Mad Money w/ Jim Cramer 12/17/24
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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 a little money. My job is not just to entertain, but to put things in context. So call me at 1-800-743-CBC. Sometimes we forget what we're trying to do around here.

We're looking to find good stocks at good prices and buy them. We want to sell bad stocks at any price and kick them out of our portfolio. Yet somehow on a not so hot day where the Dow tumbled 268 points, S&P lost 0.39%, Nasdaq shed 0.32%, we tend to feel like it's only worth owning stocks that managed to go up today, this session. Everything else, a total loser. You got to get rid of them.

I get this feeling myself. You know, I was a trader for a considerable part of my life. Today would be a day where I'd be looking for opportunities, taking them while casting aside others that weren't in keeping with that day's action. Often we start from scratch on a given day. No positions on our sheets. There would be points where we were up a great deal at the hedge fund at some point during the year. And from there, we just day trade.

Oh, it was a huge amount of fun. We only committed a small portion of our capital. We didn't want to give up our year's gains.

Our rules are pretty simple. One, don't go against the tide. If people are buying the drug stocks, find the best drug stock. On a day like today, we probably would have bought some J&J. Good yield, decent prospects, great balance sheet, down big from the high. Two, make sure you aren't buying something that's headed down after you purchase it. Just kick it out immediately. You get trapped. Three, be mindful that you can't turn a bad trade into an investment that you kept overnight. That's the heart of a loser. If a trade doesn't work, you have to throw it out, throw it in the towel, by the closing bell.

Does any of this sound familiar? I bet it does to you because you hear it all day. I think it defines much of what we see and hear about stocks these days. It's as if everyone I watch has plopped down on that trading desk with us during one of these day trading modes where we had so much software, so much knowledge, yet it still was

a fraction, by the way, of what modern traders have. Their artificial intelligence these days can find out the precise correlations among the drug companies. No seat in the pants knowledge like we had. They'll know whether Merck or Pfizer would work best. Merck with no news or Pfizer with news that amounted to something good simply because it wasn't bad, as was the case today.

Now, all of this is very useful if you're a trader. But I think as investors, we're putting on mental shackles if we behave like this. Remember, back in my hedge fund, our whole goal was day trading, which is scalp pennies from the flow. That's a lot of risk for not much reward. It's better to zero in on dollars for the big picture. That's what I want you to do. And what exactly is the big picture?

something that says we're now experiencing a nine-day losing streak for the Dow Jones Industrial Average, the longest since February of 1978, when, if you can imagine, we had double-digit inflation and a severe lack of leadership. The federal funds rate was at 6.75% at the time, but it would finish the year at 10%. Wow. So we were at the start of a horrendous decline in the abyss of the late 1970s with super high interest rates. Now we're still nearing the beginning of a rate cut

Cutting cycle. Don't listen to others who say, well, still, it's not a cutting cycle. It is. And it may or may not go slowly. It doesn't matter. It's very different from the similar losing streak in 1978, a time when most of you were not alive and I was living in my Fort Fairmont.

What else is part of the big picture now? How about the fact that we're heavily oversold? When we've experienced this level of oversold negativity, minus 5.2% on this S&P short range oscillator, I swear by, only twice in 2024. One time in April where the S&P bottom at 4967, then advanced to 5668. Another time in November when the S&P had sunk to 5701, then rallied to 6090. These were two of the best buying opportunities we had the entire year. Buy, buy, buy, buy, buy, buy, buy!

But you had to be willing to go against the prevailing attitude of negativity with tons of articles and news stories about how something terrible was about to happen.

Now, I know there are plenty of major events coming up. I didn't say major negative events, just events. We have a big Fed meeting tomorrow where we pretty much know what will happen. There could be dissents. There could be members of the overmarket committee who are more hawkish than others. But we'll still have a Fed chief who's data dependent and doesn't want to get too far ahead of himself, even if the commentators all wish he would. We know that there are inflationary tariffs in the wind, but we don't know their size, their breadth or their impact.

But that's why we're already oversold. People saw this coming. They're worried and they took action ahead. They dumped stocks so they wouldn't be long or own as much when the meeting occurred. Now, we've got some leadership stocks that are being torn apart, the heaviest of which, of course, is NVIDIA, up 163% for the year, but down 22 points from its recent highest points, not percent. Gee willikers. What exactly is the matter with NVIDIA, down eight out of the last nine days?

I think nothing. It remains the leader in the most important space of the entire market. It's riding a wave accurately depicted by a seasoned warrior, Matt Murphy, the CEO of Marvell Technology, who said something amazing on this show about the size of the AI opportunity just last night. Listen. We are in an unprecedented AI super cycle.

for AI as a service, but also for the silicon TAM underneath it. This is unbelievable. I've been doing this for 30 years. I've been through every major one of these cycles. PCs, smartphones, digital cameras, cloud computing, you name it. This one's bigger than all of them.

