Mad Money w/ Jim Cramer 1/31/25
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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. I'm just trying to make you a little money. My job is not just to entertain, but to educate. So call me at 1-800-743-CBC. We meet you at Kramer.

We had two sessions today. The first one was a great one, where Apple was soaring off its better-than-expected quarter, and video stock was fighting its way higher, and anything tech got taken up with them. But then we had the second session, dominated by anticipation of the White House slapping tariffs on Mexico, Canada, China. Sure enough, at 3.46 p.m., we got 25% tariffs on Mexico and Canada, 10% tariffs on China, and the market, which had been sagging, just slumped into the closing bell. Sell, sell, sell, sell, sell, sell, sell!

Yep, that second session held its way with the Dow sinking 337 points. It has been losing 0.5%. Now it's declined 0.28%. Oh, and adding insult to injury, by the way, President Trump later came out and said he was, quote, not concerned about the market's reaction. I wish I had that luxury. We have a lot to cover, so let's go right to the game plan for next week. All right. The fireworks start on Monday. Well, of course, we'll have to worry about the fallout, right, of the tariffs.

But Palantir's reporting after the close. Now, Palantir's a really odd duck, so we're going to spend a second on it. Data-driven consultant that helps everyone from packaged goods companies to the Pentagon to get more out of the resources. Right now, they're focused on fixing the military procurement system. We give way too much business to a handful of defense contractors, and it jacks up the price of all the hardware we, the taxpayers, pay for.

Now, Palleter's voluble, volatile, unabashed CEO, Alex Karp, is a messianic figure to some in a pipe pipe or others. He caters to his retail investor base and the stock's a levitator. I call it GameStop with the brain. I've been saying it's going to 100 ever since it was in the 50s. Now it's at 82. Shows no sign of letting up.

up. Walk my words, $100 a bus. Tuesday's jam-packed. All right, now we start the morning with PayPal and Spotify, both of which could have terrific numbers. PayPal's now being captained by Alex Chris. I think he's returning the company to solid growth mode. Now, a

PayPal used to be the king of digital mobile payments at one point. Then it fell on hard times as it frantically tried to play catch up to the buy now, pay later crowd. I believe Chris can restore the growth rate and the luster because PayPal serves as the digital wallet that often is the first interaction that young people have with the pay

Now, Spotify is a classic beat and race story that tends to blow away the estimates. I love these subscription businesses. You know that. Think Netflix, Amazon. Because of Prime and Spotify is always in the conversation. We also hear from two huge drug companies, Merck and Pfizer. Merck is a big drug company.

Merck, despite some excellent acquisitions, is still all about key truants, revolutionary cancer treatment that just keeps working against so many different varieties of disease. I bet the numbers will be good, but there are other issues. I also want to get more of a readout on the drugs that Merck picked up in its recent wave of acquisitions, one for pulmonary arterial hypertension and Alzheimer's.

whole immunology franchise. Pfizer bought Cgen, the old Seattle genetics, at the end of 2023. We still haven't seen the breakout anti-cancer drugs that would justify the deal's $43 billion price tag. Now, maybe we'll hear something good this quarter. If so, the stock could soar. Very little downside at these low levels.

The packaged food stocks have been dogs, dogs, ever since the GLP-1 drugs burst on the scene, especially PepsiCo, one of my faves, with its soft drink and snacks businesses. I think the new weight loss drugs make it hard for this great company to play offense.

Hasn't helped that the supermarket has become an inflation battleground. But PepsiCo yields 3.6 percent. You never know when you can catch a total rotation into this beaten down group. Then again, if you want yieldless market, I'd much rather own Merck or Pfizer. After the close, Alphabet reports. And we want to find out if the search business is being cannibalized by its Gemini AI offering. I think YouTube is just on fire.

Fire. And that covers up any weakness. The new CFO, Anat Ashkenazi, you might remember she was at Eli Lilly. She tells a terrific story. We'll be listening for anything about the growth of Google's cloud infrastructure business. If it is strong, the stock will fly.

AMD's been quiet of late. Now, I wonder if the chip maker has landed some big wins because in the wake of this deep-seek affair, which proved AI outfits can do more with less computing power, AMD's cheaper GPUs suddenly look a lot more attractive versus Nvidia's best-of-breed chips. All right, that's my thesis. Now let's see if it's true.

Now, we've been focused on a handful of great restaurant chains lately, especially the incredible Rally and Brinker, which you know as Chili's. The premier growth stock in the group, though, has always been Chipotle. But somehow it's been lost in the shuffle here. Now, maybe this is a chance to get back in before the next big move higher. Buying Chipotle on weekdays is generally the right call, like forever.

