Mad Money w/ Jim Cramer 12/13/24
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Hey, I'm Kramer. Welcome to Mad Money. Welcome to Kramerica. I'll do my friends. I'm just trying to make you a little bit of money. My job is not just to entertain, but I'm trying to put it all together and explain it to you. So call me 1-800-743-CBC. Tweet me at Jim Kramer. The market's buying its time right now. I mean, the Dow's dipping 86 points today. That's essentially unchanged. Now it's like advancing 0.12 percent. I mean, the market buys its time. Guess what? People tend to get a little nervous.

For example, usually when a trillion dollar semiconductor company like Broadcom reports a monster good quarter, sending its stock up more than 24%, we get what I call some pit action. But today we got next to nothing in the semis or most tech. Maybe we haven't been able to mount a rally because the bond market's been down every day this week as inflation runs hotter than we thought.

Nobody wants to buy growth in that environment. I think the Wall Street's gotten a little too negative, frankly, as we get oversold. And we're getting there. But I've been warning about stocks going to excessive levels for two weeks now. So I can't be all that positive until we see a couple of days with bond yields actually go lower with the stock market. That's why we're going to start our game plan for next week.

With, well, not Monday, but Wednesday. Because that's when the Federal Open Market Committee is expected to cut rates by a quarter percent. Now, nothing's been given in this league. But we've heard from many Fed officials that they prepped us to expect a 25 basis point cut. Okay. Now, you know me. I hate the endless focus on the Fed by everybody. Because it detracts you from benefiting from long-term performance for your stock portfolio. You'll trade in and out and in and out. Every little signal from the Federal Reserve brings up

predictions, causing many people to sell good stocks when they are freaked out. You also have people who just can't let it go. Dogs with bones. As soon as we get the Fed rate cut, well, guess what? They're immediately focused on the next cut. I think this is absurd. They're endless in their Jeremiah. It's about the future.

And I don't like to scare you. I'm not going to be complacent, but I'm not going to scare you out of your stocks. Don't get me wrong. Fed's very important. But as an investor, it doesn't do any good to obsess over the minutia of central banking. We don't have an ideological Fed. We have a data-dependent Fed. So unless you have access to data that the rest of us don't, and you don't,

All the speculation, it's a fool's error. I do believe we'll have some dissent this time from the Open Market Committee members. And while I don't think the data is cool enough to be positive about the prospect of more cuts for now, I also don't want you to make decisions based purely on what the Fed does. Contrary to popular belief, there is more to investing than monetary policy, and I wish everyone knew that. They don't.

Now, I'll make this point when we have our monthly investing club meeting on the very Wednesday that we have the Fed meeting. I think you'll want to tune in as I walk you through the prospects of each charitable trust holding for the coming year. And some of them are indeed in flux. Beyond the Fed, there's a ton of just regular corporate news next week. On Monday, for instance, a trial begins. People aren't talking about it, but I will. In a Delaware federal court between Qualcomm and Arm Holdings. It's a patent dispute involving high performance processors, NBP.

And if Arm wins, it'll take away Qualcomm's license to use important chips in cell phones and laptops. Now, the smart money is betting on a settlement, which I think would be good for everyone. Tuesday morning, we get some retail sales numbers. Now, while this number does come out on the eve of the Fed meeting, these numbers will be hotly debated as we try to figure out the state of the consumer during a period where Black Friday had more significant events than

ever because of the shortened time frame between Thanksgiving and Christmas. The bond market just had a terrible week, so cooler retail sales numbers could actually be a self-fulfilling antidote, maybe an opportunity to buy after the Fed meeting. Besides the Fed, we have some big earnings reports on Wednesday, starting with General Mills, which caught an upgrade today.

Thanks to accelerating pet food sales. Actually, I'm more worried about sugar cereal. And I say that having interviewed incoming Health and Human Services Secretary-designate Bobby Kennedy on the floor of the New York Stock Exchange yesterday. I think that his chief objective is not vaccines. It's healthier eating. And he seemed to confirm that yesterday when I spoke with him. If that's the case, then General Mills could be in trouble because, well, sugar cereal is a major profit generator for the company. After the close, we hear from two bellwethers. There's Micron, the semiconductor company.

company, which you know I like very much, and Lenore, the huge home builder, which I also share affection for. Micron had a nice rally today, and I think you can tell a good story about the entire line of chips after a period of subpar performance, not just the high bandwidth chips. Lenore, okay, that's trickier. This week saw the housing stocks just get clubbed after Toll Brothers reported a less than perfect quarter before getting downgraded by J.P. Morgan one-two punch this very morning. That sent the group cascading. It's a casualty of the frail bond market.

which is not cooperating with the Fed's rate cut agenda. Mortgage rates are stubbornly high, and we just aren't getting the turnover we would have expected by now. Thursday morning? Well, Darden tells us how it's doing. And I got to tell you, this one's still being driven by Olive Garden. I think the market's actually moved away from the formerly important restaurant chain. Instead, it's focused on the results of Texas Roadhouse and Brinker, both of which offer great value and are being rewarded with tremendous numbers and then plummeted.

much higher stock prices. I want to find out if Darden gets the consumers pushing back against high prices. They have to tell us what they're doing to entice these people who seem to be going elsewhere for casual dining, pretty much for people who want to spend no more than $11 per dinner.

