Mad Money w/ Jim Cramer 3/5/25
42:59 Share

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Hey, I'm Kramer. Welcome to Mad Money. Welcome to Kramer. I'm just trying to make you a little money. My job is not just to entertain, but also to educate. So call me at 1-800-743-CNBC. Sometimes, sometimes the stock market's so brilliant that you just have to accept the judgments. Other times, it's dumb as a bag of hammers. At

At this moment, the market's alleged reasoning powers are totally impaired. And we're getting this bizarre, gyrating action like we had today. The Dow gained 486 points, S&P jumped 1.12%, and the Nasdaq shot up 1.46%. That was easy. It was totally the opposite of the last two days, but nothing really happened. We just revalued the same stocks in a different light.

And it's truly maddening. Before I give you examples of some of the market's clairvoyance, and it's lunacy, understand that there are now two kinds of companies right now. The companies that are in the crosshairs of the president. Sell, sell, sell. And the companies that are in the clear. Buy, buy, buy. Now, normally when I'm looking at a stock, I think about its price, its earnings, its revenues, its gross margins, the mode it has versus the competition.

That's a good starting point. If I have an excellent feel, say, for all these easily available online, I then consider whether I should crack open the file, which means reading the most recent conference calls, going over their website, of course, checking out a bunch of analyst notes. If I like those two, then I try to judge the valuation of the stock price. Now, that's often when I pass on the stock, either because it's too expensive or maybe it's just suspiciously cheap. Now, though, I start with a simple question. Can President Trump hurt the stock price?

Can he damage it with an offhanded comment? Can he crush it in anger? And most important, does the price-earnings bubble make sense in this new world in light of the president's love of tariffs and total hostility to the way this country's been run in the past, not to mention many of our country's friends? Now, with that in mind, let's tackle first the market's brilliant clairvoyance.

I've been perplexed by the fact that Ford and General Motors have some of the lowest price-to-earnings ratios in the entire stock market. 7.3% and 4.3 times earnings, respectively. 4.3! Remember, the average stock of the S&P 500 trades at roughly 22 times earnings. Ford and GM look like the single greatest bargains in the world. Ford pays a 6.2%. General Motors has one of the most voracious buybacks I've ever seen. Both seem incredibly cheap.

at least until this tariff stuff started. So you have to remember that the autos were a huge reason why we first instituted NAFTA and why Trump renegotiated NAFTA in his first term, creating the USMCA. One of the most important reasons for this trade agreement was to save our auto companies from oblivion. Without NAFTA, our auto companies couldn't compete against the flood of imports from Japan and South Korea, which only have a 2.5% tariff on them. The tariffs President Trump slapped on American companies that import product from Mexico or Canada 10 times that.

When we signed NAFTA in the 90s, it made tons of sense to try to bring as much manufacturing as possible we can, and especially Mexico. At last, our manufacturers could compete on an even ground with East Asia. But now Trump wants to take away the exception that made U.S. cars competitive and affordable. The automakers just got a one-month reprieve on the tariffs, caused the market to go crazy today. But if they only end up paying these tariffs or relocating to the United States, replacing cheap Mexican labor to get expensive union labor, well, their earnings...

Let's hope they're only cut in half. Aha! Suddenly we know why those stocks look so cheap. It's because their future earnings are in grave danger. Turns out Ford and GM could be ridiculous value traps. While the president thinks these tariffs are a great way to create jobs in America, they're going to put our automakers at a severe disadvantage to Nissan, Toyota, Mazda, Subaru, and Honda, along with Kia and Hyundai. A 25% tariff on imports from Mexico is basically a subsidy for those companies.

Look out for big earnings cuts that will make the P multiples go from seeming very small to very large, making the stock's true colors come to life. How about one that makes no sense to me on the upside? We own BlackRock for the Chappell Trust. Oh, it's been a complete... It's been trying to crack into infrastructure. It hasn't really done anything. Well, wait a second. CEO Larry Fink had a brilliant idea. Trump wants the Panama Canal back.

You know, there are ports on either side and they're owned by a Hong Kong based company that were for sale. And well, Fink wanted them. The company, C.K. Hutchinson, wanted to sell these two and 41 others. Why not buy them? Put them in through that new infrastructure portfolio that Fink bought. Others had the same idea, but Fink got those properties and now he has the premier infrastructure product in the world to go with this recent purchase of Global Infrastructure Partners.

Could be an amazing return both for BlackRock and its investors. Fink kept Trump up all the way. Trump obviously loved the deal. Doesn't hurt that he praised the Panama Canal last night. These BlackRock shares, what'd they do? Well, they're still down 5% for the year and way below where the company traded after its last good quarter. It's ridiculous. I think BlackRock stock is worth much more than it's selling for. We're buying it for the trust.