Nvidia is not being dethroned by any competitor. Even the companies that are trying to compete against it are faithful customers who have no choice but to try to develop something because Nvidia can't supply enough chips to meet the demand for most customers. I think it's just profit-taking after a monster run. It has been a monster run, hasn't it? But I understand on January 6th, 2025, Nvidia founder and CEO Jensen Wang will be presenting a keynote at CES, the largest tech

expo in the world.

And he's used that podium before it introduced many of the innovations that made NVIDIA one of the most valuable companies on Earth. When will the stock bottom? I always let a stock tell me what to do. NVIDIA bottoms when the stock rolls over at the open, then hits a level on big volume where it stops, before working its way back up to well above where it opened. That, people, is called a crescendo bottom. But everyone of size who wants to get out has done so. No need to jump the gun.

But keep in mind that if you don't own any, you might want to wait right ahead of CES. Oh, and another thing, please, if the stock opens up, please do not buy it. It rarely works. Final element of the picture. We have been working on a series that tries to come up with bargains, stocks that have been sold down so hard that they only take into account the negatives and none of the positives.

The stocks I'm looking at are beaten up. They look like death won't build her. In other words, they're precisely the kind of stocks that I tried so hard to avoid when I was day trading, but that made perfect sense. But if you're investing, we were disciplined traders trying hard not to start a position and would the cutter losses no matter what at 345 p.m. That's not what you want to do.

Here's the bottom line. Now the goal is to build a position that starts somewhere well below where it was, simply because it has gone out of style in the current version of the Wall Street fashion show and is being hit with heavy end of the year tax selling, like some of the health care stocks that we're profiling tonight. You know what? You don't want to do this because of the overarching principle behind good investing, buying low so that one day you can sell high or maybe not sell at all. Let's take questions. Let's go to Bill in New Jersey. Bill.

Bill. Yeah. What do you think about Paramount, Jim? Over. Don't go. Done. Let's skip it. Let's find something that works. I think that Disney, which, by the way, has pulled back nicely in Travel Trust's name, what a great level to buy Disney is maybe even tomorrow. Let's go to Bill in New Jersey. Bill. Hey, Jim. Merry Christmas. Happy New Year. Same to you.

I always, I like when you put them props up there. Remember the apples and the PepsiCo and all that. Now back to the old days.

Yes, the old days. I'm down here on the floor of the stock exchange. I feel a little constrained, frankly, but that's all right. That's just I like to tell the truth. No one likes to tell the truth but me. I don't know why that is. Go ahead. You're the best. That's why. I'm not a hack. There's no better than you. I'm not a hack. Thank you, buddy. Thank you. What's up? It's PepsiCo. They're down 40 points in one year. I can't figure it out for a whole life for me. I like the stock still.

Did I buy more or should I jump out? Someone asked me that. Someone asked about PepsiCo, the total wine and more on Saturday in Cherry Hill, New Jersey. And I said, look, it's not expensive. Yields three and a half. Not a bad level to start a position. But I understand you're up against GOP-1s or at least the elusive story of what GOP-1s can do to a company that owns Frito-Lay. Craig in North Carolina. Craig. Hello, Jim. Greetings from Charlotte.

Oh, man, what's going on? Hal, thanks for taking my call. I enjoy the show. Of course. I've got a question for you about a good old American brand, Levi. You know, People Magazine, I was reading on Twitter that people might wear letter X, whatever, that People Magazine says that they make the best jean jackets. I didn't even know anyone else made the jean jackets. I think that the product is terrific. The stock itself at 3%, with a 3% yield and 13 times earnings is intriguing. But Ralph Lauren is amazing.

Better. RL. All right. As we head into the new year, it's worth reminding ourselves that all we really need is the overarching principle behind good investing. Buy low so you can ultimately sell high or not sell at all. I'm Matt Money tonight. I'm giving you part two of my Opportunities in Healthcare series where I'll run through some names in the medtech space that I think are worth watching. Then, as a general reversal in store for some of the moves we've seen that are powerful in December, I'm going off the charts in the currencies and the treasuries.

and gold. And later, what's behind Broadcom's monster move on earnings? Everyone's asking. I'm tracking the semi stocks on the heels of this action. So stay with Kramer.

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Before investing, consider the funds, investment objectives, risks, charges, and expenses. Visit ssga.com for prospectus 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. All week, we're running a series of one of the most hated sectors in the market, and that is the healthcare sector. We're looking for high-quality stocks that have come down dramatically from their highs.