At the close, we believe we're going to get a revelatory report from Nike. Now, the new CEO, Elliot Hill, he's an old Nike hand, by the way, will have to lay out a story about how to reignite this brand globally, which is undersold from Adidas, Hoka, Decker, Decker's, that's Decker's,

Hoka of Decker's. And then on holdings, which we've had on a bunch of times. I think Nike has to do more than just say it'll work harder with its partners. That's a hackneyed statement. Doesn't hold any water with me anymore. Company needs to show innovation. Dazzling innovation. The kind that makes us feel like fools of even thinking of abandoning Nike. It's amazing how much damage the previous CEO did to this once unassailable brand. It won't be undone easily. And we'll need both a roadmap with a line of sight to the end of the number cuts and a sense of no.

What else? The transports have been picking up a plate, which tells me maybe we've got to be a little more hopeful in the great FedEx reports. This company's been working hard to take out costs, and it's still working aggressively to improve gross margins. I think we'll hear good things. Look, I'd like to phrase it, still do. This is the period where people are most nervous about it because of the upcoming holiday. Finally, on Friday, we get our first look at the next set of inflation data. That's called the personal consumption expenditures number. Remember, my view is that we'll continue to get endless chatter about what the Fed might do

or not. So if this number runs hot, you're going to hear a lot of doomsay. And why do I put it up there then? Well, because maybe it's a good opportunity to buy something on weakness because other people will be freaked out by what the doomsayers say. We also get numbers from Carnival. Now, Carnival is, this is a cruise line, they've

This has got to be the most bullish industry in the S&P 500 at this moment. Cruises remain the most popular form of travel and leisure activities post-COVID. They're a great bargain. I think the estimates will be beaten. Right now, you can throw darts at this group and make money. I just booked myself a cruise for next year. Nothing lasts forever, but the love for this group currently knows no bounds. So bottom line, we're in a seasonally strong period, or at least we thought we were. But don't tell that to the owners of health care.

technology, industrials, or material stocks, which have been horrendous. As I see it, we have to get through the Fed meeting before Santa Claus is out. Now, it's not a fairytale on Wall Street. Santa Claus rally is usually a reality. But let's get the Fed news out before we go all in with that next and final contribution to your IRA or 401k. I want to start the calls with Jay in Arizona. Jay. Jim, thank you so much for taking my call from sunny Arizona. I'm so glad you called in.

Quite a day for you yesterday on the floor. Thank you, Jay. I did wish that my folks saw it, to tell you the truth. How can I help? So with expectation of the next administration being friendly to M&A activity, do you have a preferred investment bank that you think will reap those benefits? I was thinking Goldman Sachs, but I know there are three or four other players. So do I buy Goldman Sachs or do I buy the field? You buy Goldman Sachs.

And I will be talking about that, by the way, at our Wednesday meeting. We can be in a club meeting. And I think it is worth focusing on just the exact question that you asked. And I thank you for it. And thank you for the kind kudos about yesterday. Let's go to Tyler in Florida. Tyler. Kramer, man, I loved you on Seinfeld. Listen, man, how you feeling about Alibaba? Well, you know, that was hard for me. I had so much hair then. It was such a great treat. All right, here we go. Man, how you feeling about Alibaba going to 2025? What?

Bob is the only Chinese stock I'm recommending. I do hope I was, you know, I'm working on a piece. You'll hear it later on about the idea that maybe President Trump is going to do something. President-elect Trump going to do something a little more creative than President Biden did when it comes to China. So stay tuned. Let's go to Mike in my home state, New Jersey. Mike, Mike, Mike.

Hey, big Bernardville booyah to you, Jim. I'm liking that. I've been with you since your first show. And through your help, I've actually recently retired. And I listen to your advice daily, taking some chips off the table. And I'm thinking about AT&T for growth and income. Okay, I've got to tell you, I've been impressed. Look, I was not impressed at one point. And then when somebody gets it right, if they were doing it wrong, they get it right. Here's what I say. Thank you and great job.

