Mad Money w/ Jim Cramer 5/30/25
44:24 Share

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Hey, I'm Kramer. Welcome to May of Money. Welcome to Kramerica. I'll do my friends. I'm just trying to make a little money. My job is not just to entertain you, but to educate, to teach you. So call me 1-800-743-CNBC. Meet me, Jim Kramer. OK, we need to have a day where it doesn't feel like we're having an emergency tracheotomy with a ballpoint pen.

I mean, today was still one more section where we saw that big thing coming right at us. A day when the president was just crushing the market with some postings that were extremely hostile to China. I mean, at one point, the S&P was down 1.2%.

Then the president had a goodbye press conference for Elon Musk where he said, sure, he'll speak to President Xi soon. And the next thing you know, we erased the vast bulk of those losses with the Dow finishing up 54 points, S&P dipping 0.01%, and the Nasdaq declining 0.32%. The S&P 500 ended with its best May since 1990.

An incredible statistic made even more amazing, given that the president in the Elon sendoff actually ran some positive coverage of the economy by CNBC's own squawk box. Miracles all over the place and no emergency tracheotomy in sight. Yet it still seems like a monumental time. Sometimes you have to just take a breath and ask why things seem so momentous. Notice I said seem.

because there's nothing on next week's game plan that should have us all that worried. Yet here I am at this wall, and I feel like I'm staring down the barrel of a gun, the gun being Friday's nonfarm payroll report. That's because we have a hole developing. We have heard from retailer after retailer in the last few weeks, and we can tell that the lid is about to be blown off of pricing. There's no doubt prices are headed higher for the month of June in all sorts of goods.

So let's think about what can happen here. If we get a strong employment number Friday, then there's no way the Fed's cutting short-term rates. And longer-term rates are going to go higher, too. If we get a weak employment number, then the Fed still probably won't cut rates because they know the tariffs are inflationary.

You know, Jamie Dimon said stuff like this today, the CEO of J.P. Morgan, to which I say, what was the president thinking when he decided to raise tariffs on the entire world all at once? Did he believe that energy would come down so much it would make everything just fine and dandy? Does he know something about, say, that OPEC Plus meeting this weekend that could send oil plummeting to $50 from the 60s? I hope so. Did he think that retailers would just say, you know what, our lot in life is to make less money now that we have a new president? I

I put it like that because I can't recall a time when I actually knew for certain that inflation would go higher.

That's right. No. When you read enough conference calls, you begin to realize that rates cannot and will not go down on the short end or the long end, not while prices are rising in every aspect of your life. The Fed doesn't cut rates when inflation is rampant. Your only hope is that retailers will eat the cost of tariffs. But why would they do that? Retail is not a high margin business. They can't afford to eat the cost. My hope is on Monday when J-PAL speaks.

And he explains this somehow better than I did. We don't feel like we're staring into the barrel of a gun. Now, we've begun to question the strength of all sorts of our institutions around here these days. And we know that the presence of sold on Powell could be horrendous if we get weaker employment on Friday. But we also know higher prices are coming. The retailers have pretty much all said that they hire it with the exception, by the way, of Costco. Nice quarter there. And it's the Fed's job to maintain price stability. You don't maintain price stability by cutting rates.

Oh, and it's not like the president's saying that he wants low tariffs if you're making a bunch of trade deals. I think he wants even higher tariffs because he wants to punish. He wants to punish China. He wants an embargo, I think. So the price increases we're hearing about could be the first of many. The creep is everywhere. You know, look, we're going to get earnings from Campbell's Monday morning. And here, there was a time when I...

I would tell you, listen, if I get the stock at 11 times earnings with a 4.5% yield, I got to buy, buy, buy. Now, though, I want no part of it, given the gross margin squeeze from the rising cost on everything in the can and the can itself. Oh, let's not forget the rise of GOP-1's weight loss drugs, which make you feel too full. They make you feel so you can't have a lot of goldfish. Goldfish! What did they do?

Tuesday, the kind of day that explains the pain of this moment. We hear from Dollar General in the morning and Dollar General's done a remarkable job at keeping a lid on prices. But how much longer can they do that? We got to listen. Same as Wednesday when you hear from Dollar Tree and Five Below. Hey, man, these are so-called last resort retailers where you go when you have trouble stretching your budget. They're masters at finding low price merchandise.

But with the tariffs on China, previously low-cost merchandise, they've got to scramble to find the equivalent from countries that at this point might have more leverage than you'd expect. I mean, they never expected all these orders. I think all three chains will have good quarters because they were able to bring in a lot of merchandise before the tariffs hit.

It's the guidance I'm worried about, because the tariff regime means that either they need to raise prices substantially or accept a much lower level of profitability. Their stocks could be terrible. I wish they could be as adept as Costco, which reported this outstanding number. Then Costco focuses on a relatively small number of items that it buys in extreme bulk, and it can always swap this stuff out if its suppliers get too greedy. Nobody else has that capability. My hope is that the dollar stores can raise prices once and then keep them there until they find cheaper sources.

That might be tough, though, when the White House seems to want everything made here. And anything made here will be more expensive than made there. On Tuesday night, to back up, we hear from CrowdStrike. And we know there will be plenty of nervousness here because we've had three cybersecurity plays in a row.

With poorly received quarters, Palo Alto Networks, Okta, and Sentinel-1. Meanwhile, there's only one winner, Zscaler, which is on tonight. But what a winner that is. CrowdStrike struck out in the last quarter. And we told investing club members that it was a buying opportunity. Now the stock's trading above where it was when that last quarter was reported. I fear that it will be difficult to meet expectations. I'm sticking with it, though. Why? Because we're about to annualize the big glitch. Remember that one that CrowdStrike's Clara Clara shut down an awful lot of terminals around worldwide? Well, before, then it made a stunning recovery.

If it could survive that massive outage, you know what I say? Just own CrowdStrike. Don't trade it. What can I say? Thursday morning, we get a tale of woe and a tale of success. The woe of Brown Format, maker of Jack Daniels, and Cracker Barrel is the positive. The restaurant turned around along with historically low prices. Now, I don't think liquor's bottom. Beer was really bad last month. Too much GLP-1s. Too many younger people worried about their health and how they walk.

and prices that just won't come down. So count me out of Brown Foreman. As for Cracker Barrel, so many restaurant chains that offer value have seen their stocks pop. And we've seen Darden pop, Texas Roadhouse pop. I mean, these things are... Did you see Brinker today? It looked fantastic. This one also has value. And a CEO understands that we need to reinvigorate the company's stores. Works for me. I want to do a show from the store.

After the close, we get results from Broadcom, the trillion-dollar tech company that no one seems to have ever heard of. I think it's having a bang-up quarter. We were telling club members that it could be reporting an excellent quarter because its software is getting great margins. That could help us. Lululemon, there you go, a ton of business in China. As a matter of fact, it's actually been a real bright spot.

We did a piece earlier in the week that said that this could be a bottom for the stock. And I think it's just too cheap. I'm sticking by that judgment. Then Friday, of course, is where we need a Goldilocks labor report. I got to tell you, there is one scenario where it won't hurt us. OK, no job growth and no wage growth.

Can you believe it? That's what I'm rooting for. This crazy thing about this whole week is that if we actually get that number, this market could rally so hard that it could make up for any previous losses and we could have a continuation of the great month of May. No job growth and no jobs. That's something to root for, ain't it? Because the bottom line is this ain't baseball. It's your money. Stay long. But no fence swinging, please. It's too momentous for that. I need to speak to Ann in Indiana. Ann.

Yes.

Look, I've got to tell you, Ann, I think Fair Isaac's gotten an unfair joust from the government. Fair Isaac, you know what? Let's get Will Lansing on the show. He can tell the story better than I can, and he is one dynamite guy. We are going to get him on. I'm going to make it my life's work. Well, I have other things to do, too, though. Let's go to Lewis in Massachusetts. Please, Lewis. Lewis.

A big Friday, end of May, Nixon 7, booyah to ya. Oh, my. Oh, wow. This is fire to fella. Fire to fella. First time, long time. All right. First time, long time, member of all your clubs, and thank you for your tireless work you do for us day in and day out. You're a mentor to me. Thank you. Thank you, man. I aspire to be the hardest working man in show business, and some people have been saying, I've been making it. How can I help?

You're the best. I'm calling about Uber. It seems to me that with pending tariffs in whatever capricious and arbitrary form they'll come in, that new and used prices for cars will begin to shoot through the roof. With this, I believe more and more people will simply shift to rideshare to travel and do things like loading up at Costco. However, on the flip side, there's an argument that robots are going to make them obsolete over time. What's the deal? Can it break through $100? Give me your...

Alright, here's my deal. Lewis, I've got to tell you, David Faber talked about this today. David Faber killed when he was interviewing Elon Musk and there was this thing underneath. His picture said Tesla's not going to buy Uber. I say you buy Uber. I think Uber is the right level. It's down huge since that interview. Bye, bye, bye. Hey, why don't we go to David in Tennessee. Hello. David! Thank you for taking my call. Alright, what's happening? I wanted to get your opinion on Pfizer. It appears that

They have six drugs that are in the pipeline to be released. They're in phase three. And they just bought the rights to another drug from a Chinese company that appears very promising. They appear to be trading at a

pretty low price. Oh, they are. You know something, David? I'm with you. 7% yield. It's got to be something big coming out of that Cgen acquisition real soon about some hard-to-beat cancers. I am with Albert Bourla, and I am with you. I think we can own the stock of...

Faisal. All right, look, the biggest thing that matters next week is the Friday job report. I think it's kind of a waiting-seem market until then. It's got to be no job growth and no wage growth. On Monday, I made money. Monday. Yeah, well, that's right. You know, I don't like the weekends. You know, I like to be here. I like to just have Friday, Monday, Monday. But everybody tells me you have to have a couple days off. Anyway.

Agilent letter A for you, home gamers. Reported top and bottom line beat earlier this week with growth in China of all places. I'm seeing what led to the strength of the CEO. Then we're wrapping up our series on beating down retailers to see if Abercrombie & Fitch and American Eagle are worth trying on for size. And earnings season has not been all that kind of cybersecurity cohort unless you win.

Zscaler. I'm seeing what helps send that stock up nearly 10% today. We're going to talk to the company's top brass. So I want you to stay with Kramer.

Don't miss a second of Mad Money. Follow at Jim Kramer on X. Have a question? Tweet Kramer. Hashtag Mad Mentions. Send Jim an email to madmoneyatcnbc.com or give us a call at 1-800-743-CNBC. Miss something? Head to madmoney.cnbc.com.

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For many, many years, the arms dealers for the life sciences industry were some of the most consistent outperformers around. They got a huge boost from COVID, but once the pandemic passed, their numbers came down and their stocks came down with them. It's taken years for their customers to work through the excess inventory they bought during the COVID era. And by the way, now many research institutions are getting in with funding cuts for the Trump administration.

But man, on Wednesday night, we heard from Agilent Technologies, letter A, a key member maker of instrument software and services for life science, diagnostics and applied chemical industry. And they reported a very solid quarter response to stock pop more than 2 percent yesterday. So is the Agilent found its footing here? Let's take a closer look. We're pouring McDonald's. He's the president and CEO of Agilent Technologies. To find out, Mr. McDonald, welcome to Mad Money.

Hi, Jim. Great to be here. I'll be honest, sir. When I saw the business you have in China, I was worried. I said, oh, my God, Agilent's booked. China's going to bring them down. It's going to be like Danaher. I'm going to have to deal with this and feel bad and stuff. But it didn't happen. China led the way.

Yeah, we posted 10% growth in China this quarter and we have a lot of momentum in China with Agilent. We've been decades in China, you know, we've been there for many decades. We have a great manufacturing capability and a very tight knit

connection with our customers. So I would say the business is pretty stable. We did very well on the last stimulus. We're expecting another stimulus this year, but having made in China and having good technical teams in China is making all the difference. - I know comparisons are odious, but we've got GE Healthcare with Danner. These are good companies.

What are you doing that is so different? Is it a particular kind of safety that you're offering? Is it the multiple years? Maybe you were there before when you were part of Hewlett Packard. I just don't understand how you're doing it and they're not.

Yeah, so I think it's our longevity in China and also our connection with the industry. But our technologies are really crucial for some of the markets in China, some of the secular growth markets. You know, everybody can see the innovation that's happening in China. You know, the second largest drug molecules are coming out of their clinical trials and our tools are really important for it. And we're there to help. We have an amazing service business in China, which is really important because that ring fences us.

And also our ability to help customers with PFAS testing, forever chemical testing and also food testing has really helped us over the years. So we're in a very strong position in China. I'm glad you brought a PFAS that your PFAS division is maybe it's your fastest growing. It's incredible. So why don't you tell our viewers about it? Because when people hear forever chemicals, they get scared. They want to know how can people find out if you have them and what's the test?

Yeah, no, we had 70% year over year growth in PFAS. It's a hundred million dollar business for us.

And we, our systems are at the very cutting edge of detecting PFAS. To put it into context for your viewers, Jim, it's finding a drop of water in an Olympic sized swimming pool and our systems can do that. So we grew in all regions and that's in water testing, it's in food testing, but it's also moving into air testing. And currently the market for air testing for PFAS, which are forever chemicals, which can be quite dangerous, but 2%,

We see that market part of the business growing 8 to 12 percent, and we're very well positioned for that. So extremely pleased with the business. It's very fast growing. And we expected the market to be in 2030 about a billion dollar market. Now, I know people, they get confused about China. They think that, well, China is a great manufacturing country. They don't care about people. Just the opposite. What I find is whether I'm talking to Judy Marks, the CEO of Otis, where they test the

They test the elevators more intensely than we do. Or Costco, which is they want the Chinese want them because the food is so safe that the Chinese care of the government cares tremendously about safety and food, safety and water. And people here don't give them that credit.

No, absolutely. I mean, if you look at the long-term China plan from the government's food safety, water safety, and of course, testing their products for PFAS, making sure those are safe are right at the top of the agenda. And the Chinese government and the industries are really investing in it.

We see great growth and a long trajectory for PFAS in China. We are believers that the GOP, just one drugs will be the greatest drugs of all time. We think there'll be 40 million users with just in the United States within the next five years. You're part of the manufacturing. What do you do?

Yeah, so we have two businesses. We do the analytical testing for drugs, of course, which is a very important business in pharma, biopharma. We also have a CDMO business, which are contract manufacturing. We have cutting edge CRISPR technology and oligonucleotide technology in Colorado, by the way, which we've invested a billion in over the last three years. So a huge on-shoring investment. We acquired a company called BioVectra, which is a $1 billion acquisition for the CDMO. And they're right in the sweet spot of GLP-1s.

So a lot of the peptides that you hear a lot about, BioVectra is right in the supply chain for that. So it makes us very vertically important with pharma, both on the analytical side and on the CDMO production side. Don't you have to make a decision yourself that this is going to be big before you commit that capital? And therefore, you might even agree with me that this could be one of the biggest class of drugs in history?

Yeah, I mean, we looked at that. We looked at the trajectory of all therapeutics. We looked at where we're going. We really invested early on, which is really important in capacity. Capacity, this is a really constrained...

market from capacity. So having the capacity up front was really important for us. And that's why we invested a billion dollars overall in our oligo business. I deal with a lot of companies who say, you know what, I don't know why the president thinks we can onshore. It won't work. Supply chain no good. Don't have the workers. America can't do it. Could you please disabuse us of that because you're doing it real well.

Yeah, I mean, if you look at our customers, I think it was announced just in the equipment for the onshoring, it's about a 20 billion opportunity to 2030, which we're part of. Right. So a lot of the announcements on the onshoring, those plans are being made now. And of course, the details need to be worked out. But 20 billion in equipment is.

for these capital expenditures is really a lot. And we believe with our analytical tools, we will be there to really help. And we have global businesses. We know these companies very well. And one of our sweet spots is we are very early helping them set up labs, but also making sure labs are productive over time. So we're very excited. Well, you've always been the gold standard for as long as I've been in business. And unfortunately, I've been in business for many, many years. And I knew you guys well when you were with you at Packard. So it sounds like

This was just a terrific quarter. It's going to be a very big year. That's Porig McDonald, president and CEO of Agilent Technologies. Good to have you on the show. Yeah, thanks a lot, Jim. And it's a really exciting time for us here at Agilent. Big transformation on and look forward to speaking to you again as the story unfolds. I remember when Agilent wasn't that interesting a company, but that's all right. It's real interesting now. Thank you so much. I'll talk to you soon. Thanks a lot, Jim. May everybody's back after the break.

Coming up, try these stocks on for size. Kramer's diving into apparel brands Abercrombie & Fitch and American Eagle. Next.

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It's time to wrap up our series on fallen retail angels. The stocks and companies you know and haven't loved, at least not lately. To recap, we started with VF Corp, the maker of North Face and the unfortunate Vans. And I told you that I don't see this one making a comeback anytime soon. Although CEO Bracken Daryl recently bought $1 million worth of stock.

So not enough to get me off the sidelines, but certainly enough to encourage me. Then I said it was worth buying some Lululemon ahead of next Thursday's earnings report because expectations have simply gotten too low. Next was Nike, where I want to wait for a turn in the business. For now, it's too early to make a move. And while we're on the subject, if you're speaking to Gaps Richard Dixon last night, I think the selling there is way, way overdone.

There's too much good happening at this company, including strong same-store sales from both Gap and Old Navy. Plus, the company's gotten immensely profitable and is sitting on a ton of cash. With the stock down over 20% today, I think it's worth to go just outright, outright buy the stock on Monday. The sellers will be shamed, fall into the Gap. Now let's take on the last of the fallen, Abercrombie & Fitch and American Eagle outfitters.

Tipped off my hand on that one, didn't I? I'm going to start off by saying that these are both known as teen retailers, even as Abercrombie's been chasing after its customers as they age, maybe to those as ancient as 40 years old.

That's good, because teens are notoriously fickle, which makes them very difficult to battle. Hence why these two stocks are in total sink or swim. Sometimes they're sink and swim. And that's how I feel about A&F right now. Abercrombie has two divisions, the flagship Abercrombie and Hollister, roughly of equal size. Hollister is more cool and laid back, while Abercrombie is more reserved, has a little older clientele that it's teen-centered partner. Or to put it bluntly, I could walk into an Abercrombie

Not be too embarrassed. Hollister, I'm grandpa trying to buy some jeans for my grandchildren. Hollister had a remarkable quarter with same store sales up an incredible 23 percent. I haven't seen that kind of swing from anyone in the industry. On the other hand, Abercrombie's brand had a 10 percent decline in same store sales. I haven't seen that kind of weakness from anybody either.

Hollister's got amazing momentum, is on trend with good price points. Abercrombie was off trend. The company was abject about how they missed the mark. Now, we have to put this company in perspective. Abercrombie was a disaster until Fran Horowitz took over as CEO in 2017. She's brought it back from the brink, and we can't ignore that context when we're thinking about one bad quarter from a half the business.

My colleague Sarah Eisen knows this company cold. She told me that Horowitz has pulled off a total reset and brand transformation, especially at the division that faltered. Abercrombie, it had been toxic. She's gotten the classic playbook, including a great online presence and good instant marketing. But it's still team retail, so it can be up and down. As Horowitz told her, and I quote, when we align product, voice, and experience, our customer spends as evidenced by the strong results we deliver for Hollister, end quote. Obviously, though, we have the opposite occurring at Abercrombie.

Now, but that's the way it is in teen retail. To me, it's also the opportunity here. Right now, Abercrombie's clearing out the wrong inventory, bringing in fresh product, and giving Horowitz this tremendous track record. Possibility of a big turn? I'm calling it huge. Bye!

We know she believes in the most recent quarter she had the company repurchase $200 million worth of stock, 5% of the total outstanding shares, strong commitment. Now, Abercrombie is a small company, market capital just $3.7 billion, and a huge short position, standing at 13.8%. If you think that Hollister can stay hot for another quarter and the Abercrombie brand can turn, this one could be explosive. ♪

Plus, unlike so many other retailers, Abercrombie really got ahead of the tariff issue. Listen to this from CFO Robert Ball. Quote, for China specifically, we've worked for some time now to relocate resources of supply. And this year's sourcing volume from China will be in the low single digits, end quote.

They source from 16 countries. Nice diversification. And then here's the real opportunity. Write this down. Next Tuesday, Matt Boss from J.P. Morgan on our network today. He's the best retail analyst in the business. He has a buy on the stock. He's hosting A&F's chief financial officer, the aforementioned Robert Ball, and the chief operating officer, which is Scott Lopesky, in New York City. Further, Boss is hosting Horowitz herself on June 10 in Toronto. It's

If there's any improvement at all in flagship Abercrombie, this stock could go bonkers. As people remember a year ago when this $78 stock stood at $178. As Horowitz said on the call, quote, Abercrombie has a history of capitalizing on moments like these to further strengthen the business, end quote. I believe her.

Got my blessing to buy the stock on Monday. Especially if President Trump keeps trashing China over the weekend and people dump the stock, even though Abercrombie's made itself pretty China-proof. Next up, American Eagle. I should say next down American Eagle because this has smaller, this one had a miserable quarter. Sales down 5% year over year. Same store sales down 3%. Gross margin office tagging 1,100 basis points. I don't even know how you do that. This next quarter looks no better. They're guiding for a 5% revenue shrinkage again.

Now, American Eagle is beset with problems the company's abject to. CEO Jay Schottenstein started his conference call by saying the results were disappointing. $75 million inventory write-off, which contributed to a $68 million operating loss.

They had product misses too. Too much inventory and were highly promotional to get stuff off the floor. Strangely, even though the business is awful, American Eagle initiated a $200 million accelerated share buyback and separately bought $31 million of stock in the open market? If I were them, I'd be a little more cherry with these repurchases. The company doesn't have all that much money in the bank, $88 million in cash at the end of April. If you're a retailer, you need to have some more flexibility. Look, if you're wrong, I think you're flushing $200 million worth of flexibility down the drain here.

This is not my first rodeo with American Eagle. My travel trust took a very big hit in the stock a few years ago when they held on. We held on way too long because they promised one good quarter after another and they could not deliver. It was a nightmare. I am not inclined to give them the benefit of the doubt again. Fool me once, shame on you. Fool me twice, shame on me.

I don't usually recommend options here, but I can tell you the teams are so fickle that if I were to buy Abercrombie ahead of the talk on J.P. Morgan on Tuesday, I actually might even do it with Deep in the Money calls. And I never I never mention or recommend calls. Bottom line, I want you to limit your downside with these team retailers. You never know when a company like this may go from sink and swim to just plain sink, at least for the next quarter. But to me, Abercrombie, I think that's worth buying perhaps as soon as next week. Let's speak to Jackson in North Carolina. Jackson.

Booyah, Jim. Hope you're having a fantastic day. You know what? This has been a great day. I have spent the day working 100% since 4 a.m. That's my kind of day. I don't know about you, but that's mine. What else? What's going on? Not that early for me, but was curious if you had any opinion on Ross Stores. Yes, I do. My opinion is sell Ross Stores and buy TJX. That's my opinion. And you know why I had that opinion? Because I'm right.

Let's go to Tina in Florida. Tina. Hey, Jim. Yeah. Thank you and congratulations on 20 years. Oh, hey, well, thank you. Thank you. Oh, thanks to you and your help, my husband and I are enjoying a nice retirement in Florida. Yes. We really appreciate that. Yes. Yeah, what people don't understand, it's not, this is, I don't know, I do not know Tina that well from Florida. I just met her.

I don't know. About 38 seconds ago. But thank you so much for saying that. How can I help you now? Well, you don't know me, but we know you over 20 years. We appreciate everything you do. Thank you very much. You're welcome. Thank you. There are a couple of stocks in our portfolio that we really like. They've done well for us. You recommended them. And now we'd like to invest more money and we'd like to choose one over the other. Which would you choose, Starbucks or Dutch Brothers?

Oh, my God. Brian Nichol be so mad at me. Oh, my God. But I've got to tell you, at this very moment, Christine Barone has got the mojo. She has got the mojo. And I think that the Dutch bros, I think that I happen to like them from the times that my daughter lived in Oregon. Dutch bros got 100 written all

And thank you for the kind words, Tina. All right, look, I don't feel perfectly confident about the stock of Abercrombie or American Eagle here, but you do have my blessing to buy some Abercrombie, and you do not have my blessing to buy any American Eagle. I have much more money ahead, including my exclusive with cybersecurity player Zscaler. How can I help you? We've been hearing about companies having a soft April, but I don't think that's really happening this way. Have you seen that chart? Then we keep hearing that the spend on AI has peaked.

But I don't think we're anywhere near it. I'm going to tell you why. And of course, all your calls rapid fire in tonight's edition of the lightning round. So stay with Kramer.

Heaven knows we've seen so many cybersecurity firms drop the ball this quarter. But when Zscaler reported last night, they knocked it out of the park. This cloud-based cybersecurity alpha delivered a robust top and bottom line beat with management raising their full year revenue forecast in response to the shot up, even though it had been up a lot already, over

over 9% to the new 52-week high, but it's still down more than $100 from its all-time high at the end of 2021. So could this thing have more room to run? Let's check in with Jay Shorji, old friend of the show, chairman and CEO of Zscaler. Get a better view of the corner. Mr. Shorji, welcome back to MadMoney.

Thank you, Jim. Time flies. It hasn't been a year since we got connected. Too long. Too long, sir. And one of the things I want to say is that I was worried. We had a tough April for cybersecurity. There were three different companies, I don't need to call them out, that faltered. And what they said was, look, you know, there's a lot of confusion in the market. I don't think that you had a soft April, did you?

We did not. Jim, the market is tight, there's deal scrutiny, but CIOs are looking for better cyber protection, but they want cost savings at the same time. Zscaler is one of the few companies that not only provide best zero trust, but also we remove a lot of legacy point products

actually save money for CIOs and CISOs. That's what drove our growth last quarter. Now, you do have a flywheel, and this preface is by saying everybody comes on and says they have a flywheel. I think you actually have a real flywheel. Please explain it to our viewers. Yeah, our flywheel is real innovation with zero-trust architecture. Everyone is taking traditional firewall-based technologies, calling it zero-trust,

which really tries to secure the network. It's a complicated thing. In the world of Zscaler, you could be sitting anywhere. Your device simply connects through Zscaler, zero-trust exchange. We connect you to the right application, right service, irrespective of the network, irrespective of the device.

elegant. It's an innovative architecture. It gives far better security, saves a lot more money, and gives great user experience. That is why over 45% of Fortune 500 companies depend upon us. Well, when you say zero trust, most people, again, they just found it. What I like about you is that you don't trust. Everybody isn't trusted. You got to prove yourself. I don't know any other company that does that. Explain that to our viewers, because I think that that's crucial.

So zero trust is fairly simple. Trust no one, but if you don't trust anyone, then how do you communicate? That means you need to give a little bit trust to do only a certain thing. I'll give you a simple metaphor. In the old world, if I come to see you at your headquarters, they stop me at the reception, check my ID, give me a badge and say, "Go inside." Once I'm in, I go anywhere and everywhere. Not very good.

In the world of ZZero Trust and Zscaler, we escort you to the meeting room, and once the meeting is done, we escort you out. You're given access to only certain things. That's what sets Zscaler apart from other security companies, and that's why Zscaler customers have far fewer access

ransomware attacks than other customers out there. Now, in other words, they don't have the keys to the kingdom. They can't get to the top. They can't shut you down, right? They can't shut the company down.

Exactly. If they can do something, they may affect one application, but they don't impact the whole thing. It's a very, very powerful concept, and customers are embracing it. And customers now are going from zero trust for users to zero trust branches, zero trust workloads. We call this concept zero trust everywhere. That keeps you much safer. Well, it's...

Everywhere also includes mobile banking, which is something I always am worried about. I have someone who just checks my balances now twice a week because I'm afraid. Now, there's apparently a seven figure ACB deal you did with the global bank. Other people must feel like I do.

That's right. And in this case of a bank, they want their workloads to talk to other workloads in a zero trust fashion, which is a very novel and great approach. So banks are embracing it. And then there are other customers who are saying, if I have a thousand branches, those branches can't talk to each other openly.

So they only talk to each other through Z-scaler, zero-trust policy, which gives far better security. Now, some people say to me, how could a stock go straight up like this? It must be something. It's trickery. It's a short squeeze, whatever. I come back and say, well, wait a second. If you have total contract value bookings of over $1 billion, if your remaining performance obligations are now nearly $5 billion, that's what happens. Mm-hmm.

That's right, Jim. And it's not only the top line. Our top line and bottom line, both are very good. In the industry, they call something rule of 40. That means if your revenue growth percent plus free cash flow margin is over 40, it's a good thing. Zscaler has achieved this performance 21 quarters in a row.

This last quarter, it was 52%. So we run good top-line business. We run good bottom-line business as well. Now, I think that some people need to know this. I only know two companies that are in your league. There are so many companies out there. So, I mean, you're obviously just doing something that everybody needs, that creates some value. Most people think cybersecurity is just actually a deadweight loss. But you bring value and you catch people and you, what, 50 million lives you now protect? Yeah.

Yes, that is correct. And Jim, the reason, number one reason that's happening is our innovation. Number two reason it's happening is because we are obsessed with customers. Customer obsession is one of the ZSkillers key values. It starts with me. There are more and more customers who come back. Then when they go move from one company to other company, they call us and say, ZSkiller, I need you.

Our customers who are paying us over a million dollars in ARR went up 23% last quarter. So very proud of the way we serve our customers and very proud of the innovations we are driving. Well, I want to congratulate you for a remarkable post so-called liberation day. You're the number one stock that I follow. I want to thank Jay Strodry, the CEO of Zscaler. Tremendous work, sir. Thank you so much. Jim, thank you so much. Of course. May money's back after the break.

Coming up, Kramer takes your calls. And the sky's the limit. It's a fast-fire lightning round. Next. It is time. It's time for the lightning round. And then the lightning round is over. Are you ready? It's time for the lightning round. I'm going to start with Corey in New York. Corey. Booyah, Jim. Right back at you.

What are your thoughts on the Brad Jacobs-led QXO? All right, listen, sunshine. I'm going to tell you this and tell you this, but good. I think this stock actually is going to go higher. Why? Because it's Brad Jacobs. He will not let it stay down here. The man is, when I think of him, I think of billions. Billions! All right, let's talk to AJ in Florida. AJ. Booyah, Sensei Kramer. Yo, man, what are you saying to me? What do you got, Sunrise?

Thanks for getting back to me with your segment on striding this Tuesday. I've been doing my homework, as you always say, in studying the potential of the smart glass industry, especially how it's being used in vehicle interiors and energy-saving architecture. I've learned that it's playing a big role in reducing HVAC costs. So I'm really interested in your broader take on electrochromic glass. But today I'm calling about a U.S.-based company with a core focus in electro-optics and dimmable glass.

The company supplies long-term partners like Tesla, Boeing, and Toyota, and is running its reach in multiple markets. So I'm wondering what you think of Gentex Corp or any private company. Gentex is down so much, I'm actually willing to take a flyer on it. I cannot believe how low it's gotten. It's a very good company. It is a tech company. I've got to tell you, I'm going to say my highest praise for you. You've got horse sense. Let's go to Raymond in Pennsylvania. Raymond. Raymond.

Hello, Jim. Thanks for taking my call and for all that you do for the home gamers. Love the gamers. And speaking of games, it's good to see that the Eagles can push the tush for at least another season. Yeah, plus we got a guy, we have a guy in the Niners. The Niners are becoming kind of like the waste management of the West there.

Okay. Jim, with oil floating around $60 and possibly dropping, will energy transfer have enough energy to transfer to maintain its 7% dividend? Yeah, ET. By the way, the Niners, I didn't mean that. I like waste management very much. ET is an absolutely terrific company. I slagged it for the first 10 years of this show. The last 10 years, I've liked it a lot. It's got a good pipe. I think it's terrific. I do prefer one oak more. Hey, we've got to go to Barry in Connecticut, please. Barry.

Hi, Jim. How are you doing? I hope you're having a great day and plans for this weekend. This is a dynamite day. I have so many people working for me today. It's a pleasure, but I'm working for them, too. We're all going to work till midnight. Then I got a wedding I have to go to and then right back at him. What's up? I picked up the stock on Liberation Day. It started position because it was a good price, obviously. And it's moved a lot.

faster than I thought. It's up 50% in like the last six weeks. And I was wondering, you know, it seems a little steep now in price to keep adding to the position, but I was wondering, you know, your thoughts on the trade desk.

Oh, you know, look, I should have told people to pull the trigger after that one unfortunate quarter that Jeff Green had. But I've got to tell you, I want Jeff on. Jeff has been elusive of late. I think he's got the right. He's got the mojo. Jeff's got the mojo now. And mojo is being a technical term for really good stock. And that leads up to the conclusion of the lightning round. The lightning round is sponsored by Charles Schwab.

Coming up, is AI here to stay? Kramer's giving you his take on why AI hasn't peaked and how the technology still has plenty of room to grow and improve. Next. We keep hearing that spending on artificial intelligence will peak soon.

Doubters never stop. Again, it's Jensen Wong, co-founder and CEO of NVIDIA, which makes the platform that AI is based on. In other words, Jensen is the most to lose, so maybe he's just talking his book. But as the steward of the second largest company on Earth, with a market capitalization of $3.3 trillion, that's only a little shy of Microsoft's. I think he deserves the benefit of the doubt, even as his stock has given up everything it made since the bang-up quarter Wednesday.

That's why when I say we need, and he says that we need, a thousand times more computing power than we have now, I think that means we're nowhere near the peak in AI. Why the heck do we need so much compute power? Several reasons. First, there are a bunch of these generative AI platforms, ChatGPT, Anthropic, Perplexity, CloudFly,

Claude, Gemini, MetAI, Grok, to name a handful. They're all out to prove they're the best because if any of them becomes the default agentic, they'll own the market. To win, though, they have to have differentiation, so they're all fighting for personality or they risk irrelevancy. You may not remember when Google got started, but many people thought Yahoo or Microsoft's Bing would own the search business. Why even bother competing against them, right? But Google won, and now the search business makes $200 billion a year. That's big.

billion with a B. Everyone else, jump change. Second, as it stands, the Gen AI tools aren't that great. They often get things wrong, which makes them unusable for anything really serious. Let me give you an example. Yesterday, I was interviewing Richard Dixon, the CEO of Gap Inc. Ahead of that, as part of my research, I asked Grok, what are the top denim brands in the United States? Within a few seconds, it told me it first was Levi's, second was Citizens of Humanity, then Madewell. Huh?

I know Levi's, but Citizens of Humanity, a premium jeans brand. Maybe, well, that's a J.Crew brand that has some stretched denim. No way those are the top three, right? Today I went back. I asked him the same question because I thought maybe he had thought about it or she had thought about it. And sure enough, she had. It came out with Levi's. Same question.

Levi's, Wrangler, and Lee. Hey, at least they're normal jeans. But there's not a lot of consistency day to day. ChatGPT gave me Levi's, American Eagle, and Wrangler. Perplexity gave me Levi's, Wrangler, and American Eagle. Claude gave me Levi's, Wrangler, and Lee. So did Gemini. There was a little bit of consistency, but most of them gave different answers.

These generative AI platforms are just authoritative enough to fool you into thinking their answers are definitive. The issue is the prompt. If you know the right prompt, you might get the right answer. But more important, these platforms just aren't ready yet. They're underpowered. That's why NVIDIA believes you need a lot more computing power. But let's go to the real issue. Jensen looks at this issue from a completely different angle from the doubters.

He thinks that these generative AI platforms are fast ways to look things up. Sure. Instead of not so fast ways, they're simply stepping stone something much more important right now that they can't do.

They can't reason. We need to have agents that can reason, think, reach conclusions. For example, last week we had Dr. Artopoulos discuss his book, Super Agers, loved it. Almost every point he made, he gave citations, studies done from all around the world, all grouped together. When I was younger, you would have had to hire three researchers to look all over the globe for several weeks to get that data. