Mad Money w/ Jim Cramer 12/10/24
44:25 Share

At U.S. Bank, when we say we're in it with you, we mean it. Not just for the good stuff, the grand openings and celebrations, although those are pretty great, but for all the hard work it took to get there, the fine-tuning of goals, the managing of cash and workflows, and decision-making. We're in to help you through all of it, because together, we're proving day in and day out that there is nothing as powerful as the power of us. Visit usbank.com to get started today. Equalization.

Thank you.

Before investing, consider the funds, investment objectives, risks, charges, and expenses. Visit ssga.com for perspectives containing this and other information. Read it carefully. DIA is subject to risks similar to those of stocks. All ETFs are subject to risk, including possible loss of principal. Alps Distributors, Inc. Distributor. 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'll be with my friends. I'm just trying to save a little money. My job is not just to entertain, but to explain what the heck is happening. So call me at 1-800-743-CBC. Tweet me at Jim Kramer. The data center is dead. Long live the data center. Enterprise software is dead. Long live enterprise software. Momentum is dead. Long live momentum.

Yep, today's decline is about those three obituaries, all of which I'm going to tell you I think are premature. But that is why the Dow dipped 154 points. That has to be declined 0.30%. The Nasdaq lost 0.25% with some real deterioration under the hood of that index. Let's go to the setup. Lately, the data center stocks and enterprise software stocks have been the leaders of this market. It's been that way ever since the election when the engineering construction stocks former leadership gave up their role right after the post-election spike.

Now, you know I think leadership is incredibly important when it comes to the stock market. We've seen a level of excitement about the data center and how they are knowledge factories. They manufacture everything we need for generative AI and agentics, the world of non-existent beings who can do customer service jobs better than we can. At the same time, we've fallen back in love with software companies that help engineers create programs that do everything under the sun, just like the data center enterprise software is invisible to you and me and most traders. But

But both the data center and enterprise software have momentum, and that's highly visible. They offer scale and speed. They offer wonder and excitement. Think Palantir. Think Applovin. Think Supermicro. And then behind the data center itself, of course, what do we find? NVIDIA. We don't know what exactly triggered this now two-day pullback, and we don't want to play pin the tail.

on the sell-off, like everybody else who has the temerity to think they do. Yesterday, while I was working on a lead about how 18 companies had reached the $100 billion mark in 2024, someone, some big fund was actually laying risk off in this very same cohort. We know from an outlet called Bespoke Investment Group that all 26 of the Russell 1000 stocks that were up 100% on the year through last Friday, we know they fell yesterday with an average loss of 5%.

You get a chink in the momentum armor, it does tend to combine two fairy tales, the little Dutch boy with the figure in the dike and Humpty Dumpty falling from that wall with a bunch of clueless Kingsmen, not even a bottle of Elmer's glue to be found. But let's go back to the epicenter, data centers and enterprise software. Right now, we know that the world of artificial intelligence includes generative AI, accelerated computing, and now, agentics. When people start investing billions of dollars in something called agentics, I might have to just throw the red flag.

simply because you won't find that word in the Oxford English Dictionary, even though I use it a lot. Now, it doesn't get any better if you use ChatGPT to get a definition. The genius that is ChatGPT tells us, and here I'm going to quote, the term agentics is not widely recognized or formally defined in mainstream English dictionaries or academic fields, but it appears to be a neologism that combines the elements of the words agent and dynamics or potentially other surfaces like genetics or analytics, depending on the context. Whew.

Now I understand. Now, if an agentic force like ChatGPT doesn't know what agentics is, how the heck are we supposed to figure it out? We do know this, though. It's NVIDIA that's been talking about agentics, as well as Salesforce.com. And NVIDIA stock is truly under attack from the sellers. It's been besieged for days now, down over $10 after a four-day losing streak, with the damage getting worse when the People's Republic of China announced it's investigating NVIDIA for monopolistic behavior.

I thought that might come to an end last night when Taiwan Semi, the manufacturer of NVIDIA chips, reported November revenue up an astounding 34%. By the way, it looked for a moment like it would. But then the king of Semi doctor engineering started a hideous rollover, one that spared no prisoners for anything related to the Semis. Taiwan Semi closed down $7.23 or 3.6% brutal. NVIDIA fell $3.74, down 2.69%.

What crushed the group, really? All right, there's a lot of shadow boxing here. But the proximate cause was the plummet in Oracle, which wants to be the biggest builder of data centers worldwide. Frankly, I thought the numbers were good, and don't let anyone tell you otherwise. CEO Safra Katz stunned us right from the front, right from the get-go, saying that she expected cloud revenue, a spec not that long ago, should reach $25 billion this fiscal year. That's staggering, people.

The rest of the call was all about the insatiable demand for more data centers and how Oracle can't build them fast enough. Larry Ellison, the revered chairman of the board and chief technical officer, told a story about how Oracle can build data centers faster and cheaper than anyone else on the planet, and they don't burn as hot. I was blown away when Ellison said, I quote, we just extended our AI performance advantage by delivering the largest and fastest AI supercomputer in the world, scaling up to 65,000 NVIDIA H200 GPUs, end quote. Ah, think of it.

We've got NVIDIA. We have supercomputers. We have demand, demand, and then demand. And we have an amazing company, Oracle, that simply can't meet the demand. There's a reason four out of six analysts on the conference call offered a fuse of congratulations. That's the greatest endorsement they can give.