Buy, buy, buy! AT&T. I think if the market's going to look for a Santa Claus rally, the sleigh will have to wait until after next week's Fed meeting. On Mad Money tonight, speaking of Santa, deck the halls. How about decking company AZEK? That's up 40% so far this year. But can it keep building on its own growth? I've got the CEO to talk the state of the consumer and the housing market. Then, tech player Service Titan soared on its intro to the tape yesterday. Wow!

I'm eyeing the company, what it really means for the IPO landscape, too. And later, I'm checking in on the state of cyber with the vice president of Microsoft Security. So stay with Kramer.

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Now that the Fed is our friend, even as it might be a little less friendly after that producer price index number, we need to check in with some of the best names in housing, including the renovation and remodeling space, which brings me to AZEK. That's the maker of composite materials that are basically faux wood, except unlike wood, it doesn't fall apart.

Now, I've been a fan of ASIC, both the product and the stock, for a long time, because they consistently outperform their own markets. Hence why the company reported a strong quarter three weeks ago, and the stock's now up 40% for the year, and it's in housing. So can it keep running? Yesterday, we got the chance to sit down with Jesse Singh, the president and CEO of ASIC. Take a look. ♪

Mr. Singh, welcome back to Mad Money. Great to be here. Thank you, Jim. Jesse, I got to tell you something. I've been spending a lot of time thinking about your group and how it's a no-growth group. But you have tremendous growth. How can you overrun your sector?

Thanks for that intro, Jim. Last year, with the fiscal year we just finished, we grew 12% in a market that in R&R, repair and remodel in general, has been flat. I think for us, it starts with a pretty strong focus on the customer.

and a strong focus on converting our products, TimberTech decking and AZAK trim from wood, which is the predominant market in our types of products, launching new products and then using that to expand our shelf position in the marketplace. So we've got a formula that we've been focused on executing over the last few years.

that we believe between the things I just listed gives us an opportunity to at least grow 5 to 7 percent over the marketplace. Well, that's amazing because I'm not hearing you say, "And if the Fed cuts this or this happens." It just seems to me that you are more in control of your destiny than anyone in the segment that you play. Yeah, it's really important when people say, you know, "We control what we can control," we believe growth is something that should be part of that equation. And as part of that,

We know the products we have. We know the market opportunity that's out there. We know where we can expand with customers. And we are laser focused on continuing to grow our business through the TimberTech brand in particular, which grew 18 percent last year in a flat market. One of the things that I find unusual about your company, one of the many things unusual about your company, is that you have premium value. And I say that because you're not the cheapest.

But people recognize that there is a tremendous value proposition with going with the best. Yeah, absolutely. So if you start in our types of products and just as a reminder, this is kind of an odd thing to show, but I'll show it to you. We take recycled materials. This happens to be a record album and credit card punches. And we put those into things like decking, refining.

rail siding and trim. As you point out, that's a premium value proposition, which means we give people better aesthetics, we give people long life and low maintenance. And so value for us is really value to the customer.

Now, having said that, we continue to expand the product portfolio to meet more and more price points, which is also important in this type of a market. So always adding more value, but doing it across multiple price points. Now, you are a serial buyer of your stock, which is what we want because it returns value. But you're also building the

plans. I mean, you guys are unstoppable in terms of your capital expenditures and the ability to be able because you have to meet demand. So you're doing both meeting demand and also buying back stock. Correct. Last year was was a good capital deployment year for us. We retired a portion of our debt.

We bought back an additional few points of stock, and we invested 5% to 7% of our revenue in both growth and margin expansion. And it's important for us that we do that selectively. In addition, we bought a couple of tuck-in acquisitions. We bought a recycler, and we bought a rail company. And these are relatively low investments.

that we're able to add value to that ultimately gives value to our customers. I was at Lowe's yesterday talking to Marvin Ellison, and we were trying to figure out, frankly, what does a customer really want? And it's got me thinking, who

is the customer? For instance, when I switched to ASIC, I did it not because of you, because I didn't know it was you. It was because my contractor told me how to use ASIC. And then later on, when I did another job, I said I knew you. And the guy said, well, that's interesting because that's who I recommend. Is it the contractor or is it the person?

In our case, it's both. And it's really important to engage a consumer so that they recognize that, you know, they're buying a really premium product that gives them the right visual and the great performance. But it's also really important. There's tens of thousands, if not 100,000 contractors out there. Each and every one of them is a small business.

They have their own credibility to manage, and it's really important that we take care of them. So for us, we market to the consumer, but we have a very large sales force that is focused on training and helping our contractors to run their business and giving them the right tools to help a consumer. Well, you do have a kind of a varied audience and market.

I have the good fortune to have a beach house. And my daughter said, you know, look, Dad, you keep using the wood. It's costing a fortune. I looked into it and I found this outfit. Didn't know that I know you. But why did she want to use you? Because she is sensitive to the environment.