Of course, it has a new CEO, Scott Boatwright, but he's an old Chipotle hand. And the rest of the crew is intact, including friend of the show, Jack Hartung, former CFO, now president and chief strategy officer. It might be time to start a position.

Wednesday, we get results from Walt Disney. Now, recent weather events could bring noise as hurricanes impacted Disney World last quarter. L.A. wildfires likely impacted the outlook for Disneyland this quarter. But I think everything else is hitting on all cylinders, including linear TV. Stocks soon put in its recent weakness behind it. Disney is historically cheaper, which is why we've been telling members of the investing club to buy.

Novo Nordisk. Okay, now this is really interesting. See, this is the drug company behind Ozempic that they report. Now, maybe they can give us clarity about how well these drugs are doing because Eli Lilly has already announced soft fourth quarter sales but expects a very good 2025. Remember, we heard them when we were out in San Francisco. I'd like to hear the same thing from Novo Nordisk. If you do get good news from Novo Nordisk, get this, you might want to buy some Eli Lilly before it reports on Thursday.

After the close Wednesday, we hear from Ford Motor. Ford's been a disappointment, largely because of warranty costs, things that went wrong. But with long-term interest rates high and likely going higher, their sales could be stalled. The stock's been awful. So there's limited downside at these levels. I question the upside.

Thursday, more drugs. Yes, this is a tough drug week. Or for mention, Eli Lilly reports. While CEO David Ricks announced here on CNBC that 2025 will be a good year, we've got to get some more details before we plow in. I remain steadfast. We have a big position for the trust. Next, another trust holding. Mr. Maher.

They got a whole series of great drugs. But the one people are watching very closely is Covenfe. That's the first new class of schizophrenia medications in 30 years. Far fewer side effects than the current standard of care, if really you want to call that a standard of care. I bet CEO Chris Borner will give us an early read on prescriptions written this year. Now, this could be a nice upside.

And I've got to tell you, with that yield, it's one of my faves. At the close, Amazon and Porsche, although I predict terrific numbers, they might not be as terrific as

as they have to be to justify the stock's incredible recent run. We're in it for the Chapel Trust, too. This is like our Chapel Trust week forever. It's a bonanza. But you may want to wait until after the quarter to do any buying. I'm not being negative. I'm just saying I don't want you after this big run to come in and then there'll be this give up because people are just taking profits. That's when you want to buy. Finally, on Friday, we get the Labor Department's nonfarm payroll. Right now, the Fed's concerned that the economy might be running too hot.

If we get robust job growth with higher wages, then I doubt we'll see any rate hikes in the first half of the year. If you're rooting for a higher stock market, what do you really want to see? You want a so-so employment report, enough to keep rate cuts on the table, but not so much as to hurt quarterly earnings. Bottom line, when you get a week that's packed with important earnings reports and the monthly employment report plus the tariff news, you're usually better off sitting on your hands because there's just too much data for any individual to process, even for an AI-powered individual.

By the way, let's just throw in this deep-seek stuff, which has made tech too maddening to buy or sell and too, let's say, boring. So if in doubt, do nothing. I want to go to my home state. I want to go to Sam in Pennsylvania. Sam. Jim, how are you doing? I'm all right.

i'm all right how are you sam i'm good i got an interesting company for tonight uh that is the fair isaac and company companies trading at a 45 billion dollars which seems fairly well cheap for the company that is one of the most important when it comes to consumer lending uh companies outpaced the s p the last couple years five-year return of 365 percent so curious what you think about psycho in this age of ai where consumer lending and all this data

I got to tell you, we love FICO. We did a lot of work on this company. We came back, and then we had Will Lansing on. I got to speak to Will Lansing. Someone put me on the phone with him when I was out at a really beautiful hotel in Montauk, and we were just talking to the guy. The guy is dynamite. He is a serious practitioner of the game. Michael in Tennessee. Michael. Mr. Kramer, how about those Tennessee volunteers? The Vols. My question is,

My question is, with the increasing demand for copper driven by the energy transition and electrification trends,

Do you see copper mining stocks as undervalued planes right now? No, I do not. I keep thinking about Simone Janikowski when she came on the show. A private company is going to use glass. I'm so afraid that one day I will wake up and it's going to be glass everywhere in the data centers. And we'll say, why didn't Kramer say that copper was good? What was with Kramer? I mean, what was Kramer doing? And the answer is he was thinking about glass.

Okay. Anyway, next week is jam-packed with earnings and economic data. And, of course, SeatGeek is still going to be on. I got some more good tickets from that team, SeatGeek.