But it was all for naught. Oracle stock got clocked from the moment the numbers printed, and it kept going lower and lower and lower because not every line was a blowout. More on that later. But most were, some not. And given the stock was up 80% for the year before last night's report, we needed to see absolute perfection, and we didn't get it. Oracle swan dive splashed red ink all over the fellow travelers. That's Dell. That's HP Enterprise. That's Supermicro. Ugly. More on Oracle's plumb. Coming up here for the break. All right, that's the AI side of the downfall.

How about the enterprise software side? That was more harsh. It was based on the collapse of a stock of a company you may never heard of called MongoDB, which is a tremendous company that, just like 10 other tremendous companies, allows you to store, collaborate, improve, and dominate at scale everything and anything. Mongo reported last night, it was fantastic, terrific. Congratulations, quarter one, a billion, a blowout, just incredible. Right after the numbers printed, the stock jumped first 20, then 30, then 40 points. I started kicking myself that we did none for the Chattel Trust.

I was already thinking about how to explain the oversight. And then I read that some guy I'd never heard of who was the COO and CFO was resigning after 10 years. Michael Gordon.

Yeah, yeah, Michael Ward. I mean, sticking around for three weeks and then he's out of there. I thought MongoDB had a ton of good people led by the dev Eddie Chariot. It was like a major team outfit, you know what I mean? Kind of like an NFL team or something. But it turns out, no, no, no, no, no. It was Michael Ward. He was the man. At least that's what the stock's saying is MongoDB plunged an astounding 100 points from its high after reported last night to where it got to. Michael Ward.

Michael Clayton? I don't know. I like that movie. Anyway, so there goes the enterprise software neighborhood. Up Lovin' down 6%. Workday off 3.2%. Atlassian Simple Team down 2.4%. Datadog. MongoDB, of course, Datadog down 3.9%. Bill Holdings. Monday.com. Twilio. I mean, it all got slammed. Only the King's service now was spared and rallied big, as it always seems to do. It's a software Tesla, which, of course, was also up again today because it's Tuesday.

Now, I know it looked on the surface like things were fine in mega caplan alphabet. Oh, they got the quantum chip and Apple to stores. The industrials look very strong. Well, OK, sure. Toblerone is flying. I'm a big home builder down 7 percent cloudy forecast. But today was about reversing the enterprise software data center semiconductor rally. And instead, we got the money flowing back to its rightful industrial place led by Boeing, which guess what? It's back in the business of making plays again.

Who would have sunk it? The bottom line, honestly, I don't mind a day like today. The stocks that got hammered had all gone parabolic. You were supposed to ring the register. I said that about 20 times in the last few weeks to the point where I don't even like myself. Those started rolling back. Not that I like myself anyway, or else you know I wouldn't be doing the show. Anyway, today was day two of this sell-off. And you know what? Most likely more to come. Hey, why don't we start the questions? I think we start with Andrew in New York. Andrew. Booyah, Jim. Thank you so much for taking my call.

My pleasure. What a birthday gift I get to have. Oh, happy birthday. What? What? Excellent. What's the stock? I'm a 15-year-old high school student, huge fan of Mad Money, especially your investment club. Definitely recommend joining. It's been a game changer. Thank you so much for that. Oh, man. Thank you. Thank you. Thank you. I wanted to pick your brain about Eli Lilly, ticker LLY, between the company's Blanchero Medicine and its massive potential in obesity and diabetes markets, which brings in billions and gross margins around 80%.

So I started to try to build a portfolio on the future of healthcare. My grandpa bought Lilly in 1979. He's always reinvested dividends. He hasn't sold any. He told me to buy it, and I bought a bunch of shares a couple years ago. I absolutely love it, but I got a note from the stock king. Okay, here's the deal. Here's the deal. Right now, Lilly has lost its momentum. I just announced a $15 billion buyback, and it boosts in dividend. Nobody seems to care.

All the drug stocks have been down. A lot of people worry about the new president coming in. A lot of people worry about Bobby Jr. I look at it like this. I say that sometimes you have to take a little pain and make it some big game. We had to do it in the first go-round with the child protection. We had to do it in the second go-round, and we're now endorsing a third go-round of pain. And I've got to tell you, if I could take a match and just let it to my hand, I might just say, oh, Eli Lilly. But you know what? Soon the match goes out. Roy in California. Roy. Hey, Jim. How's it going? Couldn't be better. How about you, Roy?

Right. Well, I'll tell you. Okay, let me tell you what's going on with Uber. It's as stupid as all get out. The charts bet.

We're now in a chartless market. Is there anything really wrong with Uber? No. Is there anything really wrong with Airbnb? No. Bookings.com. They're all the same. And when the chart's good, people buy them. And right now, we're gripped in chart land. When the chart's bad, people sell them. It shouldn't be that stupid, but it is. We are gripped by a wave of stupidity, the likes of which I haven't seen in the past...

Maybe since Jefferson said the First Amendment allows stupidity. Incredible. It was in the Federalist Papers. I read it. I was a history professor. I'm not telling these guys. Anyway, look, I don't mind a day like today. All the stocks that sold off had gone parabolic. And what did I tell you about parabolic moves?

Hey, you know what? It's all fun and games till somebody gets hurt. Mad Money Tonight. What's ahead for the regional banking space? There are no power problem. I like this. Don't miss my exclusive Ohio-based key corp. Plus, it's a tale of two tech stocks. I'm seeing what's behind the opposite post-Earney's moves between C3AI and the aforementioned Oracle. And it's time maybe to make a little change.