But then there's Intel. This company may have been the single biggest winner from the previous administration's CHIPS Act, which was meant to stimulate more domestic semiconductor manufacturing. Intel was awarded a grant of $7.86 billion to expand in the United States under their old CEO, Pat Gelsinger. He's gone. But the expansion plan he set up is still on, albeit in a curtailed way.

Now, we can't tell how much of the grant will actually go to Intel, except that it's already took in $1.1 billion last year, another $1.1 billion this year. Even if it hits all of its benchmarks, though, a big if, I wonder if the rest of the money will still be there. We can't tell if Intel is going to get any more money from the government, but the company needs it badly. Intel has $46 billion in long-term borrowings. We keep hearing that there's a lot of interest from buyers for a stake in their Moore-Bunner Altera division. I'll believe when I see it.

But honestly, it's shocking that Intel stock isn't down even more here. It fell only 52 cents today after that speech last night. Given that so many of the expansion plans seem stillborn, the president's mad as hell and not going to take the Biden chip back anymore. And

Intel desperately needs to break bread with the president. Maybe Trump will help get them a partner to see them through this. Without good news on the Intel front, I think the stock's way too expensive here at $20 and change after last night's speech. It's being valued wrong. Talk about being in the crosshairs. Intel's now ground zero for the end of government largesse, especially after Taiwan's semi-committed $100 billion to build semiconductor foundries here in America. And that brings a total of $165 billion because they made a previous commitment. Who?

Who the heck needs intel? I don't know where it fits in the president's plans, other than be a poster child for President Trump's dim view of President Biden's legacy. Of course, these days we see all sorts of wholesale revisions and no one knows how to value them either. This morning, Foot Locker reported a terrific quarter, much better than expected. As CEO Mary Dillon's turnaround plan takes hold, aided by Nike's attempts to repair its relationship with actual shoe stores. Nobody cared. Too much on weight.

Under the previous CEO, Nike didn't really care for Foot Locker. They wanted more of an emphasis on direct-to-consumer. It was stupid. That didn't work out. But Elliott Hill, the new CEO, is working very closely with Foot Locker. So is On Holding. So is Deckers, the owner of Uggs and Hoka. So is Adidas. It's a new Foot Locker. Asics likes it. New balance. But people were way too gloomy to even note the same-store sales improvement this morning. That's nonsense.

I think it's a genuine winner. I can go on and yes, despite all these positives, the stock only gained 89 cents because things are being valued incorrectly. Here's the bottom line. This market is fiercely trying to revalue stocks because of the president's comments. And we do it day after day after day because he's always making so much news. So it's been doing a poor job. And that's created a ton of opportunities for you to both buy and sell. And I say you take them right away. Joe in Indiana, Joe.

Hi, Jim. Thanks to you and your crew. They're the greatest. And thanks for everything you have done for me. Are you still high on GE Vrnova? Yes, I am. I'm high on GE Vrnova, high on GE Aerospace. And if that dog GE Healthcare would stop giving up the gains that it has, we own that for the trust. I'd be higher on that one, too. I want to go to Nick in Connecticut, please, Nick.

Booyah, Jim. Nice to meet you. Booyah, Nick. Thank you, Sam. All right, my question is on Palantir. So it's seen a lot of growth, came down a bit. There's other players like Scale AI coming into the defense spend. What's the play here? All right, Palantir, don't get in front of that thing on the short side. The meme guys are pushing it up every day. They push it up in the morning. They usually start around 3.30. I get up earlier than they do, so I watch them do it, and it's just –

It blossoms each day. What a blast. The manipulation is incredible. But you know what? In the new regime, it's just called solid buying. Let's go to Myra in Texas, please, Myra. A simple thank you for taking my call. Of course, Myra. Thank you for calling.

I've listened to the conference call and like their cost management strategies. Also, competitor USPS could need drastic changes to become, well, I guess, solvent. Can the stock of UPS go higher? I think that I question their strategy. And I certainly I do not question the strategy of another stock that's down a lot, which is.

FedEx, that's the one I'd be buying. And that's Raj Subramanian is doing a remarkable job. FDX, stocks up today. I think it's the beginning of a big move. UPS, challenge. All right, so far the market's been doing a pretty poor job of revaluating stocks every time there's a new Trump headline. You know what the good news though? It's creating a ton of buying opportunities that you must take. And of course...

Sell, sell, sell. Some selling opportunities, too. I mean, what do you think? Could data centers drive growth for HVAC players like Carrier? I got to see how to hear if the stock is conditioned for a comeback.