We have money tonight. Is IBM's impressive quarter a catalyst for more growth ahead? I'm looking at what sparked the stock's run. Then I'm tracking the insider buying from the CEOs of RH and Marvell Technologies. Don't miss my take on what these moves could have been foreshadowing. Plus, after Otis reported a weakness in the quarter, I got a top rest to see why does that stock ever go dead? It's like that is press up and make sure you have that card. You know, you have to do that. I hate that. You got to show it on it and then it goes higher. And if you don't, it doesn't. 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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We're halfway through the craziest two weeks of Ernie season. This week, you heard from nearly a fifth of the companies in the S&P 500. Next week, we hear from roughly a quarter. Throw in the deep-seek-induced AI sell-off.

Some craziness in Washington. And several extremely high-profile quarters. And it's almost impossible to keep up with everything. And that's why I want to focus on some tremendous quarters that might have gotten lost in the shuffle. And I'm going to start with IBM, the legacy tech colossus that found new life and also new growth under CEO Arvind Krishna. After IBM reported great numbers on Wednesday night, the stock shot up 13%. And all I can tell you is, I told you so.

Early last year, I explained that IBM stood to be a major winner from artificial intelligence through Kramer Faye Red Hat, which is used by developers to create AI applications through its new Watson X platform that allows enterprises to create, train and deploy custom AI models, as well as a consulting business which can hold customers hands, show them how to use artificial intelligence. Ultimately, the stock finished 2024 up more than 34 percent, although it's an open question whether you can keep climbing after that kind of move.

But on Wednesday night, we got the answer. IBM reported inline revenues with 1% growth. I know, it doesn't sound like much. But now they've had six straight quarters of positive sales growth. That matters given that IBM spent roughly a decade with no growth or negative growth, if you can have such a thing as negative growth. That translated into a 14-cent earnings beat off a $3.78 basis, not to mention much better than expected free cash flow. And that's a statistic that many use to measure the success of this enterprise. The quarter isn't the reason the stock caught fire, though.

Wall Street got really excited about the full year forecast for 2025. IBM's guidance is simple. They gave you revenue growth and cash flow targets, and both of those were, frankly, excellent. First, they expect revenue growth to accelerate slightly in 2025. The company projects full year constant currency revenue growth of at least 5%.

Not only is Big Blue glowing, but that growth is accelerating. Even if it's happening off a very low base, it doesn't matter. Accelerating revenue growth is what we want. As for free cash flow, IBM says it can reach $13.5 billion this year. Analysts are looking for over $13 billion. And that's 6% growth versus last year. I think that's what sent the stock up 13% yesterday, sending it to a new all-time high.

Now, when you look at IBM's three segments, infrastructure, OK, unimpressive, down 8% year over year. That's all right. Consulting was OK, down 2%. But software, the largest segment accounting for 43% of total revenues last year, is on fire. It's up 10% in the fourth quarter. And that's the division I like the most. Software got stronger throughout the course of the year, with revenue growth accelerating every single quarter. Oh, and let me repeat this again. I

IBM, once known as an old metal vendor, is now 43% software. I think that could go to 50% before you know it. Within the software business, the standouts are Red Hat, which was up 16% year-over-year, and automation up 15%. In terms of specific products, management called out the Watson X and Red Hat families of products, both of which have incredibly strong tailwinds from, yes, AI.

Speaking of AI, CEO Arvind Krishna said, quote, we continue to gain momentum with our Gen AI book of business growing to over $5 billion inception to date, up by about $2 billion quarter over quarter, end quote. That is huge.

He explained that, quote, one fifth of this business comes from software and the remaining four fifths is consulting, end quote. Krishna touted the company's flexibility in assisting customers with AI, saying IBM's AI portfolio is tailored to meet the diverse needs of enterprise clients, enabling them to leverage a mix of models. IBM's their own open models from Hugging Face, Meta and Mistra. He also cited IBM's Granite models, which are designed for specific purposes and are 90 percent more cost efficient than larger alternatives.

That note on the Granite model's cost efficiency was interesting. Given that so much of Wall Street and Silicon Valley has been focused on the deep-seek news this week, when Christian was asked about deep-seek specifically on the conference call, he called it, quote, a point of validation. He explained that IBM has been saying for about a year that smaller models with faster training times and lower inferencing costs will be needed for enterprise to truly get value from AI. He got it right. This gets to a wider argument about IBM's AI exposure. The company's

Companies thinking holistically about how to make sure that its customers are actually benefiting whatever investments they make in artificial intelligence. See, that makes me think that this team has got some longevity for IBM because they can become an essential partner for companies looking to embrace AI for their business. And the customers will keep coming back because they're not getting ripped off.