Now, is this younger generation, do you pitch them that first? Because I know you're a replacement for wood, but there are a lot of people who say, thank heavens they're also using this stuff, getting out of the landfill. You know, environmentally, by using a very high percentage of recycle like we do, we're actually more environmentally sustainable from a carbon footprint standpoint than wood. I would say it varies by segment. In the DIY segment, it's important that

We offer the right price points and the right accessibility. In the more premium segments, we continue to offer a really premium value proposition. And in the millennial segment that I believe your daughter fits into, it's really important that we market both, that we market sustainability but also long-lasting and have the right kind of value propositions. When you took this job coming from 3M, did you know this was a growth company or did you just turn it into a growth company?

You know, we, coming in the market, you love coming into a market where the vast majority of the market, in my case when I started, 85% is an inferior material, which in our case was wood.

And so you look at it, we had a strong technology base that required some investment, some nurturing, brand building, and an expansion of new products. And when you start with a base like that, you assume that there's a growth business underneath that. And I'm really proud of what the team's been able to accomplish in driving the TimberTech brand, driving the Azak brand to really add value to our consumers. Well, you've made a lot of money for people, but you're also an inspiration. And actually, I think kind of the textbook of what

a company and a CEO can do to make it so you've got great growth in an industry, frankly, where there is very little growth. Congratulations. Thank you, Jim. That's Jesse Singh, CEO of AZEK. I didn't mean to be a commercial for it. I just happened to be a big user of it. Man, money's back after the break.

Coming up, service titans soared in its first day of trading yesterday. Does the successful debut signal a welcoming market for IPOs in the new year? Kramer is covering the newly public company next.

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Yesterday, we got one last major IPO before the holidays when Service Titan came public. This is a technology platform for tradespeople, one that makes life much easier for all sorts of small businesses, came public with a bang. The deal was supposed to price at somewhere between $52 and $57, but there was so much demand that they raised the range to $65 to $67 before ultimately pricing it at $71. Then it immediately opened up $30 at $101, which is near where it closed yesterday for pulling back $1 today.

Now, after this one, I have to admit I am hesitant to recommend Service Titan because now it's expensive. But I want to walk you through what happened here because we've been in an IPO drought. This is exactly the kind of deal we need in order to get privately held operators to start thinking about coming public again.

First, Service Titan's got a terrific backstory. The company was founded by two Armenian immigrants who saw how their parents, both trades business owners, struggled with all the tedious back office minutia that comes with running a service business. So they created a platform to help plumbers, electricians, contractors, HVAC technicians, roofers, landscapers, you name it, to help handle the paperwork. The two co-founders went on a squawk watch yesterday. Here's how they explained it.

We think of it as a business in a box. If you're running a contracting business, you need a tool to manage your advertising online, your call center, your dispatching, scheduling, payroll, everything in the back office. And so our solution is kind of like a perfectly tailored suit made specifically for contracting businesses that does everything end to end.

Though it was built with small family-run businesses in mind, ServiceTitan's platform has become so robust that even much larger professional contractors use it. That includes some large franchises with over 500 locations, more than $1 billion in annual gross transaction volume. ServiceTitan makes the bulk of its money from subscription revenue. You know I love subscription revenue models. That's for their core offerings, as well as usage-based revenue, including from transactions that use their payment solution. They have a baseline platform, and then you pay up for higher-end functionality if you need it.

I think these guys have found a great niche, and you can see that in the numbers. Surface Titan put up 31% revenue growth in their 2024 fiscal year that ended in January. They grew at a 24% clip in the first six months of the current fiscal year, and the perspective says they expect similar growth in the latest quarter, which ended in October.

And because this is a software-as-a-service business, well, that revenue is very sticky, very consistent. How about profitability? In the first six months of the current fiscal year, service titans' gross margin expanded from 66% to 70% year over year. I like that. Their adjusted operating margin came in at 5%, up from negative 5% the year before. Now, I should point out, though,

Service Titan doesn't pass the incredibly important, at least on this show, rule of 40 test. Now, this is how Wall Street grades cloud software plays, many of which are not profitable. You add the growth rate to the operating margin, and if the result's under 40, the conventional wisdom says you steer clear. Looking at the first half, Service Titan's at 29. Yeah, below 40. Still, overall, I think this company's trending in the right direction.

When these software as a service companies start turning profitable, they often turn out to be terrific investments. And that's where Service Titan stands right now. However, with some back on the envelope valuation math, this stock selling for nearly 12 times this year's sales. Now, is that appropriate? It depends. A few years ago, any remotely attractive cloud software IPO would instantly trade at 20, 30 or even 50 times sales.