And look, in a market that's run so much, at least before today, it's worth combing through the laggers because that's the only place you can find good value. Like I mentioned last night, there are 62 health care stocks, the S&P 500, and they're down an astounding average of 19.7%.

from their highs. Now, sometimes because they're real risk in the group. Look, just yesterday, President-elect Trump talked about the need to knock out the middlemen from the drug industry. Think the pharmacy benefit managers and drug distributors. It seemed like taking apart the PBMs could become a real cause to love of this administration.

But I also think that much of the risk is starting to get priced in at this point. And that's why, you know what, we're going subsector by subsector this week, find opportunities in health care. Last night, it was pharma and biotech. Tonight, it's the medical device and medical technology group. Very different.

On average, the MedTech stocks in the S&P are down 17.6% from their highs. Many of the players are down less than 10%. I mean, think Abbott Labs, which is a stock that I'll be talking about at the Thursday meeting. It's a big club name. Intuitive Surgical, ISRG, like them very much. Striker, Boston Scientific, fantastic company. Been on a couple times. These are just fantastic. You know, these are, let's just say, very successful this year, and therefore they're up a lot. And we're looking for stocks that are deep discounts, so they won't qualify for this segment.

Which brings me to Medtronic. Yeah, the medical device company that focuses on cardiovascular disease, neuroscience, robotic surgery, and diabetes. Full disclosure, Medtronic's been a long-term underperformer, up just 12% over the past decade. The stock had a big run during the early portion of the pandemic, reaching new all-time highs, but the gains didn't last. By the time Medtronic bottomed in late 2023, the stock was actually below where it traded in March of 2020 during the depths of the COVID crash. That's miserable.

But I'm interested in Medtronic here because the company seems to be making a turn, getting back its momentum for the recent spate of weakness in health care. In late October, the stock had reached its highest level since August 2022. But in the weeks since the Medtronic's plunge, down 12% from that high. You know what? It's exhausting, but I think it's a steal.

Metronix had a bunch of successful product launches in recent quarters with around 120 product approvals over the past 12 months in key geographies. Very exciting stuff in transcatheter aortic valve replacement, pulse field ablation, and leadless pacemakers.

not to mention new functionality for their Yugo robotic surgery platform, which I find very interesting, but not a lot of people are talking about. This wave of innovation has translated into much better numbers over the past couple of years, starting with eight straight quarters of mid-single-digit organic sales growth. Medtronic's earnings were basically flat in the last full fiscal year, which ended in April,

But in the current 2025 fiscal year, the earnings are expected to go by almost 5%. And if you believe the consensus estimates, that should accelerate to 7% in fiscal 2026 and 8% in fiscal 2027.

When Medtronic reported its most recent numbers in mid-November, the stock sold off a bit. But the actual quarter was strong. Management even raised their full-year organic sales growth forecast and their earnings forecast. So I'd be looking to buy Medtronic in the week this week. The stock's selling for just under 14 times next year's earnings. That's pretty amazing. It's one of the cheapest names in the Medtech group. And, hey, Medtronic's paying you to wait for a comeback. It's got a bountiful 3.4% dividend yield, very safe, best in the Medtech space by a wide margin.

What else might work? Well, how about this down and out? Edwards Life Sciences, EW. This leader in structural hard solutions like non-invasive hard valve replacements used to be one of my favorite stocks until the Fed started raising rates in 2022 and anything with a high price earnings bull got eviscerated.

This thing's made a couple comeback attempts over the past two years, but both they ultimately failed. This year, that failure happened in dramatic fashion. July, the stock fell an astounding 31 percent in a single session after a disappointing quarter that included lower than expected sales for the company's core transcatheter aortic valve replacement business.

Since then, Edwards has been working its way back higher, even as they reported another weakest quarter in late October. At this point, the stock's down 23 percent from its two-week high, down 44 percent from its all-time high in late 2021. Why bother with Edwards Life Sciences? Well, yesterday, analysts at Bank of America upgraded this thing from neutral to buy, which seemed like a bold call for a stock that's been out of favor for a while now. But when I read the upgrade, I found myself pretty convinced that better days are indeed ahead for Edwards.

The B of A analyst cited a catalyst-rich schedule for the company in 2025 and 2026. Lots of potential growth drivers coming up. They also argued that the company's in a sweet spot in the transcatheter aortic valve replacement space, which is a high-growth market with significant unmet needs. With the upgrade, the Bank of America analyst raised their price target on this $74 stock from $82 to $90. And you know what?