Now, I mentioned earlier that IBM spent most of last year rallying. Then the stock traded sideways into the end of 2024. One big reason it lost its mojo is that when the company reported in last quarter in October, management had some mixed commentary on their consulting business. While the consulting division technically missed expectations slightly in the fourth quarter,

I'd say that it was better than feared after the downbeat commentary last quarter. More importantly, thanks to the AI tailwinds, management believes their consulting business can return to growth next year. Discussing the 2025 outlook, straight shooting CFO Jim Kavanaugh explained, quote, in consulting, the combination of our backlog levels, record signs in the fourth quarter and our book of business in Gen AI support an acceleration in growth to low single digits, end quote. Now, it is worth noting.

Next Tuesday, IBM hosts an Investor Day meeting. You know, it's the first since 2021, and this could potentially bring more positive news. Now, I'm hoping we get a call for durable mid-single-digit growth going forward and potentially a new buyback program, given how strong the cash flow has gotten, that could boost IBM's earnings per share even further. So let's see what they have to say, but I am pretty excited.

I'm pretty sure it's going to be good. Now, full disclosure, IBM's price earnings multiple is higher than it's been in a long time. That always worries people. After yesterday's gain, the stock now sells for nearly 24 times this year's earnings and just north of 22 times next year's numbers. A lot of us are used to low teen to even high single digit for this company. But

But I'd argue that the overall company's return to steady growth justifies a higher valuation than IBM was getting back when it was a slowly melting ice cube of a business. Plus, as the mostly recurring revenue software unit becomes a larger and larger part of the company's mix, you've got to expect that the company's going to get a higher motor one because Wall Street loves recurring revenue, particularly from software.

Here's the bottom line. Even in a really busy week, IBM's results totally stood out. The company had solid numbers for the fourth quarter and, more importantly, a very strong outlook for the full year. Because this is one of those less direct AI plays that isn't hurt by this deep-seek news. Now, why did the stock hit new highs this week? And by the way, I wouldn't be surprised if IBM's got a lot more room to run. You know what? It's a terrific tech story for turbulent times.

Mad money's back. It's liberating. Coming up, what do Marvel Technology and the stock formerly known as Restoration Hardware have in common? Kramer helps solve the riddle. Next. New job? Growing family? Need a change of scenery?

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Call or visit ComcastBusiness.com to learn more. Yesterday, Goldman Sachs published a note on the specialty hardline segment. It really caught my eye. They reiterated their dim view on anything housing related, but they also decided to upgrade RH, the old restoration hardware, from cell to home. 5-5-5!

The Goldman analyst cited a bunch of reasons, new products, heavy marketing, and improved supply chain, bullish guidance. But really, this was just purely an act of capitulation. See, Goldman had stuck RH on their America's sell list. And then the stock proceeded to gain 67%, beating the S&P. So they finally threw in the towel and upgraded it to a hold.

Now, I bring this up not to bash the guy, okay, because this was the third upgrade for RH in the past month. On January 13th, Morgan Stanley took it from equal weight to overweight. January 8th, Barclays did the same thing. Oh, Wedbush also added the stock to their best ideas list in early January. People were really down on this company, even though it's likely that their Hampton's house

Well, probably brimming with RH hardware. And hey, can you blame them for throwing in the negative tail? RH has very quietly nearly doubled from its lows last June. Very hard to dislike a stock with that kind of performance. But the crazy thing about this run at RH is the fact that it happened without a clear turn in the underlying business. The big rally began in earnest with a gap up after the company reported in September. And while these quarterly results were strong, RH also slashed its full-year forecast at that time.

The stock then had a positive initial reaction to the company's latest quarter in December, but that quarter included a big earnings miss. RH only rallied because the company re-raised its full-year forecast and issued optimistic guidance for the current quarter. But the whole time RH has been running, there's been no beat-and-raise quarter to act as a kind of all-clear signal like you would get from so many other companies. And that's how it goes in this business. When you're investing in a comeback story, you get the biggest gains by sticking your neck out before

there's any actual turns, any evidence at all of a turnaround. And that's what happened here. However, at least in the case of RH, there was one crystal clear sign that the stock was ready to bottom in June. So in June 27th, two weeks after the company reported a particularly soft quarter that crushed the stock, RH disclosed that its visionary chairman and CEO, Gary Friedman, had personally bought 10

$10 million worth of stock in the open market and an average price of $216 a change. Yet, he hit us with a decent slug of insider buying. I'm calling it a called shot for certain. That's separate from RH's own corporate buyback,

which was enormous back in 2023. They retired $1.25 billion worth of stock on top of $1 billion in 2022, before ratcheting that back to almost nothing in the first nine months of the 2024 fiscal year. Now, keep in mind, RH has a market capitalization of less than $8 billion, and that's even after a huge run.