But then the Fed started tightening, and those stocks collapsed. They cost you a lot of money. As for right now, service tightening is a bit more expensive than Salesforce. Salesforce is the gold standard for cloud software. And yesterday during this Goldbox interview, management listed a number of potential comparisons in the vertical software as a service sector scenario.

Viva Systems, Toast, the restaurant play, Shopify, we know them, small business, Appfolio. Compared to these service titans valuations, it's right smack in the middle. Take Appfolio, which makes cloud-based property management software for landlords. I think that's a good comp, making software for businesses in a specific industry. And it's got roughly the same price to sales multiple. So I'd say service titans valuation is rich, but not unreasonable. At the end of the day, I like this story very much. But as for the stock, I would like it a little bit lower.

I don't want to pound the table on a software company that doesn't pass this rule of 40 tests, especially when the valuation feels a little stretched to me. Service Titan is certainly worth buying somewhere, though it's a 10 times sales, meaning you've got my blessing to buy this one hand over fist if it comes back down to the mid 80s.

But for me, what's known about the service-tightened IPO is just how well it was received by Wall Street. Last week, I mentioned that Reddit shares have been on fire, and it's up again today. It was one of the few big IPOs we've had this year. We've had far fewer deals than in 2021 or 2022, or even the pre-COVID Trump year from 2017 through 2019. That's not good. Not good for corporate or market. Not good for you. In particular, there have been very few tech IPOs, largely because successful tech startups can raise more money than ever in private markets. If

And by the way, often at higher valuations than they get from the stock market. I bring this up because that is exactly what happened with Service Titan. Their last four private fundraising rounds were done at much higher prices than where this thing came public. Their IPO price is $71 per share. But in the recent fundraising rounds, they got anywhere from $84 and changed to nearly $119.

Now, that is a humbling thing to do, isn't it? To accept that your company might not be worth what a handful of venture capitalists said it was and come public anyway. And I'd love to see that Service Titan was rewarded for taking the plunge. Their last private fundraising round was under 85, now a $100 stock.

I also want to say something you don't usually hear very often. I want to praise Service Titan's investment bankers, including the team at Goldman Sachs that acted as what we call the lead left underwriter. They priced this deal perfectly. They priced it high enough that their client, Service Titan, was able to raise plenty of money, but also low enough so that their other clients, the money managers that participated in the offering, also made a lot of money. That means these big institutional investors will likely be back to get the next big deal.

Which brings me to the bottom line. I'm hopeful that this successful service-tightened deal will encourage more venture capital-backed tech companies to come public next year. Come on, guys. The water's fine. Let's take some calls. Let's start with Anthony in New York. Anthony. Hi, Jim. How are you? I am good. How about you? Doing well, thank you. I'm calling about this dog with fleas that I own, SMCI Super Microcomputers, Inc.,

uh most analysts when it was down 34 were either a buy or a hold and now i'm down 56 and i was just wondering what's going on with management and what do you recommend should i ditch it and go somewhere else or hold it i'm not a

Well, I know Bloomberg this evening did say that they brought in Evercore to help the company raise capital. When that when you see that, that's both good and bad. Good that they are going to raise money. Bad that they even needed the money. I I have a strict rule in the show. Accounting irregularities equals sell. They've had accounting irregularities. I never deviate. I don't even care if it's business is good. I say sell. Let's go to Andrew in New York. Andrew.

Hey, Jim, how are you? I'm good. How about you? I'm good. I'm good. I had a question about Sound High. Sound High, about 24% up. I've been watching this really closely. But I want to know, I bought this at $6. Okay, this is a cold stock. It's a short squeeze. There's no reason why it's where it is. I'm not saying that, therefore, it's the end. I'm not saying to short it. I'm not saying it can't go to $40. I'm not saying it's going to go to $40.

I am saying it's a cold stock, therefore I have very little value when you ask me about it because I cannot opine on a company that is in the stratosphere because of a short squeeze and a lot of excitement driven by people who don't really know how the stock market works. And if they don't get out, we'll lose a lot of money.

I like the stock of Surface Titan, which is the opposite of SoundHack, but I think I'd like the stock a lot more at a lower level. When it comes to VC-backed tech IPOs, though, I'm very bullish on what's to come. Much more in MadMoneyHead, including my read on where Microsoft stands in the security space after yet another high-profile cyber attack. Plus, after Trump's historic visit to the trading floor, I'm running through some of the key takeaways from my interview with the president-elect. And all your calls rapid-fire in tonight's edition of The Lightning Round. So stay with Kramer. ♪

On Mad Money, we spent a great deal of time focusing on cybersecurity because businesses can't afford not to invest heavily and protect themselves, which brings me to one of the largest players in the industry. It's not the largest. Microsoft.