Plus, can be exchanged giant Casey's? Oh, you've never heard of it. I don't care. It's not more than 50 percent this year. And I'm breaking down to see if it's got more room to run or is it just going to be like a Wawa, which is not public. 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.

Slowing growth. Geopolitical uncertainty. Shareholder unrest. In an increasingly complex world, today's business leaders must consider their strategy from every dimension. Creating long-term value requires ambitious and achievable strategies enabled by the right experience, tools, and capabilities to prepare for the journey ahead. Powered by 10,000 strategists,

EY Parthenon works with you to see opportunities from every angle and execute on that vision. Learn more at ey.com slash US slash EY Parthenon.

When you're hiring, the best way to search for a candidate isn't to search at all. Don't search, match. With Indeed. Indeed is your matching and hiring platform with over 350 million global monthly visitors, according to Indeed data, and a matching engine that helps you find quality candidates fast. Use Indeed for scheduling, screening, and messaging to connect with candidates faster. Plus,

93% of employers agree Indeed delivers the highest quality matches compared to other job sites, according to a recent Indeed survey. Leveraging over 140 million qualifications and preferences every day, Indeed's matching engine is constantly learning from your preferences. Join more than 3.5 million businesses worldwide that use Indeed. Listeners of this show will get a $75 sponsored job credit to get your jobs more visibility at Indeed.com. Just go to Indeed.com.

You need Indeed.

Kevin, more boxes? You said you finished gift shopping weeks ago. I did. So I got myself some gifts as a reward. That's a lot of gifts. Plus, with Chase Freedom Unlimited, I cash back 1.5% on every purchase. So it's like a little gift on top of the gifts. Oh, I get it. It's just like that saying. It's the gift that keeps on giving gifts for the gifts you give for giving gifts. And now you lost me. Chase Freedom Unlimited. How do you cash back? Restrictions and limitations apply. Cards are issued by JPMorgan Chase Bank and a member FDIC.

After the election, the regional bank stocks caught fire. You know I love these stocks because Wall Street figures will benefit enormously from deregulation. And President-elect Trump's antitrust enforcers will probably let them merge again.

But after that initial burst tire, many of the regionals have spent the last month pulling back from their highs. Investors worry about higher inflation possibly causing the Fed to dial back its plans to cut interest rates. Take Key Corp. That's the parent of Cleveland-based regional bank powerhouse KeyBank. This stock shot up more than 15% on the day of the election from 17 to just under 20. It's now pulled back to $18 and change. We know Key Corp is a high-quality operator that can give us it.

ton of insight into the group. Thankfully, some of their executives were in the neighborhood today. They were given a presentation at Goldman Sachs, and they agreed to stick around to bring some color directly to Craymerica. So let's take a closer look at Chris Gorman. He's the chairman and CEO of Key Corp. Mr. Gorman, welcome to Mad Money. Well, thanks, Jim. It's great to be here. Well, it is a thrill for me to have you here because I think that you are in the heartbeat of America now. There's no doubt about it. The industrial America has, I think, the center of it.

is where you live. Give us a sense of what it's like Cleveland now versus, say, 15 years ago. Well, I'll tell you, right now there's just a ton of momentum in the Midwest. And if you think about all the companies that have moved to the Midwest, if you think about all the investment in the Midwest, I happen to be chairman of the Ohio Business Roundtable, so I have a pretty good idea of the companies that are coming into the Midwest.

And there's just a lot of activity. And then further, I think, you know, last two years, there hasn't been a lot of transactional activity. And I see a real pickup in terms of the discussions that are going on. Now, what you've done are two things that I usually don't think can happen together. Targeted scale and mass affluent. Directly ironic. Explain it to me.

Sure. So targeted scale, you know, we're a 200 billion dollar bank. We compete with people that are much bigger. And there's also many banks that are much smaller. And our whole approach, Jim, is to be really relevant to the people that we're focused on. So knowing how we win, where we win, why we win. So, for example, in our commercial business, we're focused on seven industry verticals and we're focused on companies in the middle market.

So while there's 4,400 banks, for someone to compete with us, they'd have to have a balance sheet, have an integrated corporate and investment bank, and be focused on the same industries that we are. So when we talk about targeted scale, that's what we mean. Now, a lot of people thought you can't do the corporate investment bank anymore. You can't get the annals that you need. It's just not worth going up against the big guys.

That's not your case. No, not the case at all. There's no question that there's a lot of companies that are focused on the biggest companies, but there's a real unmet need for these middle market companies that need to get strategic advice, need to be able to raise capital. For example, Jim, in the last 12 months, we raised $90 billion for our customers.

So that's pretty remarkable when you think about the size of the institution that we are. Well, I've got to tell you, I also love the fact that the number of people, 250,000 to 2 million, talk about an unserved market. Those are people that, unfortunately, in America...

Those people are considered not big enough. That's ridiculous. Well, you're right. And this is a great unmet need. So when we talk about mass affluent, we target people that have between $250,000 and $2 million to invest. Now, we have 3.5 million customers. We have perfect information, as you can well imagine.

a million of our 3.5 million customers have between 250,000 and 2 million to invest. Right now, we're only doing business with 10% of them. And so we've been focused on becoming not just their bank, by the way, our average customer has been with us for 20 years. So they know us, they trust us, they like us.

and they have this money to invest in, they're basically ignored by a lot of the market. Ignored because we're supposed to not be able to make money off them, so to speak, but how about money with them? Which includes, I think, the huge number of people who want to do M&A in your area. For sure. So going back to the mass affluent, here's an interesting stat.