Given that the stock's now well above $400, those previous buybacks in the high $200s and low $300s, which many thought were foolish, are now looking pretty darn smart. But again, the buyback is neither here nor there. I'm talking about the insider buying side. CEO Gary Friedman buying $10 million worth of stock with his own money in his first open market purchase since September of 2018.

Now, let's establish a couple of things. That $10 million purchase is nothing compared to Freeman's overall holdings. He bought about 46,000 shares. That brings his total stake to 3.35 million shares. Also, he did some big insider buying. I'm sorry, he did some big insider selling in 2022. He unloaded nearly $1.5 billion worth of stock.

But let me tell you what really matters. As I said before, insiders sell for lots of reasons. Maybe they think the stock's headed lower, but maybe they need to raise some cash, buy a boat, private island. A lot of guys doing that. However, insiders only buy for one reason. That's because they think the stock's going higher. By the way, if you missed that open market purchase from Friedman,

Well, you had a chance to hear about his conviction in his company when he came on the show back in September. Now, the stock was at 344 at the time. In that interview, he mentioned RH's history of buybacks. Since 2017, we bought back 3.75 billion of our stock.

And, you know, history would prove that we're generally directionally right, you know, when we make bets of that size. And so are we excited? We couldn't be more excited.

Wow. I mean, history's certainly proven him right. Long story short, RH has made a huge move ever since Gary Freeman did that insider buying back in June. And now Wall Street is scrambling to get behind this red hot stock. Now, look, this is why you have to pay attention to insider buying, which brings me to the next example. Oh, man, was this actually everything I could to shout this one from the rooftops.

It involves Marvell technology. Now, back in October 15th, Chairman and CEO Matt Murphy, frequent guest on the show, disclosed that he purchased just over $1 million worth of stock the previous day. And that was at a price of $77 and change. Just went into the open market and bought it.

Now, this was a much smaller purchase than Freedman's, at least in dollar terms, but it represented a much larger increase in percentage terms. The 13,000 shares purchased by Murphy increased his overall stake in Marvell Tech by more than 6%. Sure enough, that insider buying was a tell as Marvell stock rallied aggressively into the end of last year, climbing from just over $70 at the end of September to an all-time high of $127 and changed last week.

And after a bit of a pullback this week on the deep seek news, just under 113 now is up today. Now, most of these gains came in December when the stock gapped up 23 percent on December 4th after Marvell reported a really amazing quarter with incredibly strong guidance for the next quarter.

Management has some very positive things to say about how their custom silicon is being snapped up to build AI data centers. It's really taken off since then. Custom silicon is a way to be able to save money for these companies. That last quarter was where the narrative all came together for Marvell. Management explained that the more cyclical portions of the business were finally at last turning. Those have been way down. It was a real albatross. They gave more detail than ever on the scale of the AI opportunity.

In response to Stock Club Fire and all that was foreshadowed by Matt Murphy's relatively small, totally, maybe symbolic, I don't know, million bucks, still a million bucks, insider purchase in October. Here's the bottom line. Insiders, again, can sell for a host of reasons, and I tend to discount them.

But I don't discount insider buying because they buy for only one reason, because they think the stock's going up. Last year, Gary Freeman, the CEO of RH, and Matt Murphy from Art Vale Tech made some small insider buys right before the stock soared into the stratosphere. So next time you see something happening similar to that, take a good hard look at the company in question because it just might be ready to roar. Arthur in California. Arthur.

Hey, Jimmy, Jim, Jim. How's it going? How about that? I don't know. I have a little tariff action here at the end of the day. I'm trying to figure out what is what is that about? Go ahead. Big fan of your show. Even so, my middle son, he's a bigger fan of your great enthusiastic advice and all the fun you've brought. And he enjoys watching the show with me all the time. I am thrilled. You know, younger people, everything, everything. Thank you.

So here's my question. I took a little piece of a bite out of this position, this stock, a couple of days ago and planning to take smaller bites out of it if it goes any lower. But this stock is about 75 percent down from its all time highs. And that stock is super micro computers.

You know, as you were talking, I started getting very interested. Oh, down 75% from its high. That could be very good. Maybe it's a good company. But you just named a company that had accounting irregularities. And accounting irregularities in my book always equal one thing. Sell, sell, sell. And always will. And that's what you have to do with that stock. Now I want to go to Naveen in Pennsylvania. Naveen.

Hey, Jim. Hey. You call it Bucks County PA. Oh, man. Well, you're close to me. You're probably right around the corner. Go Eagles. You're probably right around the corner from me in Bucks County. Yeah, yeah. I'm in Langhorne. Yeah.

