Mad Money w/ Jim Cramer 1/6/25
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My mission is simple, to make you money. I'm here to level the playing field for all investors. There's always a bull market somewhere, and I promise to help you find it. Mad Money starts now. Hey, I'm Kramer. Welcome to Mad Money. Welcome to Kramerica. Other people, my friends, you know I'm just trying to make you a little money. My job is not just to entertain, but I'm putting this in context, explaining it. So call me, 1-800-743-CBC. Please meet Jim Kramer.

The great bear market continues. But you only know that if you're first, by the way, tacked.

For days on end, stocks have been going down and down and down. Just not the great semi-software data center companies with the wind at their backs riding the tremendous themes of our time, accelerated computing or artificial intelligence. These tech plays are so strong that they end up buoying the averages, including today, which is why the tech late Dow Jones Industrial Average actually dropped 26 points, while the S&P advanced 0.55%, a lot of that now.

the tech stuff, and the tech-heavy NASDAQ, filled with semis and software, gained 1.24%. And that's what people are looking at, even though you might not know it from the averages. Today was one of the worst days of what I'm starting to call the great selective bear market of 24-25. The bear has been roving around all sorts of areas, mauling the consumer stables, the energy sector, health care, the material stocks, all groups that have underperformed dramatically last year are doing it again.

Now, I understand the hyperbole here. I'm simply pointing out that these sectors, important swaths of the market, are an anchor to Leawood. They spent last year hurting the market, and this year already. Many are in the red. It's not just a continuation, people. It's actually an acceleration.

Why is it happening? Why isn't Saka Procter & Gamble down another 2.7% today? That's a great company. Why is Colgate toothpaste, dog food? Why is Colgate down 2.9%? How about Clorox? It got pummeled. It's down 3.3% today alone.

All right, so let's go over the reasons. One, maybe the biggest reason some would say, interest rates. When long-term interest rates spike, as they've been doing ever since the Fed started cutting short rates, these stocks have been hammered. That's what happens. The dividends, by the way, are supposed to offer some protection, right? But they become a source of vulnerability when bond yields, the main competition. Dividend stocks keep marching higher.

And they might do that all week because the loan rates are rising thanks to supply. The Treasury Department sold three-year notes today and the auction fell flat on its face. Tomorrow, the Treasury sells 10-year paper. And Wednesday, I don't know if the market is prepped for 30-year paper, but there's a ton coming. As these bonds go down in price and up in yield, things get worse and worse for the dividend stocks, even if there's actually nothing wrong at the companies.

Which brings me to the second reason this group has just been hammered. The dollar's gotten too strong. These consumer packaged goods companies tend to be very big overseas. That's not the case with Clorox, which is large domestic. But you know how our stock market works. The consumer staples all trade together. If the dollar hurts a big international company like Procter & Gamble, as it is, it's going to reverberate even into a Clorox because they're all in the same sector. And sector ETFs are like gravity. They pull all their subjects down, even the ones that shouldn't.

Now, then there's the most insidious problem, Wal. The one that no one is talking about. Let's open the discussion. Pricing. Now, have you noticed that when you buy consumer products on Amazon, they're discounting heavily, particularly the stuff you see at a drugstore? Have you seen the pressure being put on companies by Costco, where it's like a different world with those prices? They're crazy low. I know that Walgreens is trying to keep up, offering their own outrageously lower prices on their website, but you probably don't go to their website.

Now, it is true that profitability may be pinched at some of these retailers, Walgreens, Dollar General, Dollar Tree, Target, all of which sell these goods, and they've all seen their stocks just get crushed. Walmart, Costco, and Amazon have more scale and can get you better prices for many daily average needs. But if

But if the retailers are being squeezed, then their suppliers are definitely going to be squeezed, too. Maybe these companies have had so much of a run, so much price flexibility post-COVID that they are finally losing it. Maybe the consumers had it. We'll no longer tolerate COVID-era high prices from the likes of a Procter or a Colgate. Maybe the stocks are saying prices will indeed be rolled back.

Sell, sell, sell. Sell, sell, sell. The stock of Procter & Gamble is tempting. It's tempting. But as long as bonds go down in price, as long as the dollar stays high or goes higher, and until we see the earnings, find out the real innocent price pressure that I'm sensing, it's too risky to buy.

Look at this counterintuitive situation. I know it sounds crazy to call Procter & Gamble and Clorox Colgate risky. These were safety stocks for most of my life, but there's nothing safe about their stocks anymore. This is a market that rewards growth regardless of price. So people will pay up for tech growth, which is all about real demand and pricing power. And they're avoiding companies that have lost pricing power and offer yields that are too low to compete with treasuries. I don't expect that dynamic to change anytime soon.

