private or put itself up for sale. And I don't think they're going to do that. Me, I want the complete team, offense and defense. So let's just say Texas Instruments Management doesn't seem to respect its shareholders. And hey, today, the feeling is mutual. I like to say there's always a bull market somewhere. I promise I'll find it just for you right here at MadMoney. I'm Jim Cramer. See you later.
All opinions expressed by Jim Cramer on this podcast are solely Cramer's opinions and do not reflect the opinions of CNBC, NBCUniversal, or their parent company or affiliates, and may have been previously disseminated by Cramer on television, radio, internet, or another medium.
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