Yeah, not far from my box made at the Eagles games. Terrific. What's going on? Nice. So this company seems to do everything right, including e-commerce. They're up like 75% over the last year. WMT. And why don't we have it in the trust portfolio as an investing club member? Okay, it's just an honest, great question. I've said I have talked about this with the Walmart people too. The answer is I thought that if I had Costco...

And I had TJ, I shouldn't have Walmart. And the answer is that was wrong. When you think a stock's going higher, you should break discipline a little and buy the stock. Walmart is amazing. And boy, do my kids and I love to shop there. Bargains. Hey, the clothing there, by the way, fantastic. All right, look, the next time you see insiders buying up shares like we saw in RH and Marbelle, I want you to be thinking, take a hard look, okay? Because it may be the right thing to do.

buy. Much more mad money, including my exclusive with elevator maker Otis after this week's fourth quarter report. Hey, then I'm going to break down this deep sink thing. You know, you're probably tired of hearing about it. I don't care. You got to hear my take. Then all your calls rapid fire in tonight's edition of the lightning round. So stay with Kramer.

all right what do we do with the stock of otis worldwide number one maker of elevators and escalators on earth with a big service and repair business on wednesday morning otis reported slightly weaker than expected quarter of four year forecast tad light but because this company is just such a steady operator the stock only got dinged a little over a buck on the news plus while this year looks like it's going to be challenging otis still put up eight percent earnings growth last year despite a not so hot backdrop

So is that why the stock barely got hit in response? It's really holding in there. Let's check in with Judy Marks. She's the chair president and CEO of Otis World Watch. We'll learn more. Ms. Marks, welcome back to Mad Money. Jim, great to be with you. All right, so Judy, I've got to tell you, I was worried because obviously we see that a lot of commercial construction has not grown. We've got a deflationary environment in China, too. But you still manage to have the highest cash flow since the spin. How is that possible?

Yeah, Jim, first and foremost, I want to thank our 72,000 colleagues across the globe for delivering for our customers, for the 2.4 billion people a day who touch our product, and for our shareholders and each other. How it happened is it's all about service.

both in the fourth quarter and the full year, we had a stellar service year. Service, 90% of our profits. We were up 7% in revenue for the year in service. And our service portfolio grew by another 100,000 elevators and escalators to 2.4 million.

It helped us drive cash, and that cash was a record for us. That $1.6 billion now that we generated in cash by driving down networking capital, focusing on collections, we took all $1.6 billion, gave back a billion through share repurchases and the rest through dividends. Every bit of it went to our shareholders. Well, it's extraordinary. And you basically, if you had told me that you could do these numbers with the amount of actual new equipment sales, I would say yes.

that it would be inconceivable, but you've obviously pivoted and pivoted well because one of the things I see you're doing amazingly, the numbers for modernization are extraordinary. That's a pretty good business, isn't it?

It's a business that's just at its early stages. There's 22 million elevators in the world. Eight million of them are getting to that mod window, 20 years and older. And that's just going to add every year. You know, we grew both our orders and our revenue almost 18 percent in modernization in the fourth quarter. We're excited going into 2025 with about a 13 percent increase.

backlog at constant currency and it's going to grow from here we said high single digits in terms of revenue in our guide uh... we hope to exceed that based on the backlog and just the continuing steady growth and that growth is happening in every region of the world now i know a lot of people worried about about tariffs

We know that there was a kind of late afternoon tariff put on. I don't think the numbers are actually surprising, not even that dramatic. But at the same time, I would think that you're one of the businesses, you don't put a tariff on safety. There's no hope. You can't get out of it, right? I mean, safety even in every country on Earth can't be impacted by a tariff.

Yeah, Jim. And listen, we have redesigned over the years, not just our supply chain for resiliency, like many have, but our manufacturing footprint for resiliency as well. Again, well over 60, 62 percent of our revenue is in our service business.

And that is growing every year with that high 90-plus percent profitability. But, you know, we, like most people in the 90s, we moved and put a factory in Mexico. And what we did actually in 2012, we closed that Nogales factory. We decided we want our manufacturing to be closer to where we're selling here in North America and closer to where we're delivering and installing. We opened a factory in Florence, South Carolina, and it supports all of our North Pacific

North America business, and we left Mexico a little over a decade ago. So tariffs on the equipment side should be very, very de minimis for us. They were in 2018. Well, now, I remember when the plant was opened and there were a huge number of problems that it was a shame, too, because the problems made people feel like, wait, if you do reshore, we don't know what we're doing in America. But those were completely resolved by the time you took over, weren't they?

Yes, they were. And actually in 2024, we hit our highest production level ever in Florence. So when people look at the U.S. market, I mean, our North America orders in third and fourth quarter were up 15 percent plus each.