When I read it, I think they're onto something, which is why I think Edwards is worth owning here. Very compelling piece of research. I usually don't pivot like that, but I liked it. Finally, how about a pet spike? How about IDEX, I-D-E-X-X, laboratory? That's the leader in veterinary diagnostics. When he started this show, he used to be one of our favorites. They do software, water microbiology testing. This one ties in with that immunization of pets team I've been using for about 15 years. Remains alive and well.

But after an incredible run from below 200 in March of 2020 to an all-time high of about 700 in August 2021, the stock's been lost to the wilderness for a couple of years. That actually mirrors what we've seen in many other pet stocks, because after a huge boom of pet adoption during the pandemic, there were a couple of lean years that followed, including lower vet visits, something that impacts IDEXX.

Their latest quarter was of the mixed variety, a revenue mispair with a 12-cent earnings beat off a $2.68 basis. But Audix trimmed its full-year revenue.

and merely reiterated its earnings forecast. So the outlook is not so great. So the stock got hit in response. In the weeks after the quarter, the company also announced a CFO departure. Although that didn't impact the stock as much as I thought it would. I'd say it's been making a comeback since this late October breakdown, but it's still down about 27% from its March highs. I think the company should benefit from a continuing comeback for vet visits, which has been happening, but at a slower pace than many expect it.

As we get further and further removed from the pandemic, I expect everything pet related to keep trending back towards normal levels. And in the context of IDEX, normal means strong secular growth. Thanks to increased vet visits and tremendous pricing power, clearly inter-veterinary testing. At its highest in 2021, IDEX sold for 76 times the next year's earnings estimates. Now it's trading just 36 times next year's earnings estimates. I see it. I think that's a compelling entry point.

Not ironclad, but pretty good. Bottom line, if you're looking for marked down medical device stocks, here they are. Medtronic, Edwards Life Sciences and IDEXX Laboratories. But we're far from done. Tune back in tomorrow for some fresh ideas in the life science and services space. All week for more health care stocks that have pulled back to the point where I think they're just too darn cheap to ignore. Mad Money's back after the break.

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As we head into the depths of the holiday season, all sorts of markets experience low trading volume, with many pivotal futures contracts expiring between Thanksgiving and Christmas. For example, December currency and treasury futures dropped off the board this week.

And that can create some really weird dynamics, which is why tonight we're going off the charts with Carly Garner. You know she's a terrific technician. She's the co-founder of DeCarli Trading, the author of Higher Probability Commodity Trading. We've got to get a better sense of this moment because it is a little wacky. As Garner sees it, we often see inexplicable, unsustainable moves at this point in December. Then as liquidity returns after the new year, those moves reverse. Right now she thinks currencies, trade.

Treasuries and gold are all prime candidates for what she calls a holiday price squeeze, followed by a reversal come January. Let's start with the U.S. dollar. To garner the dollar went parabolic for much of the fourth quarter. You can see.

When you look at the dollar index, which measures the greenback against a basket of foreign currencies, it rallied from 100, OK, so right here, to 108 in a relatively short period of time. This is actually a huge move for currencies. They don't go like this. As Garner sees it, the dollar deserved to rally. America's economy is already in much better shape than most developed countries. And we've got a business-friendly White House. Won't hurt.

However, she wonders if the Trump trade's already priced in. Remember, during Trump's first term, we got a weaker dollar, which is what most presidents want, because a weaker currency helps boost exports. You can see Trump's under trip section. At the same time, Garner points out that algorithmic traders have gotten carried away with a long dollar short the 10-year treasury note future strategy.

I love that term.

overshoots fundamentals. Now, when you look at the consensus bullish sentiment index, which polls industry insiders, 74% are bullish on the dollar and a mere 26% are bullish on the euro. When you see such a lopsided reading, it typically means that buyers have already bought what they want. Sure enough, the dollar index is now facing significant resistance near the 108 level. Carnitine, that leaves the greenback vulnerable to a sharp reversal in early 2025. Doesn't help that the relative strength index, which we see down here,

An important momentum indicator is looking pretty sluggish. Better book your tickets for European vacation while our currency still has a ton of purchasing power. Carter also points out that the dollar index has only broken out above the trend line currently at 108 a few times in the last decade. It happened once after Trump's first victory in 2016 before collapsing for much of 2017. It happened again and Russia invaded Ukraine in 2022.

Sorry, sloppy there. Creating a global flight to safety trade. If the dollar starts slipping like it did at the beginning of Trump's first term, Garner wouldn't be surprised if the dollar index makes its way back to the low 90s. Again, you're looking at these are big, big moves.