In 2009, the household wealth in this country was $60 trillion. Today, 15 years later, it's $160 trillion. In 2009? In 2009, $60 trillion in household wealth.

15 years later, $160 trillion. And so that goes back to this huge unmet need. Right. In 10 years of zero interest rates, it's just created a lot of wealth, and we're there to serve it. Now, as it relates to M&A that you mentioned, it's been really pent up for the last two years. Yeah.

Because in the last two years, the financing markets have been challenged. We had the biggest hiking cycle in 44 years. And so now a lot of these people that are seeking liquidity, I think there's going to be a big, big surge in M&A. Right now, our M&A pipelines are as big as they've ever been. All right, so how about the investment that you got, which I think some people were worried about,

They worry about your balance sheet. A lot of banks had the same problem. They just were mismatched. They buy 15% of key, $2.8 billion. What does that give you? So that gives us the opportunity to really accelerate all the things we're trying to do strategically. So it gives us the opportunity to, one, reposition our balance sheet, which pulls earnings forward. It also gives us capital. And it gives us capital that enables us to have strategic flexibility and

as we go forward in the landscape of banking potentially changes now give me a a little bit i know this is kind of more of a touchy feely but the town of cleveland i mean i remember i remember when you're from the history books rocker barrel left it

And that was like a big blow to the city. And then you've kind of got the cliffs, Cleveland cliffs to hang around. But suddenly we've got like company Sherwin-Williams added to the Dow. P.H. totally changes its flavor. Smokers getting back on the map and making big acquisitions. These companies are very much on the move now. Yeah, well, there's no question. I mean, Cleveland is a dynamic economy, incredible history. And it's just exciting to be a part of it. I mean, we have a lot. There's a lot going on right now.

And then finally, I just want to get a sense of what it what does it really mean? New administration to you guys. Now, you mentioned M&A. Yeah, I do get the sense from a lot of business people. And I'm not trying to be political here, but there is a belief that there is that more can happen now in business than was able to happen before. And yet I would tell you a lot of stuff could happen in business in the last four years. But there is this unbridled belief that we're about to be unleashed. Is is that like.

a right way to view things? Well, we'll see. But I do think the first thing that will happen is M&A transactions will be easier to get done. It's been very, very challenging. There's kind of an overarching view that consolidation was bad for the consumer. And one could take either side of that argument. But I think people feel like, you know, there's a lot of pent up demand around transactions.

And I think that I think in the medium term, I think you'll see some changes there. So you think that some Cleveland companies will want to do some big things or is it really like the the billion dollar company merging with the billion dollar company? It'll be some of all. I think you'll see some of the largest companies buying other companies. I think you'll see companies merging. And I think people will really be looking for economies of scale. My personal view is that the economy right now.

could be on the precipice of some acceleration. And when you're on the precipice of some acceleration, people start looking at both organic and inorganic ways to grow. Fed could help by cutting rates to that? Yes. All right. Well, I've got to tell you, next time I see you, I want to be in Cleveland because it's a changed town. I look forward to hosting you, Jim. Well, we are going to do it. Me and my wife, Lisa, because her best friends live in Cleveland. We've got to get there. I want to thank Chris Gorman. He's the chairman and CEO of Key Corp. Just great to have you on the show.

Coming up, the market's AI craze has sent any name in the space soaring. But Kramer's breaking down two players in the sector and explaining why one might generate better returns after the initial phenomenon fades. Next. Sometimes words seem so unnecessary.

Introducing Unspoken, the new diamond fashion collection you'll only find at Jared Jewelers and just in time for the holidays. Discover the brilliance of natural diamond pendants, rings, earrings, and bracelets in a range of carat weights, expertly interwoven in white or yellow 14-carat gold. It's the perfect holiday gift where your love speaks for itself. Unspoken, the dazzling new collection exclusively at Jared.

Kevin, more boxes? You said you finished gift shopping weeks ago. I did. So I got myself some gifts as a reward. That's a lot of gifts. Plus, with Chase Freedom Unlimited, I cash back 1.5% on every purchase. So it's like a little gift on top of the gifts. Oh, I get it. It's just like that saying. It's the gift that keeps on giving gifts for the gifts you give for giving gifts. And now you lost me. Chase Freedom Unlimited. How do you cash back? Restrictions and limitations apply. Cards are issued by JPMorgan Chase Bank and a member FDIC.

You know what I really despise about this dark market? It's the rampant short-termism. Just take a look at how Wall Street processed last night's earnings reports from the giant Oracle and the fledgling C3.ai, which is a smaller enterprise software play. Now, both stocks have been roaring going into earnings. Oracle up 80% for the years of last night's close. C3.ai up 45%, with nearly all the latter's gains coming in the last month or so. After the company announced an expansion of its partnership,

with microsoft plus everything with ai and its name has been rallying like crazy even on profitable companies with spotty track records which frankly is c3 ai in a nutshell

Yet when Oracle, a colossal, incredibly well-run enterprise software company with a rapidly growing cloud infrastructure business, reported a strong but slightly imperfect quarter, the stock got slammed today, plunging almost 7%. On the other hand, C3.AI helps companies create enterprise AI applications for all sorts of use cases. Tell me you don't have 100 of those out there, right? But it's never turned a profit since coming public four years ago.

Never mind that it's been around since 2009. But after reporting an earnings beat last night, the stock soared into the stratosphere today, only falling back to earth after we saw some late-day profit taking in some of the hottest momentum names. Even then, it still finished the day in the black on a down day for the market. So what the heck happened here? All right, let's start with Oracle, which I think reported a strong quarter, even though they technically missed expectations on the top and bottom line.