Yet, while it sometimes flies under the radar because, well, it's part of a much larger operation, Microsoft's the heavy hitter in cybersecurity with a bird's eye view of the industry. It's another reason why we own this stock from my travel trust and have forever. So let's take a close look with Vasu Chakal. She's the corporate vice president of Microsoft Security. To learn more, Ms. Chakal, welcome back to Mad Money. Thank you so much. It's so great to be here with you, Jim. I don't know if people realize, but you guys put out, I think, the most informed, uh,

briefings for someone like me, for anyone in this country to know where we are. Secure future initiative, this Microsoft Ignite November 2024. I read it. I feel great about what you're doing. I feel badly that things have gotten even worse from when I saw you last. But like you guys were saying in 2021, only 579 password attacks per second. Now it's 7000. What's happening?

Yeah, so first of all, thank you for the acknowledgement on Secure Future Initiative. In today's age of AI, security must come first because as you said, last year when I was here with you, we were seeing 4,000 password attacks per second. Two years back, 570 now. Today, it's 7,000 password attacks per second. And what makes it even worse is if you look at the defender side and the gap, we have a talent shortage of 4.8 million jobs today. So it's

become really easy for anyone to become an attacker, ransomware, nation state, all over, really hard to become a defender. And as we look at AI and the potential that AI brings, we have to use AI for defense. So that's why Secure Future Initiative is about how do we bring the industry together? How do we prioritize security for Microsoft and for all? How do we advance our innovations so that we can bring this comprehensive security? Right now, everybody uses it.

Nearly everybody uses Microsoft. I am going to go into some of the larger companies, but I find them going after now companies with 10 people, five people and shutting the company.

company down. What do you advise to those people? Yeah, you know, it's so easy to say that, hey, this is not going to happen to me because we always think about cybersecurity as a big enterprise or a government issue. But the reality is, let's talk about phishing and scams. They're all around us because it's become really easy to make a dollar in cybercrime. Cybercrime, Jim, is costing us trillions of dollars every single year. Imagine what we could do if we brought that back into the economy.

My advice is be cyber vigilant. Start with that cybersecurity awareness. Everyone is vulnerable to attacks. All our companies need to make sure we're doing all we can to do security. And security is a cultural transformation as much as it's a technology transformation. In fact, Secure Future Initiative

is about culture. We have mobilized the equivalent of 34,000 engineers, probably the largest cybersecurity movement in our industry. And what we're doing is we are making security a core priority for every single employee. So that's what we need to do. Because when we as consumers, as employees are aware of security, when we use the best tools out there, when we are vigilant, we are ahead of the attackers. So about

I don't know, 10 yards from you right here was President Trump yesterday. Would you have said that to him? And then how would you say that should we play offense? Is there a way we could be doing something differently from the current administration?

So we have always partnered with every administration to advance cybersecurity as well as AI. And I look forward to working with the incoming administration on that. What I would say is in this age of AI, cybersecurity needs to come above all else. Like it needs to be our top priority. We need to look at the investments we are making in cybersecurity. We need to look at the cooperation, the collaboration, accountability, because cybersecurity, as I've shared with you before, is a team sport. Every single organization needs

every public sector, we all need to partner with that. And there's a lot we have to do. Well, I'm glad you say that because we had George Kurtz on the day of his, this is, we're talking about Crossfire, horrific attack that it was not, and it was not, by the way, a breach. It was a glitch. But I, I,

I understand that he just said, look, you're boss. And he sat down and said, let's figure this out together. Totally. That we're now getting to the point where people are no longer spitballing or anything like that. When it comes to these things, they're too big, right? You have to get together. Totally. And I remember having this exact conversation on, hey, let's come together and figure this out. That CrowdStrike incident is a great example. What we did was what we should do. We leaned in. We put our customers first. We helped them recover. We stepped back. We worked with all...

all the ecosystem vendors on, hey, what can we do to better protect? How do we do safe deployment? Because it was such a great lesson in resiliency for us. Like, we've got to think of resiliency. And I'm really heartened, like you, with all the progress that we are making and how we are protecting end-to-end. And this is one of the reasons why

Microsoft is building out a platform. One of the coolest innovations, and you're going to love this, is what we call exposure management because it helps defenders now look at an organization and a digital estate the way an attacker would look. That is going to be game-changing. Imagine that with AI for security,

So I'm excited. I'm excited about the progress that we're making with all of the ecosystem. And that was a great example of why we need to work together. I was so thrilled that everybody got together. I like both sides, so it's difficult. Now, Charlie Sharp recently, a fantastic banker, Wells Fargo, said he said that cyber is by far the biggest risk that we all face. And he's saying he wakes up at night thinking, is he spending enough money? Are we doing everything we possibly can?