Then where does Hasbro stand amid the latest tariff talks? I'll reveal my conversation with token makers, Topcredits. That stock's on fire. And later, CrowdStrike posted some softer-than-expected guidance with last-dunch report. But should the stock stay down? How long should it be in the doghouse? Let's get to the bottom of it with the CEO. And you should stay with Kramer. ♪

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Right. Here's the thing I'm getting tired of. Any stock remotely connected, the data center build out has been hammered. That includes the heating, ventilation, air conditioning place to prevent these warehouses full of servers from overheating. Take Carrier Global, which has been a huge winner in five years since it was spun off by the old United Technologies. Fortunately, the stock peaked at 83 and change in mid-October. It's now pulled back to just around 65%.

attractive now sometimes when there's the latest corporate quarters have been less than ideal some of it's from data center worries and the latest round of weakness comes down to tariff fears and i think not really people understanding the story we're going to change that sells for less than 22 times this year's estimates that could be a steal don't take it from me let's check in with dave gitlin who's been a total winner he's the chairman and ceo of carrier global get a better sense of the situation we should get them welcome back to bad money thank you jim thanks for having me okay so dave since i i've seen you last in the set

You have made so many moves that I really want to reintroduce the new carrier because in many ways it's vastly superior to the old carrier. Yeah, we're so excited about the new carrier because I think we have the perfect combination of focus. We're a pure play HVAC refrigeration company, but we also have balance. So we're not oversubscribed to any one vertical, any one geography. So we're tied to three key secular trends that are going to drive growth for sustainable periods to come. So let's go over those because I think that people are

confused right now because when you talk about secular growth, there's a lot of people who think that there's things that are cyclical that aren't. And then there's other people who say that they heard an enraged president that just seems to be up against anything that has remote spending involved in the government, even especially if it has climate. So why don't you put those in perspective? Yeah.

Yeah, I would say the first big secular trend is there's more demand for cooling. There's three and a half billion people in the world only live in the hottest parts of the world that only have 15 percent of them have air conditioning. So there's more demand for cooling, more demand for cooling for data centers, as you as you just mentioned.

Then you have a shift to electricity. So 20% of the energy consumption today is electric. It's going to 50%. So we're seeing more electric heat pumps, more electric cooling. And the third is more demand on the grid. And we have solutions that alleviate that demand on the grid. All right, well, let's talk about one. This team up with Google Cloud that I think is so interesting people should focus on. It's tremendous because if you look at the demand on the grid, what the utilities are really solving for is peak. 20%.

20 to 75% of the demand on peak comes from HVAC systems. What we've developed is an integrated heat pump battery, so you can run the heat pump off the battery during peak hours. What Google is looking for is a win-win. We can use their intelligence to help us optimize

our solution, but they're also looking for clean energy for their data centers that they're building. So in a phenomenal partnership that we announced with Google this morning, they're a great customer and a great partner. Let's talk about data centers. Now, in your conference call, you made it very clear that you were late, but you said you've come in like gangbusters. Now, I want to know how much business there is, because I'm looking at an ABI research piece. It says Vertiv and Johnson Controls take the lead in ABI's research thermal management providers for data centers competitive ranking. There are

others in the field. Do you have to price cut to get business? No, we're actually doing well pricing wise, but I would say we were a little bit late, but we've come in super hot. Okay. Last year, about $500 million. This year, about a billion. We continue to grow this year, two X next year. It's going to continue to grow given our order backlog. So it's propelling great growth for us. We have unique offerings and data centers, great relationships with the hyperscalers and now with the colos as well. Okay. Now are

Are you convinced that the build-out is for real and will last for a long time? Because you know, as I said in my introduction, people are getting really, let's say, suspicious. 100% it's real. You look at the hyperscalers spending $250 billion on CapEx last year on data centers, $330 billion this year. We're very well positioned. Great wins. We've been getting outside share on an orders basis, so we feel really good about the backlog, not only for 25, 26. We're taking orders for 27 and 28. Okay, now...

You did the Visa acquisition. Actually, you announced it based on my show. Yes. I thought it was brilliant. But then I came up against what I found, even in my own little business in Italy, is that these countries, they were subsidizing, subsidizing. Then suddenly they tell us they're running out of money midstream. What's been your experience in terms of subsidies from Europe and Europe?

Are Europe's really coming back with a vengeance? Would they do spend more money again? Yeah, we're very encouraged by some of the trends we're seeing now very recently in Germany. You know, with the recent election with Chancellor Merz, this two party coalition like that looks like it's going to be formed again.

We see a conservative government that's going to lower taxes, increase spending in infrastructure in Germany. So we're seeing early trends of stability, and we believe that you will see this continued shift from boilers for home to electric heat pumps. When that happens, we mix up 3 to 4x.