Oracle's revenue came in a little light and they earned $1.47 per share when Wall Street was looking for $1.48. Very simple. Reiterated full year forecast inline guidance for the current quarter. However, they only missed the headline numbers because of one-off issues like currency fluctuations. And they're also taking a loss on non-core investment, which is why the earnings guidance for the current quarter wasn't stronger, believe me.

Safra Katz, the CEO, could have told an even better story than she did if she wanted to. More importantly, the parts of Oracle's business that we truly care about, namely cloud infrastructure, in particular anything AI-related, they are doing incredibly well.

Management said that record-level AI demand drove 52% revenue growth in the cloud infrastructure business, 52%. That's an acceleration from 45% in the previous quarter. Would have been up 55% if you exclude their legacy hosting infrastructure business. Oracle's adamant that demand continues to outstrip supply. I have no reason to believe otherwise. As CEO Safra Katz told it,

Growth in the AI segment of our infrastructure business was extraordinary. GPU consumption was up 336% in the quarter, and we delivered the world's largest and fastest AI supercomputer, scaling up to 65,000 NVIDIA H200 GPUs. And by the way, those are the, well, not Blackwell, but

the last generation, but they're really powerful. Now, the company touted an impressive list of AI customers, including OpenAI, XAI, NVIDIA, Cohere, and its latest went meta with their large-scale Lama models. Founder and chairman Larry Ellison often acknowledges one of the savviest and yet, yes, competitive people on Earth, said, quote, Oracle continues to win large AI training workloads because we're faster and less expensive than the other infrastructure clouds, end quote. And that new supercomputer with the 65,000 NVIDIA chips

gives them an even bigger advantage versus the competition. In short, the AI opportunity for Oracle remains incredible. But the estimates have finally caught up after the company's extraordinary run this year. That's why they didn't report a huge beat. And it's why the stock fell nearly $13 or almost 7% today. Now, I get why you ring the registry, given how much this one has had run. I'm not against that. But I say you should buy Oracle into this weakness if you don't have any. It's a fabulous company, red hot stock, finally giving you a better entry point.

After today's pullback, I'm just not sure. Yeah, I don't know how much cheaper it's going to get. I mean, we did see some pullbacks like in Dell and AMD that have been tough. Maybe this has more of a pullback, but it's doing incredibly well. What about this other alpha, C3 AI? Well, to be fair, their numbers were genuinely good. Meaningful revenue beat with growth accelerating to 29% up from 21% in the previous period. They made clear about that right at the top of the conference call. Meanwhile, they only lost $0.06 per share. Wall Street was looking for a $0.16 hit.

Nice. However, C3.ai's guidance was mixed. Basically, they're expecting higher revenues than previously thought, but also larger losses. That's why I was so stunned to see the stock surge as much as 8% earlier today for pulling back and finishing up only marginally. The thing is, all anyone seemed to care about was C3.ai's newly expanded partnership with Microsoft, the one that kicked off the stock's recent rally already. We're building that in again. As CEO Tom Siebel put it,

Quote, it is difficult to overstate the potential of the Microsoft C3 AI strategic alliance by establishing a C3 AI as a preferred AI application provider on Azure and creating a Microsoft scale go to market engine. We're making it easy for businesses to adopt and deploy C3 AI applications, end quote. He then goes on to say, quote, this is an inflection point for enterprise AI driving growth, end quote.

Oh, OK. So inflection point. You got it. Basically, C3AR's products will now be sold by the Microsoft Azure Salesforce. And yes, it could be a big deal. But the flip side is the company's making some additional investments to support its new Microsoft partnership, which is why management lowered their full year operating income guidance expectation by more than it raised its revenue outlook.

I find that somewhat questionable. My fear is that as exciting as this Microsoft team-up could be for C3 AI, it might actually hurt their profitability, which is what really matters at the end of the day. Still, maybe it sounds crazy for me to complain about this. Oracle was up huge for the year. It missed the headline numbers. Guidance wasn't perfect either. Of course, the stock got hit.

On the other hand, C3 AI beat the numbers, so of course it rallied. But I don't like seeing the huge decline in Oracle or the big run in C3 AI because these moves tell me that the market's prioritizing the wrong things, and that includes that it's too speculative. C3 AI is pursuing what I call growth at any cost strategy. Very similar to what all these enterprise software plays, including C3 AI itself, were doing back in 2021 before the whole group went out of style and their stocks collapsed in 2022. But as I said at the top of the show, they've come roaring back since the election.

the end of the day i can't get behind c3ai because there's a very simple rule of thumb for enterprise software companies we call it the rule of 40. the idea here is that these software plays either need rapid revenue growth or immense profitability if you're going to try to justify buying the stocks so you take the revenue growth rate along with some measure of profitability usually the operating margin then you add them together and if the result is above 40 you know you've got a good company c3ai's revenue growth simply isn't that fast

And they're big money losers. So this company is never going to come close to passing the rule of 40 tests as it's currently configured. In fact, it had a negative score for the past two fiscal years. And it's expected to have another negative score in the current fiscal year. It's so unprofitable that their 29 percent revenue growth cannot compensate at all.

But even though I think today's action was a mistake, at least you can use it to your advantage, either by picking up some Oracle on weekdays and don't buy it all at once. I mean, it's going to come down if this market stays weak. Or by ringing the register on C3 AI industry. And that I think you should do, even as the latter's got some cold stock appeal. I'm not about cold stocks.