Next bear market. Oh, my. It's in health care as this group's off 20 percent from its highs. Next week, I'm going to J.P. Morgan Health Care Conference. Find out what the heck is going on in this group. And I am a gas. These stocks are just hideous. Humana is down 43 percent from its highs. HCA, the hospital company, off 29 percent. That one's been a winner for years. Signal off 25 percent. Well, run. Centene down 23 percent. A wasteland of burned out companies. Look at the

Biotex. Whoa. Vertex off 23% from its highest. That's a great company. Amgen. Dow stock down 25%. Regeneron, for heaven's sake. Biogen. Off huge. Moderna down a hideous 75%. Remember when they were strong? That are heinous now. Food Group just taking it on the chin. Hormel. Great company. Down 17% from its highest. Smucker. General Mills. Conagra off 19%. Hershey. Campbell's. Kraft Heids. And the Mondelez. All down in the low 20s. That's incredible.

Same script, higher rates, stronger dollar, pricing pressure. But let's throw in the GOP-1 weight loss drugs, too. We know these companies are loathe to admit that GOP-1s have anything to do with their weakness. But that Cornell Business School study I referenced last week, it talked about a 6% decline in grocery spend for people who take drugs, the GOP-1 drugs. Processed foods are designed, in part, to be craved.

But when you're getting these GOP-1 injections, you crave nothing. Maybe the sales decline is just beginning. Maybe that's what the stocks are saying. What else? Real estate, wasteland. Just today, we saw Federal Realty and Kimco's shopping center and a strip mall company get crushed. Two of the worst stocks in the S&P. Now, this is highly unusual. These companies are linked with interest rates, and the spike in long rates has all hurt them. But

But the actual businesses, they're terrific. It doesn't matter to the stocks, though. What matters is interest rates. Oh, hey, listen, as bad as those are, because I just said about rates, the bear has really rolled back. Housing stocks, the clients are staggering. Lenar, trading at 193 in September, is down 135. Toll's going from 169 to 126. Pulte, 149 to 109. D.R. Horton, 199 to 139. And no time flat.

What do you think it says? I think the home prices are going lower, maybe much lower, something that no one is thinking about. But nothing's as bad as the materials, mining, minerals. When you look at the stocks in this group, and I'm talking about plastic, I'm talking about wood, it's almost enough steel. It's almost enough. There's got to be something going on. If you didn't know any better, you'd think there's a recession.

The chemicals, the papers, the coppers, the steels, they are factoring in a definite recession. No other way to explain the decline. How Nucor stocks down 41 percent from the top. Mining down 36 percent. Freeport, the copper company, down 30 percent. Cleveland Clemson has plunged from $22 to $9. And how about the oils? They're all hard, too. Which brings me to a thesis that's not talked about much when we see all these Federal Reserve officials telling us how inflation is not being brought to heel. It's true. There is plenty of inflation, particularly at the supermarkets.

But the bottom line, when you look at these super underperforming stocks, all I can say is maybe the Fed had better be careful of what it wishes for. Companies that represent a gigantic chunk of the real economy have seen their stocks swoon. Could their earnings be that far behind? And could inflation be running its course a lot faster than expected? Considering the stocks that are going down and the magnitude of the declines, I'll tell you, it sure wouldn't surprise me. I'm going to Frank in Texas. Frank.

Hey, Jim, a hearty Philadelphia Eagle booyah to you. You bet. Let's hope that Hurts is okay, booyah. What's going on? Well, first of all, a hearty thanks to you for all you've done for my wife and I. You've made a major difference in our life. Thank you. Don't ever retire. Yes, yes.

Well, I'll tell you, I think that my wife wants to hear that. She wants to hear people say that because I've been I know that she feels like I'm a little long in the tooth, but I like being here. What's going on? Well, Jim, I have a position in Netflix at a cost basis of ninety nine or eight ninety two. And I want and I've been buying on dips and I'm wondering if I should buy more hold or

I'd buy more. I know the chart looks like it's rolling over, maybe wait till like 800, but I would buy more. I think that they are still the national water cooler stock. It's very unusual to have something like that. Look, spoiler alert, I just have to say this. My wife stopped watching mid-show the final Squid Games. And I just want to point that out because there are a lot of people who might be a little more sensitive. That's not a spoiler. It's just, I'm just saying she walked away. It's pretty...

Pretty dazzling. We watch everything together. Anyway, companies that represent major parts of the economy have seen their stocks swoon lately. The big question is whether their earnings will follow. On Mad Money tonight, what's behind the decline in some defense stocks? I'm taking a closer look at this cohort and how the incoming White House...

Could affect the space. People aren't talking. Then I'm bringing you another bull versus bear analyst duel. This time it's on Uber. I'll break down where I stand. And later, Sirens AI. Have you seen that crazy thing? It's already soaring higher in the new year. I'm going to check in with the CEO. You've seen him before to hear what's behind the big run-up. I want you to stay with Kramer.

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And now, a next-level moment from AT&T business. Say you've sent out a gigantic shipment of pillows, and they need to be there in time for International Sleep Day. You've got AT&T 5G, so you're fully confident. But the vendor isn't responding, and International Sleep Day is tomorrow. Luckily, AT&T 5G lets you deal with any issues with ease, so the pillows will get delivered and everyone can sleep soundly, especially you. AT&T 5G requires a compatible plan and device. 5G is not available everywhere. See att.com slash 5G for you for details.

While the many stocks are doing pretty well these days, they are mostly tech. Beyond tech, there's some real pockets of weightiness out there, as we described at the top of the show. Just take a look at the pure play defense contractors like Lockheed Martin, Northrop Grumman, General Dynamics, and L3 Harris. They were all trading at 52-week highs in October and November. Now they're down anywhere from 11% to 25% of these levels. It's pretty shocking. So we have to ask, what went wrong with the defense contractors?

Simple. There's a widespread sense that the new Trump administration may not be a good friend to the traditional military-industrial complex. Instead, they've buddied up to an alternative military-industrial complex. And that's why Palantir Technologies, the beloved software company with a big focus on the Pentagon, has seen its stock climb nearly 50% since the election.

It's very easy to dismiss the Palantir rally and very hard to justify the stock's valuation on a price-to-earnings basis. More are coming on that. But I don't think that will prevent it from going higher. I bring this one up because Palantir's tight with Trump. And these guys have a vision for the future of the defense budget that is really dazzling.

On Halloween, Palantir CTO Shyam Sankar published an article arguing that our defense industry has gotten out of date, uncompetitive, something we could get away with 10 or 20 years ago. But that's impossible just by now China's on its way to a superpower. And by the way, not a friendly one at that, with better capabilities than most think they have. Oh, this was a brilliant manifesto. I read it a couple of times. It's so smart. It's a strong indictment of the current procurement process. That's one of the things that Palantir's an expert at.

According to Palantir, the defense contractors stick because there's no competition anymore. We used to have 51 prime defense contractors in this country, but over time, they've gradually merged into just five major players, the five families. Rather than innovating, they argue that these companies are mostly focused on gaming government contracts.

Of course, at the time this article was published, it didn't seem like it would have much of an impact on military procurement. Then, less than a week later, Trump won the election and appointed Elon Musk to run his new Department of Government Efficiency, DOGE. Musk is very close with the co-founder of Palantir, that's Peter Thiel. He's a big Republican donor and power broker. They both came up together. PayPal, the mafia of PayPal. He's certainly of the same mind as the Palantir crowd, including the company's eccentric co-founder and CEO, Alex Karp.

and he's on board with the idea of radically reshaping the Pentagon's procurement process, then maybe the defense contractors will have a real problem with a new Trump administration. At the very least, I think that that's why the defense stocks have been rolling over since the election. Musk seemed to confirm these fears when he began to openly criticize Lockheed Martin. That's the builder of the top stealth fighter jet in the world, the F-35.

It's revered. In November, Musk elaborated on why he doesn't like the F-35, writing an expo saying, quote, The F-35 design was broken at the requirements level because it was required to be too many things to too many people. This made it an expensive and complex jack of all trades, master of none. Success was never in the set of possible outcomes. And manned fighter jets are unbeatable.

obsolete in the age of drones anyway. We'll just get pilots killed." End quote. Wow. That is a mouthful and that is a real, that's the indictment right there. Pilots, they're too expensive, but they're great.

Now, speaking with CNBC's own Morgan Brennan during a panel discussion at a defense industry conference a couple of weeks ago, Lockheed Martin CEO Jim Taglet, he's been on many times. He gave a great response to these criticisms. You can't just replace these fighter jets with drones because the enemy has fancy fighter jets of their own. Plus, Israel recently used F-35s to take out Iran's entire air defense system, as well as their ballistic missile production practically overnight. That's a nice kudos.

I think he made a good argument for why the U.S. and its allies would still want some F-35s in their arsenal. But after all the criticism from Elon Musk, the defense industry generally, and Lockheed Martin specifically, have found themselves under the microscope certainly more than any time I can recall in recent years. The defense budget has always been sacrosanct under both parties. Nobody wants to be accused of being weak on defense. Plus, of course, they have...

They source parts from almost every state. When you add in other considerations for the incoming Trump administration, like the fact that President-elect Trump seems, shall we say, far less interested in sending weapons to Ukraine to defend itself from Russia, investors are starting to think that the classic military contractors might actually have a serious problem with this new incoming administration. This would be a big break with the past.

In fact, this thing is now making its way into formal Wall Street research. Just this morning, analysts at Barclays published their 2025 outlook. And they know the note for aerospace and defense industry where they said, quote, while defenses underperform, we think the setup remains difficult with more budget risk than thought, given fiscal realities, along with Doge uncertainty, end quote. Wow. They're talking about Musk right here. They prefer the commercial aerospace side of their coverage universe.

If you are to be in defense, they recommend government services companies, which are previously underperformed. But now Barclays likes them because they, and I'm going to quote here, don't see disproportionate budget doge risk. Every time you see doge, remember, that's Musk.

So that's what's going on with the defense stocks right now. And it's a bit of a pickle for investors and people like me who try to help make sense of the market. Is the Trump administration, even with powerful allies like Musk and Doge, really going to be powerful enough to dislodge the military-industrial complex? Do they even want to? Frankly, I'm not sure. I have my doubts. While I agree that the Pentagon could certainly become a heck of a lot more efficient, these defense contractors source their companies

from all sorts of congressional districts as possible precisely because they want to make it impossible for legislators to cut the budget. Now, we'll see how serious the Trump administration really is about cutting military costs when it means cutting jobs in some GOP House members' district. But I also don't think you can ignore the threat here. Even if these defense contractors are only getting more scrutiny from the White House, that still makes it harder for them to make money. Maybe they change the procurement process altogether.

Which brings me to the bottom line. Even though the defense contractors have pulled back very hard, I wait. You know what? I think you've got to wait and see. I know that feels like I'm punting, but listen to me. This is the military industrial complex. It's not hard. It's going to be very hard to disprove. I don't know. I don't know how you get it out. There are some names that are safer than defense pure place. How about, like, buying some RTX, which has a nice balance of commercial aerospace and defense businesses. And you don't have to upgrade.

boot the system. But for the pure plays, we've just got to wait a bit to see if Trump, Musk, Doge, and the rest of the administration are truly serious about making meaningful cuts in defense spending. I've got to tell you, until we find this out, I'm regarding this group as untouchable. Wow. Who'd have thunk it? Man, money's back here for the break. Coming up, has Uber's rally run out of gas? Kramer's breaking down the bull and bear cases for the name. Next...

And now, a next-level moment from AT&T business. Say you've sent out a gigantic shipment of pillows, and they need to be there in time for International Sleep Day. You've got AT&T 5G, so you're fully confident. But the vendor isn't responding, and International Sleep Day is tomorrow. Luckily, AT&T 5G lets you deal with any issues with ease, so the pillows will get delivered and everyone can sleep soundly, especially you. AT&T 5G requires a compatible plan and device. 5G is not available everywhere. See att.com slash 5G for you for details.

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What do we do with the stock of Uber Technologies now that it's spent the last few months in the House of A? After a miraculous run in 2023 and the bulk of 2024, this stock peaked at $87. And that was back on October 11th, the day after Tesla's big robo-taxi event. It didn't help that Elon Musk is tight with Trump, and Trump went on to win the election a few weeks later.

At the same time, Google's Waymo self-driving business raised $5.6 billion in a private fundraising round. Then at the end of October, Uber reported an imperfect quarter with lighter than expected gross bookings. The stock then spent the last three months of the year getting eviscerated.

Finishing 2024 down 2% despite strong gains in the first three quarters. At this kind of decline, you've really got to wonder, are we getting a chance to buy a high fly and grow the stock at a discount? Or did Uber deserve to pull back like this? Wall Street's certainly asking. On the first trading day of the year, we got a classic bull versus bear showdown on Uber from the analyst community. Goldman Sachs added Uber to their U.S. conviction list, but J&P downgraded it.

From outperform to market perform, basically, by the whole. Now, let's start with the bear case we got from Andrew Boone. He's a JMP. There are two main reasons for his downgrade. The analyst believes Waymo, remember that's the Google offering, has a better service that will be able to take share from Uber, while Tesla's RoboTaxi venture represents an ongoing risk. Anything involving Musk is a risk.

Basically, J&P is arguing that autonomous vehicles are a real threat to Uber as these companies start to expand across the country. Even though self-driving is still in its extremely early innings, Waymo had 175,000 rides per week in November. That's up 15% from the month before. So I get why they're worried about this in theory. But it seems like a bad reason to sell Uber in practice.

Even the analysts in question acknowledge that Waymo, quote, still too small to maturely impact results, end quote, for Uber. I got to tell you, I am surprised they only have 175,000 rides a week because when I was in San Francisco last year, I saw them everywhere. The service is quite visible, if not ubiquitous. I think they should be doing better.

But the analyst at J&P argues that valuation is likely to be capped until Uber better addresses the transition to AVs. They're also worried about the Trump administration. They could adopt a regulatory framework for self-driving that heavily favors Tesla, given Elon Musk's close relationship with the president.

Now, I question this whole line of thinking. Uber is an aggregator. They don't run their own cars. They don't need to pay up to buy a huge fleet of vehicles. If Waymo or Tesla wants to build tons of robo taxis that they operate themselves, I'm betting Uber will run circles around them, just like they ran circles around the old school cab companies. So how about that bull case on Uber from Eric Sheridan? I've liked this guy's stuff for a long time. He's a goldman.

He says that Uber, the most debated stock in large cap internet. Well, he's...

He's saying it is controversial. It really is. And while Chardon acknowledges that the ride-sharing business faces some near-term headwinds from currency fluctuations and lower benefits from pricing, he still sees a lot of reasons to be bullish on the stock, even as it is controversial. Specifically, Chardon sees a path for Uber to boost mobility bookings growth in the mid-to-high teens in the next two to three years and further penetration of mobility trips in less dense geographies, both domestically and abroad.

While Uber stock just got slammed in response to that latest earnings report that I talked about, which generated some negative headlines, anyone who actually sat down and listened to the ComSchool knows that there were still a ton of positives, especially when it comes to expanding to less popular areas. In the prepared remarks, CEO Dara Khosrowthari, whom we like very much in the show, noted that, quote, in the U.K. and France, for example, trips outside of London and Paris are

are growing three to four times faster year over year than in those cities, end quote. With Uber already operating in 70 countries, it might seem like it doesn't have much room left for expansion, but those who listen to call know that's simply not the case. And this is why I always stress the homework part of buy-in homework. Although not everyone has access to Wall Street Research conference calls, they're publicly available and they often contain fantastic information. The same information that Goldman Sachs is using to put Uber on their conviction buy list, you can have it too.

When it comes to autonomous driving worries, Goldman also sees a path to profitability for Uber alongside autonomous vehicles. Besides, they say the adoption of self-driving, and I'm going to quote, is likely to play out over an extended duration of at least several years with a long tail of possible outcomes, implying muted near medium term concerns, end quote. Hey, makes sense to me. There's no doubt that Elon Musk is great at creating value. But when it comes to strictly following deadlines, I mean,

Let's say he's got a little room to improve. Similar to the bear case from JMP, the analysts at Goldman see the ride sharing industry evolving towards a hybrid network, a mix of human drivers and autonomous vehicles to adequately service the growing demand for personal transportation. Uber already has a partnership with Waymo to launch in Atlanta and Austin early this year, for heaven's sake. Why the heck is anybody worrying about Waymo hurting their business? It makes no sense to me.

Additionally, Goldman sees rapid growth for Uber's new mobility services like Reserve, U4B, that's Uber for business, and two or three wheelers. They also talk about greater cross-platform usage, which includes the user one subscription. That thing has more than 25 million members. That's up 70% year over year. That's very bullish. Wow.

At the same time, Goldman's betting on delivery bookings. They think it can boost growth in the mid-teens as monthly customers order more frequently. That's a great sidelight there. It doesn't hurt that they're expanding their offerings beyond fresh food and into grocery and retail delivery.

Well, a bit more on the technical side, Goldman likes that Uber's got free cash flow. They generate a ton of it. And that enables the company to consistently return cash to shareholders, while also investing back in the business to maintain an edge versus a competition. Hey, that ended up being a pretty good call because Uber announced a $1.5 billion accelerated buyout

I back program just this very morning. And that's why the stock value of few percent. You know, I thought it was a very bullish development. So when I was up talking with Carl Cantania this morning, wow, that's pretty impressive. So where do I come out in this tug of war? Look, the longer term impacts of Waymo and Tesla's robo taxi aspirations, they're worth keeping an eye on. Absolutely. But I think there's a lot of this handwriting about the distant future. When we know Uber's prospects look great right now, I'm discounting it. Bottom line.

Despite the sell-off we got last quarter, there were some huge positives in this quarter if you listened to the conference call. Not if you didn't. Although Uber's stock has started rebounding in the new year, it's still darn cheap versus its growth rate. And I think you're getting a great chance to buy it at a discount. That's right. Buy, buy, buy, buy, buy, buy, buy! The stock of Uber is a buy. I'm going to go to Frank in New York. Frank. Oh, yeah, Jimbo. Yo, what's up, Frank? Happy New Year to you and your great staff.

Our staff is amazing, and it's one of the reasons why I still love coming to work every single day. Thank you. That's great. My stock is Lyft. I've done pretty well with it. I rang the register, but I've kept some money in it. I'm a customer there that loves to pick up times in the pricing. The CEO is great. I saw the interview you had with him, and now they signed up Mobileye for the driverless cars. Are

Are you still bullish on this stuff? You bet I am. You know, and we had David Ristrom recently. And every time I speak to David, I am so impressed. I think you stay long. And I've got to tell you, if it comes down anymore, I would pull the trigger and buy more. I think it looks really terrific here. And I think David is a great CEO. Dan in Illinois. Dan. Hey, Jim. Booyah.

Booyah, Dan. Hey, I got to thank you for helping ordinary people make a lot of money. I saw this ordinary guy outside the show, okay? I saw a guy. He was right in front of the building. And he went in his picture with me. And I was like, me? But I got to

I got to talk to him. He was a construction worker and he loves the show. And I got to tell you, it made me so darn happy. So, yes, I do. Do I like to help regular people? I like to think I'm a regular people and I get a kick out of talking to them and being with them. How can I help you?

Oh, man, I got a big question. I started watching this stock when it was $3. I watched it triple to nine. I bought a boatload at nine. It went to $260 a share. It's one of your darlings, Carvana. OK, Carvana. I look, I read Nate's piece on the Hindenburg Research article.

I think it raised a lot of good things that you really want to know before you own a stock. And this stock has had a very good run. Why did you do this? Why don't you take out your cost basis and then play with the house's money? I think that you will never have to worry about anything that Hindenburg says or anybody else and just go ride it with the Garcias. Remember, again, the concerns are huge.

Always worth considering when you have a stock that is up as much as that stock. And thank you for your consideration and caring. Now, Uber's been rebounding this year, but I think there's still time to get in at a good price. There's still lots of gas in tank for this stock.

Now, much more money, including my excuse with the CEO of a software stock called Sarence AI that's been red hot. Then two key market stories have seen pullbacks after Monster 2024. I'm going to give you my take on the evaluations and all your calls. Rapid fire. Tonight's edition of the lightning round. So stay with Kramer.

You want to see the definition of a hot stock right now? Check out surge, which makes AI enabled technology for the auto industry. Half a billion cars already have their products installed. It forsook 139 during the speculative bull market in 2021. This thing got obliterated, only bottoming at $2 and change in August of last year. Since then, the stock's folded to 20 bucks. That's more than a 750 percent gain. And most of it has come in the past two months.

In fact, Cerns has rallied more than 150 percent over the past two trading days because last Friday the company announced a new partnership with NVIDIA. They're cooperating on some of Cerns AI's models for the auto industry. Of course, the stock's still well off its 2021 highs, but this is a huge move. One that's been spirited by new CEO Brian Krasanich. He's the one time CEO of Intel, later served as CEO of CDK Global. That's his offer coming for auto dealers for taking his current job three months ago, right before the stock took off.

So what's driving this move? More important concerns keep running. Let's check in with someone who's been on the show a great number of times. It's Brian Krasanich, the new CEO of CERN's AI, to find out what's happening. Mr. Krasanich, welcome back to VanMutti.

Hey, Mike. It's great to be here, John. Great to be here. So, Brian, we know you from CDK. We know you from Intel. We need to know you from CERN's AI. It used to be CERN's. You've added AI. Give us a sense of why you took the job, because it is a smaller cap company, and what you can do to make it a bigger company.

Thanks, Jim. First, just it's a great opportunity to really showcase what Cerenc can do with you today. I took this job because Cerenc is really a good company with just great technology.

And I really looked at it as a chance to really make it a great company with great technology by expanding its partnerships and expanding even beyond the automotive space over time with its large-language models and generative AI. And we really have a clear vision for how we're going to continue to grow this company and move forward.

Well, now you do say in your last conference call, I understand you're in a quiet period, but we can refer to your previous conference call, that you talk about the big guys and how you can be a better competitor than the big guys. Now, the big guys have a lot of money. How do you do that?

Well, you know, because we're really focused on the automotive. Take a look at this company that's been in automotive for years and years. And so we have a lot of automotive experience. We understand what the OEMs want. We have relationships with the OEMs. And so when you look at our large language models,

For example, in the automotive space to drive the car, there are over 23,000 unique phrases that we have to build into our large language model that open windows and charging ports and doors and everything else, seat heating. That's all specialized around the automotive space. The other thing is, Jim, we offer not only a cloud-based solution in large language models,

but an embedded version as well, because OEMs need a single supplier that can supply both cloud and embedded, because many geos and even some just models, they're not connected to the cloud. And so they need to have an embedded large language model, which is a lot of engineering. So what do you think NVIDIA can bring to the party of Assurance? Assurance really kind of doing the right thing for a long time.

Well, we've announced over the last few weeks partnerships with Microsoft and now, as you mentioned, Lockheed and NVIDIA. What both those companies are doing is really helping us continue to improve our models. They have tools, they have capabilities,

that again, they're the big guys. And NVIDIA specifically is helping us with our cloud-based models to improve performance, lower latency. The difference between 200 millisecond response and 250 millisecond response may not seem like much, but when you're in your car and you're looking for directions, that's important. Security, all of these kinds of improvements

And video is really helping us with those and their tools. And they're a great partner because we can bring them into the OEMs as well as hardware providers as well. Now, you had a great experience in CDK, made you a lot of money. And you also got to know auto dealers. Now, we have the – fortunately, we're well off enough to have the highest-end BMW. And we have –

And we have that great system, but all we ever do is we know we can talk to it and send messages. How do you get people to know what CERNs can bring? Because without someone schooled in what it can do, frankly, we think CERNs isn't any better than anybody else.

Yeah, that's, you know, again, as we move forward, Jim, this capability, we're really moving from those large language models like you see today where you can do simple instructions. What's nice about them, right, is you don't have to use, like my wife's Mercedes. She doesn't have to say, you know, turn on seating. She can say, hey, my seat is cold or crack the window, open the port. So it allows you to use a lot of common language.

The future is what I call agents, and that's what we're releasing later this year with our Gen 2. And what that is is now it's going to allow you to really interact with your car as if it's a person, as if it's an agent on the other side. And so you're going to be able to get into your car and say, hey, route me to my house.

Route me to the Starbucks that's nearest my route as I go home. The system's going to come and talk to you and say, "Okay, I've routed you home and I found the nearest Starbucks. Is this one good?" You could interrupt at midterm and say, "You know what? I don't want Starbucks. I want Peet's or Dunkin's or whatever."

And it's going to be able to just interact and work with you. And what we're going to do to overcome that exact topic you talked about is we're going to offer what we're going to call a proactive. The car is going to help you as it's going to know you. As you enter, it's going to say, hi, Jim. I know it's 5 p.m. You're at your workplace. Do you want me to route you to your house? And so it's going to start interacting with you up front.

And now you're going to go, oh, wow, I can just talk to this thing and it's going to keep me home. That's how we're trying to work proactive. But that does sound like something if I had a full self-driving, I would want. I mean, I want to say take that one time I was in a Waymo years ago. I said, take me to the best pizza place.

And, you know, Waymo wasn't that bright and didn't know how to do that. Are we looking at a system where I will be able to do that ultimately with a servant's car where I get to BMW and say, take me to my usual Italian place? It might know that.

Absolutely. We're working with the OEMs as they start to look at autonomous driving. And we're working with some of the companies, you know, there's some out there that are solely autonomous driving. And we're starting to work with them as well, because you're right, the user needs to be able, there is no car driver, and you need to be able to, as a passenger, interact with the car directly.

and the car needs to talk to you back. And so our technology and these large language model agents are exactly where you need to go to really facilitate that. I don't know, Brian. This sounds pretty darn great. I've got to tell you, I know you wouldn't have taken the job if you didn't think it was special, and NVIDIA wouldn't have picked you unless you are special. So I want to thank you for coming on. I think it's really very cool stuff.

It's great, Jim. And, you know, this isn't far off in the future. Like I said, you can today, you know, the cars we're shipping today have these first gen large language models. Those second gen are coming out in cars at the end of 25, beginning of 26. So this isn't far off in the future. This is now. It's been great talking to you. OK, it's really great to have you back on the show. Brian Crescent is CEO of Surrence. Thank you so much. Great to see you again. Say hello to your family. OK. All right. Absolutely. May have money back here for the break.

Coming up, Kramer takes your calls. And the sky's the limit. It's a fast-fire lightning round. Next. It is time. It's time for the lightning round. And then the lightning round is over. Are you ready, Steve? Time for the lightning round. I'm going to start with Jim in Ohio. Jim.

First time caller and thank you for your help. Oh, sure, Jim. How can I help you? Why is the Lincoln Electric Holdings in the past nine months gone from a high of 260s to the current 180s when the market has done so well? Is there a problem with this company?

It did miss the revenues, okay? But you know what? This is a company that is so down from where it was. It's down 80 points. I think you can buy it. I like the company. It's got welding and welding. There are very few welders around, but that is a great manufacturer. I need to go to Gary in Maryland. Gary.

Hello, Jim. Booyah, Jim. It's great to watch your show. I watch it every day. Oh, thank you. I'm glad you got a kick out of it. I appreciate that. Thank you. Jim, I got this stock up at 57. Now they're 33 or something. And they opened new casinos up and they have a big sports book and they've got a big users' book.

Superdome and Caesars Entertainment. What did you think about that stuff? I'm not that high on the gambling stocks right now. It feels like there's too many of them and we need a consolidation. The one that I like is DraftKings, but that's come down quite a bit, too. It's not been a good group. Let's go to Corey in Massachusetts. Corey. Dr. Kramer, the OG himself. How are you doing, my friend? I wish I were, but thank you so much. Let's go to work.

Well, listen, I fear I have a dog on my hands. I walk by the U.S. office nearly every day. Shout out to the great city of Southeast South Boston. In the age of speculation in quantum and AI, where is the love for the future of medicine? CRSP, CRISPR Therapeutics. You know, I want to own CRISPR because I keep seeing their name come up in all the science papers that I read, and I read quite a bit of them. But boy, this stock's been a tough own. Let's put some away, and then if it goes lower, we'll buy more. But I understand.

How could that company keep losing money like this? It is just, it's Moderna-like, and the money they throw in the chimney. Let's go to Paul in Ohio. Paul. Hey, a big Buckeye Booyah to you, Jim Cramer. Holy cow, absolutely. Tom Holabos Booyah, big Buckeye fan. What's up?

Hey, man. Thanks for all you and your staff do. Thank you. I really appreciate it. Staff puts up with me. It's incredible. Go ahead. Yeah. I'm part of the club. We're looking forward to working with you this year. It'll be great. We just work every day. This whole week was devoted to it. How do I help? Yeah, I'm calling about Seagate Technologies.

You know, with this stock, I have to tell you, it has never, ever done well in the time that I've watched it, and it's always been cheap. I'm calling it a value trap. If you like Seagate, I say that you will love Broadcom. And that, ladies and gentlemen, is the conclusion of the Lightning Round. The Lightning Round is sponsored by Charles Schwab.

Coming up, a cause for concern? Kramer's breaking down what to make of the latest moves in Tesla and Palantir. Next. Booyah, Jim. Your integrity makes you the booyah saint of Wall Street. Booyah, Jimmy Chil. Booyah, Jimmy Chil. Booyah, Jim. That's a lot of booyahs.

Some stocks just hurt. They rip out your insides and strip you of your face. Or at least that's what it feels like. Right now, there are two stocks that fit that painful bill, Tesla and Palantir. Both stocks defy the gods of valuation. They spurn them, laugh at the scaffold of rigor, won't let you value them using traditional metrics because they just keep roaring higher.

They are true market darlings, the likes of which I haven't seen in ages. They're the kind of stocks that at one point in my hedge fund career, we would buy them and then put party hats on, pound the table like a drum and chant their names like they were players in the gridiron.

I struggled with these two stocks this weekend in a think piece I sent out to CNBC investing club members. I do it every Sunday. These are not the kind of stocks we want to own for the trust. I explained that. But at the same time, I can tell you from experience that Palantir and Tesla are almost certainly headed higher.

That's a great reason to buy if you're running a hedge fund, chase momentum. But it's not enough reason if you're running a regular portfolio because both stocks are ridiculously expensive on traditional metrics. Now, if you're a hedge fund manager and they keep going higher, you're in fabulous shape because once they turn down, you can easily head for the hills. You never had any real reason to own them anyway other than fear of missing out their next moves.

But we don't play that game with the charitable trust because it's too hard for you to do at home. Instead, we have to figure out how to justify owning the software analytics and cybersecurity company as Palantir. This morning, a very good piece of research on Palantir, a piece that started with a sell of all things from Morgan Stanley, was entitled, quote, winning the early rounds of AI, but valuation premium skews risk reward, end quote. Then the analyst wrote, quote, while

acknowledging strong execution and momentum, we see success more than priced in at a current multiple premium end quote. Given last year's 340% gain, they're saying enough is enough. In response, Palantir stock did fall almost 5%. But as I wrote this weekend, no price is too high for the buyers of Palantir. They will be back. May

maybe as early as tomorrow. They behave like Palantir is more of a cult than a company, and cults get premium multiples on everything, sales, margins, contracts, you name it. If you look at any of the numerous videos of CEO Alex Karp, you will be mesmerized. He's got what it takes to be a cult leader, which is a surprisingly rare quality in executives. I wish you could put a multiple and be mesmerized, but as people discover Karp, they'll pay more and more for his stock because he wants to change the world, and he is messianic in explaining how shareholders will benefit from it.

He's also, by the way, a great shot, no doubt a card counter.

Carpet is retail investors going gaga over the stock, taking it up at all hours. It's a little like GameStop when it comes to shareholder affection. The difference being that Palantir is a real growth company with oodles of contracts that are brimming with potential. GameStop had neither sales growth nor potential. And the GameStop probably was totally brought on by an immense short squeeze. I think that could happen to Palantir, too, but not yet. Morgan Stanley is way too early in the sell call, especially because if Palantir is brought in by a must-doge operation to rationalize any government agency, especially the Pentagon, they are going to make a kill it.

Tesla. Last week it went down because of disappointing vehicle sales. The next day it went up more than it went down. The stock keeps climbing ever since because Tesla is no longer a vehicle company bound by those sales anymore. It's a tech company. The stock's expensive as a car company, but it's dirt cheap as a tech company with deep political connections. It could potentially become the self-driving car plate. Federal Interstate Highway beckons. You know that Trump's just going to say, hey, well, this is what I think. Federal Highway, that's the place where we can do self-drive.

Long story short, I think Palantir and Tesla are definitely going higher. But this is the kind of move you can only take advantage of if you're nimble enough to quickly sell them into strength. If you can't manage your portfolio like a hedge fund, don't even think about it. And that's why we don't own them for the travel trust. But we respect their ability to go much higher. I like to say there's always more markets on my prom show. I find just for you right here on Man Money. I'm Jim Cramer. See you tomorrow.

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