Next, check out the monthly chart of the Japanese yen. The yen's been getting pulverized for years, except for a brief moment this August when that yen carry trade imploded. But that rebound didn't last long. The yen's giving back nearly all these gains, and Garner's betting it will keep heading lower during the holiday season. In Garner's view, investors have been spoiled by the fruits of borrowing yen and low interest rates. This is so low versus where it was. Borrowing yen...

It lowers rates to buy higher-yielding dollar-denominated assets. This form of leverage can deliver great returns for years, even decades. But it can't last forever. And when it ends, it usually ends poorly. The lower the end descends, the more dangerous it becomes. A retest of the breakout trend line will support the currency near 0.64 cents. But a full retest of that downtrend line dates back to 2004, and that could be in play. If that happens, then the yen could drop to 0.6150.

If so, the carry chain would be highly vulnerable to another round of unwinding, which would prompt another panic and, remember, cause our stock market to get hit severely earlier this year. Looking back at history, the yen peaked during the global finance crisis. The world was convinced that this was a safe haven asset.

However, in 2024, nobody has much reason to go long Japan's currency. If the yen peaked during the financial crisis, maybe it can bottom during this moment of economic and stock market euphoria. Garner notes that as the yen has been making lower lows, the relative strength index hasn't fallen, which is generally a positive sign. By the way, the yen and the 10-year note have traveled the same direction 92% of the time over the last 180 trading days. So strength in the yen translates into firmer treasury prices and lower interest rates. Remember, all this stuff is interrelated, which is why we bring it to you.

Well, of course, which brings me to the next monthly chart. And this is gold. Gold in yellow versus the 30-year Treasury futures in blue. There are many absurd correlations with Treasuries here, but you'd expect a consistently positive correlation between Treasuries and gold because they're both safe haven assets. Yet nowhere to be found in this environment. Gold soared as Treasury prices have plummeted.

And Garner's view, gold's in the process of putting in a significant top. For the you Goldbergs out there like me, listen up. Significant top, while Treasuries are likely to put in a significant bottom, if only just due to what she calls mean reversion. Keep in mind, the yield in the 30-year is pretty high right now, which makes it a heck of a lot more attractive than gold as a storehold of value, because gold doesn't pay interest. Finally, let's look at the 30-year Treasury futures in isolation in the monthly chart. Garner notes that this is so important.

Garner notes that this has been the worst multi-year stretch for Treasury holders in history. And she thinks there's a window of opportunity for the bears to keep mulling bond prices because existing trends tend to continue and get overextended at this point in the year, as I said at the top of the segment. However, the 30-year is still holding above its uptrend line, year 116, where it yields 1%.

4.6. At the same time, when you look at the CFTC's commitment of traders data or cot data, large speculators have one of the largest net short positions of all time betting against the 10-year Treasury futures. Everyone's betting against bond prices. They're betting that we'll see bigger budget deficits or more inflation. Don't forget, of course, on tariffs, which will tank the bond market.

But man, the last time Trump took office, the yield in the 30-year was more than a percent and a half lower than it is around now, around 3%. It peaked at 3.4%, stood at 2.5% when he left office. Throw in the potential for weak dollar and Garner's betting that Treasury prices will have a strong 4 in 2025. If we do get an uptick in bond prices next year, she says the yield in the 30-year needs to fall below 4.1 before we can confirm a trend. And I can just tell you that if we do this, we get there, stock market,

Like that. And that's my view, not hers, but I have to put it out there. Bottom line, the charts interpreted by Garner suggested some of the popular trades going into the end of the year could reverse hard if you get too complacent as we turn to the calendar year 2025. One more reason to stay on your toes and to pause before you presume that long term interest rates are inevitably headed higher, which, of course, would then drive our stock market lower. Let's take questions. Let's go to Robert in New York. Robert.

Hey, Jim, I just want to wish you a happy holidays. Merry Christmas to you and your family and Lisa and to your staff, Emma, who's phenomenal. I hope she gets a good bonus. But that's terrific. Thank you so much for those kind words. Thank you.

okay this doctor to keep the fifty two weeks high which shares trading at an impressive almost seventy three dollars the other day you made a you made me a boatload of money on this company uh... a while ago and some wall street writers of saying what they did today with the bold financial move they're offering seven hundred fifty million convertible senior notes due in twenty twenty nine but they're also purchasing over three hundred million in class a common stock

which I think is kind of smart in a way. Okay, Max Lefchin is a genius like you. And Jim, do you agree I should buy more and sell much later? Okay, Max Lefchin is a genius. Don't put me in his category. He's really out there in terms of how bright he is. And you're right. Buying the common stock was brilliant because otherwise people are going to short the common stock.