That will undoubtedly continue. And because we are now combined with the best company in Europe, Wiesman Climate Solutions, we're well positioned. OK, so your HVAC Europe numbers from your page 12 of your deck, you say HVAC Europe is going to be plus low single digits. But you do seems to be the residential week, but commercial gangbusters. Commercial is great. You know, our commercial HVAC globally has been up.

double digits four years in a row. It's been very strong in Europe. We'll be up another double digits again this year. You know, in the residential business in Europe, we have said flattish this year. We're hoping it's conservative and does a little bit better. But commercial HVAC, especially as they're decommissioning boiler rooms, moving to commercial heat pumps, that plays right to our strengths. I want to say that for the first time in my career, but your long career, we really are in a secular growth for HVAC that had been

Are you sick of it? I mean, companies are always trying to get rid of their age back because they want to become more secular. That's not really the case. 100%. We have more recurring revenues. We have secular tailwinds, more cooling, more electric cooling, more demand on the grid that plays to our strength. So we are now in a secular growth phase. All right. We've got to talk about Mexico, Dave.

We know that the tariffs are coming from Mexico. We also know Mexico is an emerging growth country left out of the dialogue entirely. The weather's hot. So, I mean, both must be good customers, but also we have some tariff exposure. We do.

We do, for sure. I would say when you look at tariffs all around the world, we feel pretty well balanced when it comes to China, Canada, raw materials, Europe. Mexico is the one that we certainly need to watch. Right. But we, look, we'll do the same exact playbook

We did with COVID, we did with supply chain. We take a very measured approach. We hit these things head on. We have a three-pronged strategy with tariffs. Number one is pricing. Number two is work with our suppliers because we do need to, we can't be the ones holding the bag entirely. And then number three is if that's not enough, we may need to take costs out somewhere else in the system.

but we'll be very judicious and very measured, and we will hit this head-on as we have every other issue. Tell Warren I hope everyone listens to you. The CEO should listen to you. What you just said is the common-sense way for companies to deal with this instead of the hysteria. Let's get away from the hysteria. One last thing, Steve Tussauds, one of my favorite analysts in the whole world,

upgrade your stock today. Some of us standing in the faint praise because the stock didn't come down. But in general, to see this business, which is much better than the business one I first met you, to have this price does seem a little absurd. I know you're not supposed to comment on your price, but you've got to admit, with that balance sheet you have, you can buy a

if it's okay, a huge amount of stock and make a lot of money for the company. We are. I mean, look, between the second half of last year and this year, we're buying $5 billion worth of shares back. Our leverage ratio is down to 2x. So low. We're now integrating. We're investing in growth. So we feel really good about our portfolio. We feel great about the team. We feel great about secular trends. We feel great about growth. Well, I am so glad you came on.

I agree with you on that. I followed your company really very closely, and this is the most exciting time that I can recall. And I now feel emboldened on the thing I was most worried about, which we covered, which are the tariffs. Moving past it. That's Dan Gitlin. He's the chairman and CEO of Carrier Global. This stock is on sale right now, and you should buy it. We have money's back after the break.

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This is such a crazy environment that all sorts of companies with great numbers have somehow been lost in the shuffle. Take Hasbro, the iconic toy and game company. You probably know it. You play to Nerf, Dungeons and Dragons, among many others. A couple weeks ago, Hasbro reported a terrific quarter. Higher than expected revenue paired with a pretty sizable earning speed and a strong full year forecast for 2025. In response, the stock shot up nearly 13% in a single day.

Jumping from 61 to 69. But thanks to the insanely volatile action, due to the season now pulled back to 63, you're practically getting that amazing quarter for free. So could this be a buying opportunity? Yesterday I got a chance to sit down with Chris Cox. He's the CEO of Hasbro. He was in town for the annual Toy Fair event in New York City. I want you to take a look.

Mr. Cox, welcome back to Mad Money. Jim, thanks for having me. Well, I've got to tell you, Chris, the momentum your business has is extraordinary. And I think it's fair to say that you are playing to win. Tell us what that means. Playing to win is our new strategy. It refocuses the company on play and partnership, two things I think we're best in class on.

and focuses on three business lines. Games, which is our high growth profit driver. IP, which is really about licensing and entertainment and outsourcing that, up 60% in the last three years. And toys, which is a diversification play and a first handshake with tens of millions of kids every year.

I think that you were known as a toy company. I know it was questioned what you were on the conference call. I think you're one of the greatest IP companies in the world. They're also having to sell toys. No, I think that's a fair approximation of what we are. Now, I do want you to talk about what licensing means, because licensing turns out to be this fabulous asset-like business, and you've got since Mr. Potato in 52 to license. Yep, yep, yep. So our licensing business is up 60%.