Here's the bottom line. I'd be a buyer of Oracle after this pullback because the most important parts of the business are still doing great. As for C, I mean, you've got $25 billion in revenue that we're going to do in cloud. As for C3 AI, if you own it, you know what? I'd take something off the table. But for the love of God, don't try to short the darn thing. It's got AI in its thing. That's a disaster in this market to short. The cult of AI is still very much in charge, even if the company's

biggest AI companies, and here I'm speaking about like Oracle and NVIDIA, as I talked about at the top of the show, continue to take it on the chin, and these little guys continue to be loved. Don in Florida, Don. Booyah, Jim. Booyah, Don. What's going on?

Okay, if you need money, yes, of course, you should take some off the table.

If you are someone who feels that the stock has moved too much and you're concerned, I would take something off the table. Me, for our travel trust, I'm not. Because even though I think the stock certainly pulled back here, I like the long term and I've owned Amazon for a very long time and I'm staying that way. All right, listen to me. While I don't agree with the earnings reactions, I'd be a buyer of Oracle gingerly not all at once. You're going to get hit again tomorrow, as they do when they're down this much. And if I own any C3 AI, you know what? Ka-ching, ka-ching.

All right, much more Mad Money Head, including my look at the keys to success for an alpha called Casey's General Stores. And later, are people too frequently rolling the dice with their profits? I'm telling you what I've witnessed during my tenure with the tape. And all your calls rapid fire in tonight's edition of The Lightning Round. So stay with Kramer.

About 15 months ago, we ran a profile of Casey's General Stores. They reported a great quarter. They sent the stock screaming higher, up more than 11% in a single day. Now, you have to do some homework. I told you to put it in a small position and then buy more into weakness. At the time, the stock was just under $280. And it briefly pulled back to the low $260s in the weeks after the last segment, giving you that ideal entry point. And now, now it's at $416 and change. And I'm calling that...

A total home run. House of pleasure. Question is, can Casey's keep running? This is basically a chain of convenience stores, so you might be surprised that its stock has been one of the best performers in 2024, on top of being one of the best performers in 2023. What makes Casey's different? If you live near a big city, you may not know this, but this company is the third largest convenience store chain in America.

Casey's flies under the radar because they deliberately put their 2,600-plus locations in incredibly small communities. Roughly half their stores are in towns with less than 5,000 people. They're spread across 17 states, but more than half their locations are in Iowa, Missouri, and Illinois.

So while you might imagine Casey's General as your local quick trip, Wawa sheets, or even just your local 7-Eleven, this company is actually much more than that because it's not just the third largest convenience store in America. It's also the fifth largest pizza chain. And they've got some wild varieties like breakfast pizza, which comes loaded with cheese, eggs and bacon or sausage.

Now, to a New Yorker, that may sound like a crime against humanity. But given how much the stocks run, there's clearly something genius about turning a bacon, egg and cheese sandwich into a pizza. It wasn't Taylor Ham on there. I'm from Jersey. This store is special. There's a reason the stock gently climbed higher for the first half of the year before exploding higher in June after Casey's reported spectacular quarter since stock up 16 percent today. Since then, it's run another 10 percent. What is driving this move?

Okay, the reason I was such a big fan of Casey's in the first place is because of its selective footprint. They operate in pretty small towns, so their main competition comes from grocery stores and other convenience stores. Because there aren't really any other big players in the area,

Casey's can offer superior service with a broader selection of goods and, best of all, lower prices. They've got the scale to bargain with their suppliers, unlike most of the local rivals. Casey's believes that most small-town convenience stores simply aren't big enough, and they're suffering from headwinds like declining tobacco sales, gradually declining fuel demand. This gives Casey's an advantage as roughly 70% of its in-store transactions don't even include fuel, and they've been slowly reducing the tobacco mix.

And again, this is a convenience store and a pizzeria. Their local convenience store competitors can't afford to build out full kitchens. Casey does that as a matter of course. That brings us to July when we learn that Casey's is buying Fikes Wholesale, owner of Sefco convenience stores, for $1.5 billion in cash. This deal adds nearly 200 stores to the portfolio, including about 150 in Texas, with the rest spread over Alabama, Florida and Mississippi. Casey's will take these stores and make them into their own.

The last time I profiled these guys since September of last year, they'd acquired 418 locations over the previous decade, although 259 of those stores were bought in the previous three years. The strategy's working. Cases are starting to double down on it. They're now planning to acquire roughly 500 stores through 2026 fiscal year, up from the 350 they previously forecasted. Man, these guys are smart.

Mark. Best of all, they've got a ton of room to expand. Three quarters of towns with 5,000, 20,000 people don't have a Casey's general. I'm calling that some serious white space. Now, last night, Casey's reported its most recent quarter. And even though the old, only the stock did nothing in response, these guys delivered a monster earnings beat $4.85 per share. And it's looking for $4.28.

However, sales were a touch light, which seemed to spook investors, and that sent the stock down nearly 3% in pre-market trading. Now, if you waited for the conference call, I could always tell you to do. The stock bounced right back because Magic told a great story. Casey's has terrific inside sales, which are a lot more profitable than what they're selling at the pump. Between grocery, general merchandise, prepared foods, and found drinks, we're talking about roughly 65% of gross profits.

Their sales only came in weaker than expected because of the 14% decline in the retail price of fuel. But that's a low-margin business, and Casey's obviously can't control the price of gasoline.