I like Affirm very much. I think it was very underpriced in the 30s. So therefore, I'll tell you, Affirm, Block, which of course is Square, Block, Square, and PayPal are the three fintech stocks that are going to continue to work in 2025. I know it sounds strange to bless a buy of Affirm here, but I do so. Let's go to Brian in Pennsylvania. Brian.

- Oh yeah, Jim, thanks for taking my call. - Of course. - Jim, I've been thinking about nuclear energy with regard to AI data centers. About 10% of my portfolio is in PSE and G, which has some nuclear plants. But I'm wondering if I should also be looking at Constellation, which is a bigger player in nuclear power.

Do you think I should stick with PSE&G or branch out into Constellation? At this point, I want you to stick with P&G until I see Constellation go lower. There's too much hot money in Constellation CEG. And you'll see it. Just watch the tape in the morning. It's known as the crawl. It's just boom, boom, boom. There's so much hot money in it.

I don't like to be involved with hot money. All right, listen, the charts are interpreted by Garner, especially if you get too complacent heading into 2025 with the trends that we're seeing now. The popular trades will see a reverse themselves. So you got to stay on your toes. Much more mad money, including my look into what Roy Combs' big run-up could mean for other chip companies. Plus, on the eve of the next Fed meeting, I'm breaking down my playbook on how to react to the early commentary. And, of course, all your calls rapid-fire in tonight's edition of The Lightning Round. So stay with Kramer.

What the heck is happening in the semiconductor space? There's been some wild action over the past week. It started last Thursday when Broadcom, which we own for the Travel Trust, reported technically mixed quarter. Even though the results weren't perfect, the stock still soared 24% on Friday before tacking on another 11% yesterday. That was easy. Although I pulled back more than 4% today.

So how does Broadcom trade like you got a takeover bid in the aftermath of a seemingly just okay quarter? Because the headline numbers don't tell the whole story here. Putting all that aside, we learned that Broadcom is having tremendous success with its AI chips, which is all investors care about right now at the moment, as you know. More important, management made some comments about potential big new customers for the AI chip business. The focus for Broadcom right now is on developing technology for AI data centers.

including and especially custom accelerators, meaning advanced processors that they call XPUs. This is a business that's been building and building throughout the years. Here comes customers' race to build out their AI infrastructure. And with last week's earnings report, management noted that their AI revenue for fiscal 2024, the 12 months ending in October, was up 220% to $12.2 billion. Wow.

220%! And that wasn't even the best part. Even before this quarter, we knew that Broadcom was making XPUs for at least three hyperscaler customers. Management never confirmed who they are, but they're widely believed to be Alphabet, Meta Platforms, and ByteDance, which is the company that owns TikTok. On last week's call, the Broadcom president and CEO, Hawkins, has been on our show. He gave more detail than ever before on how he expects his semiconductor business to evolve over the next three years. And his vision had investors drooling.

First-hander, the Broadcom's non-AI chip business has bottomed and should grow from last year's base, probably at a mid-single-digit clip. Now, it doesn't have much sex appeal. I know that. But it's still major good news that the legacy part of the business, which, by the way, still makes up 60% of the company's semiconductor revenue last year, will no longer be a drag on the rest of the business.

Second, there are major positive developments on this XPU and networking equipment front. Hyperscalers can't get enough of this stuff. While we knew Broadcom had three major hyperscaler customers and we knew they were spending fortunes on AI infrastructure, Tan explained that he expects each of these three customers will deploy clusters of one million XPUs in 2027. I mean...

That is shocking. Tam projects that these sweet customers alone represent a serviceable, addressable market, that's his term, SAM, of $60 to $90 billion, and that is incredible. From perspective, WorldCom's entire 70-year business racked up just over $30 billion in revenue last year. Of course, this one company won't get that entire serviceable, addressable market, but even winning a decent chunk of it would be huge for their AI business. And the cherry on top?

It was the news that Broadcom has engaged two additional hyperscaler customers, which represents additional upside to that 2027 addressable market forecast. Now, look, I don't want to get too excited about this, but it's hard not to be. And clearly, the market's more than happy to get ahead of itself and digest that news instantly. So that's the reason why the stock jumped to combine 38% on Friday and Monday and made a lot of club members happy. But there's also been some important pin action.

in the group since then. First, what Brooklyn had to say last week about the success of the custom accelerator business, that echoed similar commentary from Marvell Technologies, which we had on the show last night. Marvell reported solid results over this month and also made similarly bullish comments about the trajectory of their custom silicon business. And that's why that stock jumped 23% in a single session after reported earlier this month and then jumped another 10% last Friday, responsive to Brooklyn Quarter. Now, clearly, this is an area where the hyperscalers will be spending a lot of money.

But almost immediately, investors began to wonder if these custom silicon companies are going to be such big winners. Who are the relative losers?