There is construction going on in North America. We've got the talented field professionals to do it. And we expect America new equipment to be up low single digit and the service business and modernization to grow significantly here right at home. So tell me about what the commercial real estate market is. We've seen all the bank earnings. Turned out it really wasn't so bad. In some places like New York, we have huge conversion. Matter of fact, I always saw San Francisco to be trouble. Are

Are you finding that the so-called real estate, commercial real estate crisis isn't a crisis at all in this country?

Well, I can't talk to the real estate investors, but what I can tell you is what we're seeing from the developers, from the general contractors, and from people who are now making investments versus Class B real estate and other places that right now are getting renovated, Otis wins in all of those, Jim. Return to office, we get more wear and tear. We get more repair work on elevators.

Residential multifamily was up fourth quarter for the first time in well over a year. And we continue to see kind of that two to eight story building, no matter what the use is, whether it's industrial, commercial or residential, continuing to be the power horse of our business. And then any of the buildings that are maybe not as fully loaded or fully inhabited, we're seeing residential conversions.

And we're also seeing people modernize because it's really important to have amenities and to have a fast, safe,

safe, aesthetically pleasing, capable elevator in your building. I don't want to beat a dead horse, but if you're a Canadian real estate company or a Canadian office, somebody who's a manager of a Canadian office tower that has Otis in it, just because it's American, they can't just switch to some Canadian operator. That Canadian operator won't know how to handle it, correct? Yeah, listen, Jim, we are the...

We founded this industry 171 years ago, and we're still leading it. When we service, we service as a local Otis company everywhere in the globe. Our equipment gets shipped everywhere, and everyone thinks of us as local. Wow.

Well, look, congratulations to you. Everyone's so worried about so many different things involving overseas. Maybe you're the answer if you want to stay and have a balanced portfolio of United States and other countries around the world. Judy Marks, president, CEO and chair of Otis. Great job at a tough time. Good to see you. Thanks, Jim. It's all about predictability. Yeah, I guess so. It really is. Dan Money's back after the break.

Coming up, lightning doesn't just strike twice in Kramerica. Booyah, Jimmy Chil. Booyah, booyah, booyah. Thanks for taking my call. It strikes every day. Kramer is back in a flash with your questions next. It is time. It's time for the lightning round. It's time for the lightning round.

And then the lightning round is over. Are you ready? Let's get that. I'm going to start with Lou in Pennsylvania. Lou.

Hi, Jim. Thanks for taking my call. Thanks for all the help you provide to the millions by now of investors. Thank you, man, for your help. Thank you. I'm calling about a company that's a British bank, hard bank, that's been involved in investment banking and other parts of banking in Europe and the U.S. for many years, but is now pivoting away from investment banking in the U.K., U.S. and England to Asia and the Middle East, especially China.

HSBC is the company probably now. It's a good company. It is at its 52-week high. If I'm going to buy one of those, it's a foreign bank. I'm going to recommend Banco Santander because I think that Anna Boutin is doing a great job getting a little bit better yield. We're upside, Spain. Let's go to Fred in Illinois. Fred. Jimmy Choo. It sure was a tough day to buy a sweater.

Anyhow. It was very hard. Very hard. In order to rise to summit, one must have pulse. Summit Therapeutics closed at 2150. Pulse closed at 2093. Robert W. Dugan, you probably know him from the company they have, PCYC Pharmaceuticals.

That company has no revenues. I don't know. It has not made money. It's obviously just a very big spec. I can't go there. Let's go to Sal in Barna, Sal. Hey, I need a little help, Mr. C. Dan, you came to the right guy, my friend. What do you got? I have a 10-point profit on this company. It has a nice balance sheet. The company just did a split, though.

I have read so many upgrades to Western Digital that I have to believe the stock is way too cheap. I'm calling that one money side up. All right, let's go to Justin in New Jersey. Justin.

New chairs adjusted. You said it right. Hey, Jim, longtime fan, short time investor and maybe a club member soon. How's it going? I want you to join the club. We've been rocking good time. How can I help you?

Yeah, I would love to. Well, I'm in property management, right? And I see a lot of companies using AppPolio, the online property management software. Right, right, right. It's actually a cheap stock. It's a cheap stock. It's a good one. I typically find enterprise software is too expensive. That one rocks. You're on to something. But you know that clue. I now learn from you. You don't learn from me. I learn from you. Thank you very much. Let's go to Zach in Pennsylvania. Zach.

Hey, Jim. Call from Philadelphia. How are you? Go birds. Go birds. Hey, calling about a company I own that I'm getting pretty concerned about. Company's down over 30% from its all-time highs. That company would be Adobe. Adobe.