These segments continue to deliver with management crediting innovation in this part of the store for their increased strength. Casey's refreshed their sandwich platform earlier this year, featuring two types of chicken sandwiches, a quarter pounder cheeseburger and some updates to the fan favorite breaded pork sandwich. Mm hmm. Good. As a result, sales of hot sandwiches were up 60 percent from last year's. Again, this stuff is not impressive if you live in a big city, but you live in a small town. Casey's might have the best food around.

They're also keeping innovating in pizza, which I know is a segment that needs more innovation. They got a jalapeno popper pizza earlier this year. How about this one? A filafel cream cheese, cheddar and mozzarella and some smoky bacon cream cheese. Top of the pizza, topped with pickled jalapenos and Mike's hot honey drizzled on top.

Hey, that breakfast pizza didn't sound too bad now, is it? Look, I'm going to fill it up for you guys myself. But to quote the great Randy Ross, come on, man! On the grocery side, Casey's is even seeing strength in categories. I

I thought things were flailing. You know, they're flailing, calling out their energy drinks, liquor offerings as drivers of strength. To be honest, I'm not sure how they're doing it, but I'm certainly not complaining. Hey, outside of that, the only real negatives from the conference call included some discussion around, and I quote, moderate cheese headwind.

Now, if you're going to sell a great stock on a modern cheese headwind, well, maybe you should just throw in a towel and buy some darn government bonds. Now, while I'd love to see Casey's hit the revenue numbers, so much of the company's profits come from inside the store. And that part of the business is en fuego. I love that they're making meaningful acquisitions, too, because they have the best format for small town convenience stores. I think Casey's can take the country by storm. However, given how much the stock's run, its valuation's gotten stretched. Stock now trades at nearly 26 times next year's estimates. Not cheap.

But with analysts looking for a consistent 13% plus growth rate, it's justifiable. Now, regular viewers know I am concerned about these high-flying stocks, but Cases is a solid operator with great profits, a very strong long-term story.

So, bottom line, let me echo what I said about this stock 15 months ago. Don't be afraid to put it in a small position in case you're going to pull back, save some cash on the sidelines so you get to buy more if it gets brought down by a market-wide pullback, which I certainly expect between here and the end of the year. Look, it's a terrific story, and I'll remain that way until you start hearing people in New York and California talking all about jalapeno popper filled up with cream cheese-style breakfast pizza. Mad Money is back after the break.

Coming up, Kramer takes your calls. And the sky's the limit. It's a fast-fire lightning round. Next. It is time for the lightning round. And then the lightning round is over. Are you ready, Skeet? Time for the lightning round. Dennis. Dennis.

Good afternoon, Mr. Kramer. Season's greetings. Same. I'd like to get your opinion on OXY, Occidental. It's one of my least favorite oils. I know we're in Buffett and Pramodder, but I don't care. I do like Kotar. I want that mix of natural gas and oil. I love the Travel Trust. Steve in Missouri. Steve. Steve.

Jim, first time caller. Excellent. Hey, I'm calling about Cooper Company's call site two, their largest contact lens of manufacturing in the U.S. You know what? I think it's a very good situation. I think it's because Bausch Health is so pathetic. I liked your call. Let's go to Stephen in New Jersey. Stephen. Hello, Jim. How are you doing? I am doing fine. How about you?

Everything's good. I'm good. I was just calling. Yes. Sorry. I was just calling about energy transfer. I've had it for a while. I want you to keep owning it. It's got a 7% yield. And if it goes down, just buy more. I like energy transfer. I used to dislike it, but I've liked it now for the last five points. Let's go to Tony in Florida. Tony.

Hey, Jim. All right. Thank you for everything you do. And I've been a day one and I enjoyed it. That's what I mean. You and Jeff. It's fantastic. Thank you. The 1020 meeting. It's online. A lot of people watch probably like the most popular thing I do, frankly. Anyway, I'm glad you're watching. Thank you. What's up?

I have the right early, but I want to start another position in the healthcare stock. And hopefully the court stuff is behind them and I use two of their products. What do you think about starting a position in Abbott Labs? I really like that at 115. I think it's a terrific idea. I think that their legal stuff is really largely behind them and we will find out. Now that the FDA and the NIH said, listen, this thing, we need that formula. I think that the plaintiffs don't have a leg to stand on, honestly. And I know their situation is tragic.

But this is not the venue for them to be able to do okay in. Let's go to Dimitri in North Carolina. Dimitri! Dimmy! Booyah, Jim. Booyah. Just curious your thoughts. Looking at Kinder Morgan, just curious to see what your thoughts are. Kinder Morgan's good. I mean, look, obviously it's been straight up. It still yields four. It's finally getting its act together for this year. It's a good situation. Let's go to Preston in Illinois, please. Preston!

Professor Jim, one of the only Wall Street gurus willing to speculate on television. Correctly, I may add. Thank you for that. I'm always learning from you. We spoke about EBLG last time, which you noted, and I quote, be willing to lose lots of money on, end quote, shortly after it dropped nearly 50% and subsequently ran up on nearly 100%. I made money in between, but I'll set the speculation aside and say, forget about it.

What are your thoughts on WMS, Advanced Trading System? All right, Dave missed the numbers by a mile. And when I see that, that often means that the next number is going to be missed, too. So let's be careful there. Let's just be careful. Let's go to Ned in Ohio. Ned. Hello, five-star Professor Kramer. How are you? Five-star? Good to talk to you again. Holy cow, five-star, not bad. And we're not, you know, not Michelin five, being more of a hotel five. Okay, I'm doing well. How about you?