It's basically a pure profit business for us. We're the number one licensor in digital entertainment. We're the number three in the overall entertainment industry.

And it's a great way for us to scale our business. We've got over 1,000 licensed partners, 4,000-plus collaborations, and we have over $4 billion of committed capital from our licensing partners to build out our brands in theme parks, blockbuster movies, TV shows, video games, you name it. See, I think there was a time when people would say, oh, my, they must really be hurting from the tariffs and sourcing. The model you just outlined is almost as if you anticipated these kinds of things.

because this is really somewhat, if not all, immune to what we've been talking about on TV today. Definitely. I think it gives us a lot of diversification. Our games business basically is not exposed to tariffs, and certainly as we digitize, it's not exposed. Our licensing business has some exposure, but most of that—

is fairly predictable, minimum guarantees. Our toy business does have exposure to tariffs, but we produce in over eight countries around the world, and we have a fair amount of flexibility and agility to be able to push things where we need it to. It seems to me that far more important might be

your fantasy cards, this schedule up of what you've got, because you have a great line of sight to what you're up to for the rest of the year. Oh, yeah. Magic the Gathering is a real success story for the company. When I started back in 2016, it was about $350 million per year. Now it's going to be more like $1.1 to $1.2 billion, again, at 42%, 43% operating profit, so pretty good. And

And we have a new collaboration that we call Universes Beyond, where basically Magic is the only trading card game in the industry that opens up its play platform to great outside licenses. We started with Lord of the Rings a couple years ago. This year, we're going to have Final Fantasy. We're going to have Spider-Man. And we're going to have Avatar the Last Airbender. So it should be a heck of a year for Magic. I think you do well for your partners, because they seem to be lining up to be able to do business this way. Oh, indeed. Yeah, that's why we have 1,000-plus players.

Now, there's something else. I had always said, you know, they'll come in age where people don't want to play Monopoly. So they do a couple of special monopolies, whatever. Come in age with Nerf, whatever. But I like this joint venture. But aging up is something that I never thought I'd see a toy company do. Hence why I was saying IP. Tell me about the process of aging up.

Well, I think it's where the growth has been in toys over the last decade and will be for the next several decades. Hasbro is unique, I think, amongst toy companies in that over 60% of our revenue is from consumers 13 plus. We have brands like board games like Monopoly, Magic the Gathering, D&D, collectibles like Star Wars and Marvel and Transformers that appeal to broad age ranges. So really, when we think about our kids' business, it's really about a

first handshake that lasts a lifetime from two to 102. Sure does. Now, we're looking at something I would have thought was a little antithetical. I've always felt that it was a claymation death match, so to speak, using clay. Between you two, between Mattel and you, I guess anything can happen in this toy industry, huh? Oh, for sure. I mean, I think we think about

toys and we think about our brands as let's partner with the best in the business. Let's expand categories with companies that we don't really do a lot in. And likewise, let's open up categories that we're world class in, like with Play-Doh, to best in class partners like Barbie. And, you know, we thought up of Play-Doh fashion as a great new play experience. And I think we turbocharged it with an iconic play brand like Barbie. Oh, totally. Now, I want people to understand you. You came in.

And you decided to see, you know, no sacred cows. If something is losing a lot of money, you can't play to win and do that. Hence the change in your TV approach. Yeah. Yeah. So in 2020, we acquired E1, which was a film and TV business and a theatrical distribution business.

that acquisition wasn't penciling out. We weren't getting the scale we wanted, we weren't getting the branded content we needed, and so we made the difficult decision to part ways with it. And it's worked out really well for us. Year over year, our content budgets are down 95%, but our overall amount of branded content and production is up 15%. So that's a good deal to me. That's the way to do it. Now, one last question. My family loves Monopoly. Should we get Monopoly Go?

Well, you all can have it on your cell phones and you all can play with each other. But what I would recommend for you guys, it's Monopoly's 90th anniversary this year and we have new expansion packs like buy everything or go to jail. It speeds up the gameplay to 20 to 30 minutes and

and creates all new combinations for you guys to have a little bit of fun Kramer family competition and maybe a board flip at the end. Well, I have to tell you that that has been my reputation. I have board flipped, but always because the other people had a company.

Yeah. Think of that. I agree. Well, I want to congratulate you, Chris Cox, because you have done a remarkable job with Hasbro and it's quite exciting to see the change because everybody wants you to win. Yeah. Playing to win. That's what it's all about. Thank you. That's Chris Cox, CEO of Hasbro. My buddy's back after the break.