Now, one incredibly knee jerk and wrong answer, as I mentioned at the top of the show, is that NVIDIA might be getting displaced. I think that's one reason why the stock's down nearly 15 percent from its November highs, including a big pullback today. Although it's also because Amazon's making chips that matter, too. And Microsoft's making noises that it won't be so hard to get chips, that there are no shortage. I don't know.

Every long knife is coming against this stock that you know I like the most, which is NVIDIA. I think these concerns are totally misplaced. First, as Marvell CEO Matt Murphy told us last night, this market's going to be big enough for a number of winners. Second, while the upper scale is clearly like the custom chips they're getting from Marvell and Broadcom, these solutions still aren't as powerful as NVIDIA's industry-leading graphics processors, units, or GPUs, which they can't live without.

Don't forget that NVIDIA also has an enormous moat in the form of software ecosystem to go with this hardware. Never, ever sell NVIDIA reports that the hyperscalers will spend ridiculous amounts of money on AI. Customers buy Marvell or Broadcom and they buy NVIDIA, too. It is so not a zero sum game. And I've done so much research on this, people. It just isn't. It's a win for everybody. But the other chipmaker that's been trading like a loser is AMD, another charitable trust holding. Now, this is different.

While AMD was clearly far, far behind NVIDIA in making these ultra-fast GPUs, it was seen as really the only chipmaker that could even come close. But the fact that these hyperscalers are quite interested in custom silicon solutions from the likes of Broadcom and Marvell has investors wondering if these ancillary chips might actually be the next best option, not AMD.

And that's a big reason why the stock's down 12% since Marvell reported two weeks ago. And it's now down 45% from its highs in March. So that's what's happened. But what are we doing about it? OK, long story short, the Charitable Trust taking some profits in Broadcom. It's had such a huge move. We don't like to be greedy. We're standing pat on NVIDIA, of course. AMD, OK, even after it's come down, I got to trim some.

It's just not getting the kind of traction I thought it would with its AI chips. If we got Broadcom and NVIDIA, we don't need to keep sticking our necks out on AMD. This is a new theme. We just aren't seeing the demand we thought we would for AMD's AI chips, and we haven't seen a big move into AI PCs either, which they also have a big stake in. I'm going to talk more about AMD at our Thursday noon CNBC Investing Club call, and it will be plaintiff.

Here's the bottom line. The big news from Marvell Tech and Broadcom is that the hyperscalers are increasingly interested in custom silicon designs, and we care about the hyperscalers because they're spending fortunes to build these data centers. That's obviously good news for Marvell, good news for Broadcom, but it's also a negative impact on GPU makers like NVIDIA and AMD. Now, I am not worried about NVIDIA as its business remains on fire. Its GPUs are fine. And I've got to tell you, the strong demand for Marvell and Broadcom means strong demand for NVIDIA. But AMD...

It's tough. There's a reason why we're lagging out of this one for the Chabot Trust, and it's everything I just said. MidMoney is back after the break. It is time. It's time for the lightning round. We're going to talk about rum, gold, and orange. We're going to talk about buy, buy, buy. I don't know the talk questions at the time. I stand for the graph. I would plan to sell. And then the lightning round is over. Are you ready? Let's keep that. It's time for the lightning round. We're going to start with Stephen in New York. Stephen. Stephen.

Yes, hi, Jim. Thank you for taking my call. Yeah, what's going on? Of course. I wanted to ask you about Ford Motor Company, great American company. It is a great American company, but it does have warranty problems that I think are going to come back to haunt it. And I had to sell for the Chapel Trust because it just kept missing the quarter. And that's no way to run a stock, maybe, and maybe a car company, but not stock. Let's go to Brian in New Jersey. Brian.

Hey, booyah, Jim. Booyah. Thanks for all you do. Paying it forward to us. Making a green holiday season. My question is, Rigetti Computing, RGTI. Okay, so that's quantum computing. They are all the same. I mean, no, of course the actual companies aren't the same, but the stocks are. They're all parabolic. If you come in, you have to understand at this point it is pure speculation. It can keep going up, but they're all trading the same way. Anything that's quantum computing is

and mostly it's related to how it's going to help health care. I am not a believer at this stage. I wish I'd caught them earlier. Let's go to Denise in Minnesota. Denise. Hey, hey there, Jim. Thank you so much. I'm not an Nvidia millionaire, but I am a Kramer millionaire. And I think that. Whoa. Thank you. You're quite welcome. Thank you for bringing it up. So my question today is as a retiree, I love dividends.

What do you think of the dividend for Liondell Basel? Is it safe?