I'm worried, too. You know, Shantanu and Ryan is so good. The product is like a Lamborghini versus the guys that it's up against. I don't think I want to sell the stock down here. It generates too much cash. I know that it seems like a tough stock to own. I can't sell with 21 times earnings. And that, ladies and gentlemen, is the conclusion of the Lightning Round. The Lightning Round is sponsored by Charles Schwab.

Coming up, the deep-seek debate rages on. But with the long knives out for NVIDIA, Kramer makes his call on the stock. Next. Booyah, Jim. Your integrity makes you the booyah saint of Wall Street. Booyah, Jimmy Chill. Booyah, Jimmy Chill. Booyah, Jim. Quadruple. That's a lot of booyahs.

Everyone's gunning for Nvidia now, and why not? It's the king of artificial intelligence. It can charge a fortune for its chips because they're the only game in town. To get the most out of them, companies need to buy tens of thousands of chips. Long live the king.

This week, however, we learned that maybe, just maybe, we don't need to buy as many of those chips as we thought. A Chinese alpha called DeepSeek has purportedly figured out a way to get much more out of NVIDIA's cheaper lower-end chips, which makes you wonder, why should anybody buy the most expensive ones? Instead of spending hundreds of millions of dollars on hardware to build and train an AI model, DeepSeek claims it only spent $6 million and got something almost as good, if not better. AI for the masses.

Now, if you're like me, you found all this deep seek chatter unsettling. So let's analogize. Let's say we were talking about oranges and orange juice. That's a simple concept. Suppose you want to make orange juice with the most expensive juicer in the market, the OpenAI juicer. It can make one glass of OJ from one orange, with an NVIDIA GPU being the orange in this analogy. But deep seek? Well, that's like a brand new juicer that can get 10 glasses of OJ out of the same one NVIDIA orange. Now,

Now, if that's the case, then you obviously don't need to buy as many oranges. You can cut your order by nine-tenths and still get all the OJ you need. Yeah, instead of buying 10 NVIDIA chips, you can buy one and use DeepSeek, allegedly, to get the same amount of computing intelligence. Yeah, I snuck in a critical adverb there, didn't I? Allegedly.

So this declaration by DeepSeek rocked our world this week. We took it as gospel that DeepSeek, spawned by a Chinese hedge fund, has ended NVIDIA's ability to charge high prices. And if that's the case, you have to expect that the company will cut prices.

Because its customers won't need as many chips as they did before, when demand was the same. If prices are indeed coming down, then so are the earnings estimates, which means Nvidia's stock is too high and therefore must be sold. All very logical. So naturally, the stock got pulverized. ♪

Made much worse, by the way, that most stocks, because there's so many one-day gamblers who like to play NVIDIA like it's a roulette wheel. I mean, it's incredible how much this stock is what we used to call footballed. But not everything that's logical is true. What if the Chinese hedge fund isn't giving us the full story? What if the reality is totally different? What if DeepSeek spent a lot more on its hardware than the $6 billion that they're reporting? What if they didn't get 10 glasses of OJ out of one orange, but actually just bought 10 oranges?

And that's what an article in a known authority called Semi Analysis said today. This publication, which has covered deep seek for longer than most people knew it existed, speculates that the six billion dollar cost is highly misleading. They say deep seeks real hardware spending all in could be more than one point six billion dollars. I wonder if the PRC subsidizing them. So if you sold in video on the deep seek revelations and now you're finding out that might not be the real story, perhaps it was a huge mistake.

Makes sense to me. If there are really a way for businesses to save a fortune, GPUs for AI, then you'd have to believe virtually everyone in tech is a complete moron. And that seems unlikely. Consider this. We learned in the last few weeks that Mark Zuckerberg, CEO of Meta, Elon Musk, CEO of Tesla, and Larry Ellison, chairman and CTO of Oracle, are all paying full price for the chips from NVIDIA. Now, maybe all three are knuckleheads.

Or maybe there's so much demand that they simply don't have a choice. You have to believe that before they laid out the billions, they did their due diligence, which has to include the deep-seek software story that's supposed to let you do more with less. It's not like deep-seek was a secret. It just got a lot more attention this week. I am sure they knew everything that was in that semi-analysis piece and still went forward and paid full price.

So is DeepSeek in an alternate universe that bodes terribly for NVIDIA's pricing down the road? Hey, anything's possible. But if you had to design the most punitive way to bring down the price of this great stock, you'd invent something like DeepSeek. Hmm. I think the semi-analysis piece is spot on. It may just be one more long knife aimed at NVIDIA and nothing more. Maybe it's not so great to be the king after all.

I like to say there's always a bull market somewhere. I promise you I'll find it just for you. Right here on Mint Money, I'm Jim Cramer. See you Monday.

You should not treat any opinion expressed by Jim Cramer 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 forward slash madmoneydisclaimer.

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