OK, what the heck happened to the stock of CrowdStrike today? It's the best to breed cybersecurity out for the sort of stock plunge over 6 percent. At one point it was down 8 percent in response to last night's earnings report. OK, CrowdStrike delivered a nice top and bottom line beat. They also gave softer than expected earnings guidance for both the current quarter and the full year. Now we're talking about a big hit versus what Wall Street was looking for.

Got to be sure if that's the case, though. Plus, the stock had run up 94% from its August lows through last night. So you could argue it's priced for perfection. No wonder it pulled back 6%. So is this a chance to buy a great company on the cheap? Or do we need to be worried about that forecast? Let's take a close look with George Kurtz. He's the founder and CEO of CrowdStrike. The final attack is going on. Mr. Kurtz, welcome back to Mad Money.

Great to be here, Jim. OK, so, George, first, I'm congratulating you because I'll tell you why. You turned in a record full year operating income, net income and reached one billion dollars in free cash flow for the first time in a fiscal year. This tells me that your business is darn healthy. How are you able to turn a record year despite the bumps along the way, including one that we know that was a glitch that really hurt the company?

Well, Jim, as we talked about, we spent a lot of time with our customers around the world, making sure that they were taken care of and it paid off. Part of our approach was our customer commitment packages, where we actually worked with impacted customers and showed them our commitment to them. And what it turned out was they actually bought more as we delivered these packages.

And that also showed up in our flex licensing. This is one of the things that you and I spent some time on. The ability to take a flex deal, which is a new licensing model, and upsize what would have been a much smaller deal by orders of magnitudes has resulted in fantastic results for the quarter and the year, despite a lot of challenging headwinds. And if you look at what we delivered this quarter, $32 million ARR beat over consensus

given still the challenges that we had to go through, I think was fantastic. Repeatedly in the conference call, the consumer commitment package that you're dropping, because why give stuff away, suggested to people that things are still not good, that some of these contracts are going to go away. You just basically told me that it's actually very good, and yet the analysts, many of them didn't buy it, George.

Yeah, well, I think what's important to realize is that the customer commitment packages were designed to burn off at the back half of the year. So what that means is we could seed

the platform modules with our customers now, knowing that those dollars that we're giving them, essentially we're giving them dollars in a pool that they can use for modules, will essentially be used by the time we get to the back half of the year. And that's why we're confident in the reacceleration of net new ARR. So from our standpoint, we're able to see great products and we know they're extremely sticky

and customers are gonna most likely 95% or more chance they're gonna renew, which I think is a good thing. - I wanna make it clear where I come out on this, because this question is going to make you think that I am not positive. We bought stock today for the trust. Why did we do that? 'Cause we think there's gonna be accelerated second half. My view tended to be what I would say, a view of skepticism by the call. So I'm gonna read George's summary of what I thought a lot of the analysts who didn't take to the stock said.

Analysts saying near-term free cash flow uncertainty, huge slowing in ARR, worse than expected operating income, guidance that was much lower than what people expected. These are the bill of particulars, George, that I read through that chilled me, that chilled me. And yet even there wasn't a single one of those questions that wasn't parried correctly. I want you to parry them here.

Well, let's start at the top line. Again, we had a big beat in net new ARR. When we talk about the growth for next year, we're still 20% growth overall at scale, and we're still dealing with some of the headwinds in the first part of the year. You look at our free cash flow guidance,

We're exiting the year at 27%. We haven't changed our long-term models of 10 billion. When you put all those together and you look at the health of the business, one of the metrics, Jim, that we gave out for the first time is our total contract value.

Six billion in a year, which is phenomenal at a 40% growth rate. What does that mean? It means that the flex licensing is working and we have visibility into the back half of the year where we'll see that acceleration. By the way, look at some of the new products. The newer products in the category, the three that we talk about, Identity, Cloud, and NextGen SIM, up 50% to 1.3 billion. So that's what gives me confidence in the back half of the year. Now, let's talk about demand.

There are a lot of people who didn't on the call. And I'm sorry to reference the call so much, but it was very I didn't like the way the call went. It just didn't seem right to me. We've got nation state threats that should have been, I think, the focus of the call. I want to know how in danger we are, how in danger companies are and how ridiculous it is to think that maybe if we even have some sort of peace pachamonteros with Russia, believe me, that's not going to stop things.

Jim, here's what you have to keep in mind. Whenever there's geopolitical tensions, and I would argue there's a lot of them right now, this actually drives more activity in the threat environment. Adversaries get more active, nation state adversaries get more active. And certainly in the confusion of that, you have the EEC criminals that come out. So the environment is only going to get worse. We talked about this in our annual threat report.