I'm doing very well, sir. I was looking at my book here that gives a lot of your advice. And I know that a couple of weeks ago you talked about speculative stock and you said that a small percentage of that may fit in certain portfolios. And that was OK. And so I have been reading about something that.

might be considered speculative, and that is air taxis. And I'm interested in what you might say about a company called Arch Aviation, which...

Well, arch aviation is the ultimate in speculative. And as long as you know that, then I'm absolutely fine with it. But it has just very quickly gone up gigantically late for a little bit of pullback, even with the speculation. And that, ladies and gentlemen, the conclusion of the Lightning Round. The Lightning Round is sponsored by Charles Schwab.

I've worn a lot of hats in my time in this business. Advisor, trader, salesperson, venture capitalist, creator, banker, you name it. But in every position, I've always felt that the greatest way to pursue wealth was to know when you've won. Winning gave you the right to take something off the table without any sort of disgrace. But of course, nobody ever wants to hear that it's time to ring the register in a winning position. Somehow, when a stock's going up, people forget the basics, like buy low, sell high.

Now, I always use the example of my mom, Grandma Louise, which was actually, sadly, a ridiculous epithet because she didn't live long enough to see my children. But she was a gambler at heart, a gambler with incredible discipline. When she was winning, she unfailingly left the casino, any casino, the racetrack, the stock market, and bought a cashmere sweater. Close watchers of the show are now bored of that story. She died with a ton of cashmere sweaters. But if I were advising the people who work at these companies that have seen their stocks go up dramatically, double, triple, quadruple, even ten baggers,

I'd be telling them to immediately sell at least a third of position tomorrow morning to make sure that their lives are set. I'm seeing millionaires have been created overnight right now, and they actually think it's OK for their stocks to sell at 30, 40, 50, 70, 80 times earnings. They think it can only get better. They all act like they work at NVIDIA for heaven's sake. Not kidding on that one. The run of NVIDIA has inspired a lot of people, lesser companies to do a lot of stupid things. Consider me a skeptic.

That said, it feels like we're on terra firma in these stocks because, well, until the last couple of days, there was nothing like normal selling happening. People really are letting it run. Directors, executives, you name it, all are rolling the dice at this point. And they should probably leave the casino, at least with some of their money. I book no criticism here. These are just pieces of paper. Any piece of paper can be toppled.

As long as everyone holds on for dear life, they'll be okay. I mean, that's the subtle thinking behind all this. People don't just think that they work at Nvidia. They still have GameStop on their mind, meaning they see this business as a game. Their wealth is a game. And as long as they strap themselves in, they'll be fine. Hey, by the way, the GameStop game, it's rolling right now. It just reported another awful quarter and buyers are swarming in like they know something other than this miserable retail business. What a dog.

By the way, speaking of meme stocks, I was thinking the other day about Adam Aaron. He's the chairman and president and CEO of AMC Entertainment. He sold $42 million worth of AMC stock for estate purposes back in 2021 before the stock collapsed. But he was vocal about it. At the time, the stock was in the low 200s, split adjusted. Now it's under five. No sin. The man had been the CEO of the 76ers, Norwegian Cruise Lines, Vale Resorts, Starwood, giant hotelier, seasoned operator, understands the need for estate planning. And that's, by the way, what you're doing when you're selling stock at 67 years of age.

Did he know something the others didn't? No, except maybe how to read a balance sheet, and AMC's was in tatters. I saluted him at the time, I salute him now. Neighborhood kid who went to my high school rival and telegraphed his sales like no other CEO I can ever think of. Go for him. Especially good when the stock went south. I bet that most AMC shareholders didn't sell when he did. They thought that he didn't know anything, analog of what they have. In short, you don't know what you have until it's gone.

Now, people are back in the mindset of believing that they can't lose. That's part of what I keep calling the year of magical thinking. That's a fabulous book, by the way, by the incredible Joan Didion. But it's not really magical thinking. There's cross-disciplines of long-term versus short-term greed here. I'm hoping that the insiders who aren't selling have some plan for turning some of that long-term greed into cash because they've won. They can only lose from here.

Because they haven't really started bringing the register, we've all grown complacent. So as we get into 2025, I'm begging these people with these big gains to stop with the magical thinking already. For some of these stocks, it's more about alchemy at this point. Stocks do go down. We saw it today. That's why if you have huge gains, you do need to take something off the table now or else it will be too late. Hey, don't do it for me. Do it for yourselves. Read our bullets for the investing club. I sold some stock I've owned for 10 years this morning. 10 years. So I said enough's enough. When

When the year of magical thinking ends and the odds are just, let me tell you, they're pretty slim for another one right behind it. Just remember the vocal Adam Aaron selling AMC at $200 for it went to four. If you don't want to give back your gains, I think you need to follow in his footsteps, at least with some of your money. I like to say there's always a bull market somewhere. I promise I'll find it just for you right here on Mad Money. I'm Jim Cramer. See you tomorrow.

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.

Sometimes words seem so unnecessary.

Introducing Unspoken, the new diamond fashion collection you'll only find at Jared Jewelers and just in time for the holidays. Discover the brilliance of natural diamond pendants, rings, earrings, and bracelets in a range of carat weights, expertly interwoven in white or yellow 14-carat gold. It's the perfect holiday gift where your love speaks for itself. Unspoken, the dazzling new collection exclusively at Jared.