OK, I can't say it's necessarily safe. All the chemical companies have similarly high yields. A lot of them are related to China and China weakness. And I think each one has to be explored on its own. And that when this cycle, this cycle stays bad and the Fed doesn't doesn't cut rates quickly enough. A lot of these companies may end up to be, let's say, dicer than you'd like to be. How about that? I want to be quiet about it. Let's go to Robert in Texas. Robert.

Hello, Mr. Kramer. This is Robert from the great state of Texas. My question is about stock ticker ALT. I bought it under $5, so I've made a lot of profit, but it's just going up and down daily. It's making me manic and stressed. Well, look, it's trading with Eli Lilly because a lot of people feel it's got similar drugs for different issues like obesity. Eli Lilly trades like death. What can I tell you? I mean, these stocks all trade badly right now. It can come back.

But you have to understand that right now, health care is so out of fashion, it doesn't matter how good it is. Let's go to Jake in New York. Jake.

Hi Jim. Hi, can you hear me? How are you doing? I'm 18 years old. Recently, I've put a solid amount of my portfolio into AFPS Space Mobile. And I know you've spoken about it previously, but my thesis for it is the fact that, I mean, you mentioned Starlink. I feel like with Starlink, it does something differently where it brings 5G directly to your phone. And they also have a bunch of...

different companies in the telecom industry that are agreeing and signing with them for different types of contracts.

So I just think that I'm just asking what are your thoughts on ASTS in the future outlook? All right. ASTS, look, again, it's quite quantum computing. There's a whole bunch of stocks that are very speculative. And if people want to speculate, I am not against it. I just don't want it to be a large part of your portfolio. This company is losing money hand over fist. Doesn't mean the stock can't go down. But it does mean that it's not worth anything other than a spec. And that, ladies and gentlemen, is the conclusion of the lightning round.

Generally, I like most of the commentary we get about the stock market. Even if I don't agree with it, when you're talking about what companies are doing well and what ones are beloved, what ones are disliked, I actually find it helpful. But on the eve of our regularly scheduled Fed meeting, I've got to tell you that there's one thing I hate about business media. The endless obsession with trying to guess the Fed's next moves.

We spent a huge amount of time talking not just about what the Fed will do tomorrow, legitimate prognostication, but what it will do in the meeting after that, and then the subsequent meeting, and on and on.

You can make useful predictions about the next Fed meeting when it's happening tomorrow, but it's very hard to say anything helpful about what they'll do three months from now. Try any guesses of fools are and they can throw you off the scent of great investments. The arrogance of that kind of thinking drives me nuts. Even the Fed doesn't know what it's going to do in three months. How the heck can we know until we get closer to the event and see more data?

As an old sports writer who covered football, I find an analogy might wake us up to how aggravating all this is. The Philadelphia Eagles just earned an important win against the Steelers last Sunday. There's much to discuss about what they did right or what they did wrong, not to mention what the implications could be for this week's game against the Washington Commanders. But can you imagine if some gas bag went on and on about the Commanders game before the Eagles beat the Steelers?

Can you imagine if we parsed every play of the Eagles against the Commanders ahead of a win or loss against a totally different team? That's insane, people. Yet that's exactly what happens as a matter of course in business media.

Worse, there's endless chatter about what action you need to take based on the games after the commanders. How would you possibly know what will happen? How can you pretend to know what will happen? How could you participate? How could you anticipate, anticipate what the head coach, in this case, Fed Chief Jay Powell, might do when he doesn't even know? Frankly, you know what? It's insulting to Powell.

that he's had to say over and over again that he's data dependent, but we dismiss that and tell you what he'll do anyway? Even as we have no idea what the facts will be in a few months, we act as if he's doctrinaire. So wrong. He's flexible. Now, I'm not saying that you shouldn't try to think that far ahead when you're investing. You have to think far ahead. That's part of the process. But when it comes to the Fed's future moves, it's not helpful to fret about the details because you don't have them.

Feb always matters. Washington always matters. But I talk to a huge number of individual investors, perhaps more than anyone else in the world. And this kind of prognostication is what drives people out of great stocks. They fear what can happen next. I'm not kidding. This is what happens. You should talk to them, in part because they think, oh, no, we know the unfathomable. And they don't. And in part because they feel stupid for not knowing the unfathomable.

What a shame. What a disservice. And then our job is the job of the person who thinks it's right to make judgments early about things they can't possibly be right on. And me, someone trying to actually help investors make informed decisions about stocks, have been diverging for ages. It's only grown worse throughout the years. These guessers are really hurting you.

I always want to do something valuable for investors to parse commentary that put things in context rather than spend hours and hours on a useless parlor game of what the Fed will do in the spring of 2025. It's just not worth my time and it is not worth 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.

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