Some of the breakout times that we're seeing are 51 seconds, meaning someone gets on a system and in 51 seconds they can break out and move somewhere else in your network. We haven't seen that speed in the past. So I think it's only going to get worse from a threat perspective. And when we look at where we are today, it means that security is going to be even more important, particularly to governments around the world. And CrowdStrike can be a big beneficiary of that. Okay, so let's say a North Korean agent—

I decide, you know what, I'm going to pose as a bad guy. I mean, it's like the Manchurian candidate. Can I get in? Can I just, you know, with remote work, can I get in, borrow in, find out everything I need and steal everything? Absolutely. This is something that we talked about. We actually found this out and wrote a paper about this really before anyone was talking about it. And that was the North Koreans were actually applying for jobs at companies that you know, you interview them all the time around the globe. And

basically getting their operatives hired as remote workers. And in this remote work environment, sometimes they never show up to work. People don't see them on Zoom. And as soon as you ship them a laptop, they turn around and they ship it to a laptop farm where it's then controlled by operatives in North Korea. Right.

We identified this using our AI technology called Signal well over a year ago. And we went out to many customers and we said, we think there's a problem that you've hired a North Korean. And you know what? We were right. And our customers remembered that. And CEO after CEO that I meet thanked me, had one thanked me over the weekend for being able to do that. The only company that was able to do that for them. All right. Well, George, to me,

It seems like another problem that I'm really worried about. Everyone's so excited about agentics. They're all excited about these agents. They think it's all great. I think they're easy to crack. I think you could easily get into one of these agents. You could really wreck everything. People are very glib about it. What are you doing about it?

Jim, you have to look at where we are in this journey and where we are from a security and a technology cycle. You know, just go back in time a little bit. You had mainframes, you had PCs, you had client server, you had mobile, you had cloud. Now you have a genetic AI, right? Each one of those seismic movements require new security. And there's going to be a whole wave of new security technologies coming out.

some of which CrowdStrike are pioneering. And there's going to be a new wave of buying and securing everything from gathering the data to training the data to doing the inference to actually building the agentic AI agents and delivering the workflows. That's all going to have to be secured and controlled. And that will be another wave of growth for the entire security industry, including CrowdStrike. Are the negative analysts looking at CrowdStrike now versus what it might be able to produce for companies a year from now?

Well, again, coming out of the incident, we talked about some of the headwinds. I think we've made tremendous progress just in six months. We talked about the visibility as we get to the back half of the year. I feel really good about the business. I look at the interactions I have with customers. I look at the products that they're buying. I look at the demand environment. I look at the threat environment and put all that together.

And I'm encouraged. I'm probably more excited than I have now ever been because the demand is there. And you see a lot of these legacy technologies and a lot of companies that have been bought and sold. And we're in the perfect spot to continue our march towards 10 billion. Let's leave it right there. I think that that is the correct view. Obviously, it's George's view. It's also my view, as we told all club members, the Travel Trust, CBC Investing Club.

If this is the right version of what's happening, that's George Kirst, founder and CEO of CrowdStrike. This man has never, ever been wrong when it's come on the show. That's how I feel about it. Matt Moniz, back after the break. Thank you, George. It is time. It's time for the Lane of Uncursed Red Rhapsody. Just hit me this time. I tell you the problem about ourselves is all. Just because you don't know the course, I'll question it. Tell my staff first. The graphics will apply. Plan this out. Ah!

The lightning round is over. Are you ready? Skid deck over the lightning round, Kramer's mad money. Let's start with Sam in Pennsylvania, please. Sam. Jim, how are you? I'm good, Sam. How about you?

I'm good. You know, I've got a question about the world's largest lithium producer, Albert Marley. Specifically, the fact that they have so much of their production here in the United States. With all the tariffs called, curious what you think about a cyclical recovery in commodities, specifically Albert Marley, the United States. I can't go. I can't go with it. I can't go. I'll tell you why I can't go with it. Because in the end, we forgot about EVs. I mean, like, you know, we pretty soon are going to be like buying gas guzzlers. I want to stay away from that one. But so does everybody else. That's the only problem.

Let's go to Tom in Michigan. Tom! Kramer! Tom! Call from the center of Amish country.

where I listen to you every morning, every night, religiously. When you're not there on the weekends, you're just not having a good day. It's tragic. It's tragic. I get that. Other people feel that way, like my late mom. That's really about it. And that was about 45 years ago. That's the last person who's missed me. Go ahead. It's all right. It's okay. I have a really specific question on RTX. You taught me to do my homework. You taught me to, by a little at a time, do

But I'm really a novice at reading charts. When I look at the chart, it looks like a giant piece of paper. You're hardly a novice. Tom is a savant. You are buying it right. Keep it. It's a fantastic stock. I wish I had it for my travel trust. I say you are dynamite. Let's go to Michael in Pennsylvania. Michael. Booyah, Professor Kramer. Booyah. Thank you for tenure. What's going on?

A newborn recently told me about a stock that has the largest market share in hospitality, sports and entertainment, and is second in restaurants. He also said they're growing faster and more profitably than any of their peers. Best yet, he said they trade at a discount compared to those peers. Junior and I would love to hear your thoughts on the payment processor Shift 4.

Yeah, you know, people didn't like that last quarter. I agree with you. I think it's a remarkable company. It's just that the payment space is very crowded. Go ask PayPal. So what you're what you're hoping for is that the payment space gets less crowded. I don't know if it can do that. So it's a tough space. Let's go to Rick and Bo. No, I think we may have to stop. Darn it.

And I was just getting a rhythm, you know that? I was just getting people, boy, they hate it when I'm doing this. They just say, go to the wall, point to that, and then end it. And that, ladies and gentlemen, is the conclusion of the Lightning Round!

All right, listen to me. You need to pay attention to everything and everyone if you want to make some money in this exceedingly tricky market. Take our guest yesterday. We just so happen to have the CEOs of three companies that have a leg up on tariffs and the ensuing turmoil that controls this tape. It's not shocking, but only if you stop with the hysteria already about what the president is doing to the stock market. Let me walk you through the particulars of this amazing Troy Gove company. First, let's consider Peter Jackson, CEO of Flood Entertainment. It's a peer company of FanDuel.

This gambling concern has no interaction with anything the president may be up to. It's levered to a powerful secular trend that transcends the day-to-day headlines, gaming. If a state happens to be hard-pressed for cash, gambling can be a terrific way to close a budget gap. Remember, Flutter really doesn't want to do anything but attract gamblers, and it lures them in

by offering the most fun single game parlays. It's a tremendous business model bound only by Peters and his team's bold, creative imagination. They're international business and great heads of the U.S. book. Second, there's Jason Liberty, CEO of Royal Caribbean. There's this ridiculous belief that if the economy is slowing, the cruise lines will suffer. Historically, that's really how it plays out. When the economy gets tough, people still want to take vacations. They just become more value conscious and nothing's more of a bargain than a

and a cruise. They got a lot of data to prove that. Plus, real Caribbean, no tariff exposure. Now, we could maybe get a story or two about how the Trump administration might try to levy a tax on the cruise lines. They don't pay any American taxes. They're not domiciled here. They're flagged in other places. But the key metric for the industry isn't that. It's about new ships. Right now, cruise ships are being made...

we usually want to sell the stocks when there's a flood of excess supply. They can't make these boats fast enough. When they build too many ships, that's when the stocks become very tough to own. We're at the opposite moment right now. Way too few ships. Plus, let's not forget, coming out of COVID, we had all sorts of post-pandemic bull markets. Almost all of them have faded, except for travel, because we've taken a page from the Shawshank Redemption, get busy living or get busy dying. Royal Caribbean surfing that tremendous way. Finally, let's talk about the

Oddest idea of all. Enbridge, the diversified Canadian energy company, one of the largest pipeline operations in North America. I figured that with all the presence of RASP and talk about Canada, no one would want to hear a story about a Canadian pipeline company that transports 3 million barrels of oil across the border. Major reason why North America's energy is self-sufficient. Thanks to the trade war with Canada, Enbridge now sports an outsized 6.3% yield. Even though it's a dividend aristocrat, it's raised its payout for 30 years. CEO Greg Ebel hit it out of the park,

He said that Enbridge is a huge beneficiary of Trump's oil and gas deregulation. That won't be hit by tariffs because they only transport the oil. They don't produce it or market it to the consumer. Keep in mind, the vast bulk of oil is a landlocked. Canada can only send it to the United States, and it has to use Enbridge's pipes. Somebody needs to eat the cost of the 10% tariff on Canadian energy, but it's not going to be Enbridge.

Look, it's a terrific story, especially if you're looking for income. Now, why bother to do this? Because there's a growing perception that nothing is safe to buy here. We do have a Walmart White House where the president seems to want everyday lower prices for stocks. But Flutter, Royal Caribbean and Enbridge prove that to be a lie. There are so many others out there. Do not give up on stocks. Just hold on for the ones that are truly in the crosshairs.

Plus, when the White House is this unpredictable, you get positive developments, too. Just look at how the averages were when Trump gave the automakers a one-month reprieve on new tariffs. I can't tell you to relax. I don't do that. I can tell you to be more constructive than the people I hear screaming all over the place every single darn day. I like to say there's always a bull market somewhere. Promise I'll find it just for you right here on MadMoney. I'm Jim Cramer. See you tomorrow.

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