Are businesses doing everything they possibly can? Are people trying to say, you know what, don't worry, it'll be fine? Well, we should worry. Cybersecurity is a continuous improvement game because it's a cat and mouse game. The attackers are getting smarter, defenders have to stay ahead. There are three things we should look at as we move forward. The first one is how do we use AI for defense?

There's a lot of potential of AI. I absolutely believe security is one of the best and the most serious use case. So what are we doing? Like Copilot for security is a great example where it helps defenders. In fact, one stat, which I think you're going to love, is it's helping novices. So people who don't really know cybersecurity get faster and better. 26% faster, 35% more accurate. Voila.

The second thing I would say is as we build AI and as organizations start using AI, 90 percent plus organizations are using some form of generative AI. Let's make sure that we're securing and governing that AI. That's a very important thing and we're using technologies for that. Third, remember security takes all.

It's a team sport. So think about the ecosystem. Think about who we need. Think about comprehensive protection. So those are the three things. And we have to be vigilant. We have to move from defense to protection.

to prevention and proactive security. So I think that's what we need to do. And yes, we have to make it priority number one. But I would say, and I in full disclosure showed you something that I got that I thought looked real. They're so good now. I mean, initially I said, oh, come on. Are they like, is this what they're sending your beloveds? Now they look exactly like I would expect. What's your advice to the people out there, working people who just say, you know what? I can't tell the difference.

It is really hard. We looked at that text just a few minutes back. So I would say every time you see something suspicious, you know, if you are like, well, is this right? Don't click on that link. Do not click. Do your research. Ask someone. And I think all companies have an obligation to make sure they're following the right processes and the right procedures so we can educate the consumers and our employees on what the right thing is. Cyber security awareness is going to be

critical because you took a pause before clicking on that. That's what we need to do. Well, look, I think that you are a calming voice in an otherwise hysterical world of cyber of cyber terrorists. Not that you aren't out there trying to get the bad guys to do it much more than we are. But it's great to have you on. That's Vasu Jakal. She's the corporate vice president of Microsoft Security. I always want to bring these people to it because it's so important. And I also did like it when Microsoft and Grassroot got together. Mad money's back in.

Coming up, Kramer takes your calls. And the sky's the limit. It's a fast-fire lightning round. Next. It is time. It's time for the lightning round. Question and answer. And then the lightning round is over. Are you ready? Skiing day. Time for the lightning round. We'll start with Kenny in New Jersey. Kenny.

Kenny. Thank you, Jim, for taking my call. Kenny. Of course. Of course. In La Valette, New Jersey. Your man, you're coming down to see me down here. I'm waiting for you. Oh, yeah. I'm going to Cherry Hill. I'm going to Cherry Hill tomorrow from 12 to 3 to sign some bottles for my wife, Mezcal, at Total Wine & More. I'll see you at Cherry Hill.

Thank you. Let's go to work. There you go. I'm there. What do you think of IBM, Jim? What should we do? I like IBM. I like IBM. It's still an inexpensive stock. It's still got upside. It's a little more episodic than I like, but you had that down drip. But you have 22 times earnings. I am on board. Let's go to Sal in New York. Sal. Jim, what's up? How are you? I am good. How about you, partner?

Very good, sir. All right. I got a small cap company. You have their CEO on a couple of times. The auto industry has been through a challenging period, no doubt. This small cap company has managed to grow its top line and build a 7.1 billion strategic backlog.

with consistent design wins from top OEMs. The CEO projects a return to significant growth in 2025, targeting over $700 million in revenue by 2028. What do you think about Indy's semiconductors? I think he may be a tad too bullish because the auto business is really much worse than people realize right now. So I'm going to have to take a pause on that one. I am sorry. You made a nice brief for it, but I can't go there. Let's go to Frank in New York. Frank.

Hey, Jim. Hey, great work yesterday with the president-elect. Thank you. Thank you very much. Hey, listen. I'm asking about Alcoa Aluminum. All right, now here's the problem with Alcoa. In the end, it's a material stock. The material stocks are linked with China, and therefore nobody wants them, even though Alcoa had a great quarter. So I have to go with the crowd and say not now. Let's go to Jim in New York. Jim. Hey, Jimmy. Question for you on Devon Energy Corp. TVN.

I don't know. Rick Moncrief just left it. He built the company. The stock is at its 52-week low. It's at 33. People expect oil to go down 10 bucks. We heard it from President-elect Trump yesterday. I say to start buying some. And I almost put it in the bullpen today for my travel trust in preparation for next Wednesday's meeting. I'm holding off for now because oil is so weak. Let's go to Alma in Rakhineh. Alma. Hi, Jim.

Yo, what's going on, Alma? Long time listener, long time listener. You help me out so much. I really appreciate it. Oh, thank you. Thank you. And I just joined the club. Oh, yes. I'll see you at Wednesday's meeting, 12 o'clock. I'll tell Jeff you're going to be there. Thank you. Jeff wants you. I'll be there. Be there or be square, right?

Okay, I just wanted to ask you about paychecks. It doesn't seem to me like it's doing a whole lot. Okay, paychecks reports next week. And I think this is on hold. A lot of people feel that if the Fed stops cutting rates or says, listen, we can't cut anytime soon, the stock's going to fall. Let's wait to see. It yields 2.7%. I like to buy this stock at 3%. That's been the right thing to do. Let's employ that strategy. I need to go to Nicholas in Florida. Nicholas.

Let's go to William in California. William.

Happy holidays, Jim. I would like to ask you about a stock, APLD, Applied Digital Corporation. Yes, you know, look, this high-performance computing, and you know when I see high-performance computing, I think about a stock that everybody suddenly hates again, and that's the stock of NVIDIA. And I'm not back and away from NVIDIA. It's actually been very good to my travel trust and everybody else in the world. And that, ladies and gentlemen, is the conclusion of the Lightning Round. The Lightning Round is sponsored by Charles Schwab.

Coming up, what could the new administration mean for stocks, crypto and the market's direction over the next four years? Kramer shares his takeaways from yesterday's conversation with the president elect next. Hey, still get a lot of good feedback from my interview with President Trump from the floor of the Stock Exchange yesterday. Thank you.

And I want to share the most important morsels with you. The biggest takeaway I heard was from Trump's statements about China, where he first talked about how he has a good relationship with President Xi. It is self-revelatory. But also that China has not been a good actor and it can't stay that way. This is so important in so many different ways. We need to protect Taiwan. We want to protect Taiwan semiconductor, perhaps the most important non-American company to our national security. At the same time, we need to figure out how to turn China from a full-time adversary into a worthy trading partner.

I don't know what one president can accomplish with a country that's taken advantage of our trade policy for years and years. But let me tell you what I think can happen. I believe the President Xi needs the U.S. much more than people realize. The Chinese economy is more of a deeply indebted. He's lost the good faith of our country, which was truly in fault with China not that long ago. He's losing the good faith of his own people with his old school malice leadership style. Something has to give.

I think Trump is a deal-making move. He can say, "President Xi, you can either deal with me or you can deal with Peter Navarro, the biggest China hawk in my retina, maybe the biggest China hawk in the country. What'll it be?" Civil direct. It just might work. But like Ronald Reagan with the Soviet Union, Trump will have to trust but verify. Could this be like when Nixon went to China to open the door to better relations? I think the president-elect wants to be thought of as someone who can really change things for the better in this country, and putting our relationship with China on an even keel would be a big step in the right direction.

I also thought the president-elect had no bluster when it came to the stock market. That was a very good thing. To grade yourself by the stock market is to take a taskmaster on that doesn't play by the rules. It's not worth it to link your performance to such a fickle beast as the Avernus. The president-elect's affinity for crypto will only give the dollar a strange bedfellow. I want our country to be the capital of finance, and that means being the capital of crypto, too. I believe the dollar can cooperate with crypto, as it's cooperated with gold all these years. But I want Washington to get the deficit under control to take the luster off crypto.

Finally, I heard from a huge number of people from all sides of the political equation who liked that there was an upbeat tone, a lack of rancor, and a sense of forgiveness toward the vanquished rival. It was almost like Trump had just too much to be consumed by the past. He got too much to do. The best business people don't want to dwell on what went wrong in the past. They're laser-focused on what can be done to make the future better. We got a hint that Trump's headed in that direction. Less adversarial, more sternly cooperative.

A lot of people on the floor of the exchange seem to think that nothing could be better for the market than a pro-business conciliatory president, not unlike what we got when President Ronald Reagan came to the floor in 1985.

I can see why people want to believe in the analogy, because Reagan coming back then was the beginning of a multi-decade embrace of stocks, even if it was occasionally interrupted by the 87 crash, dot-com bomb, and finally the financial crisis. In the end, all of those actually did turn out to be terrific buying opportunities. I want to believe that White House's attitude toward business is important to the direction of stocks.

The current president is often going way out of his way to show his disdain for any business people. But what's more important is profits. So it certainly doesn't hurt that Trump talked about wanting to cut corporate taxes once again to let more money fall to you, the shareholder. Love him or hate him, you've got to admit that's good for your portfolio, which, by the way, is still the true north of mad money. Like I said, 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 Monday.

Thank you.

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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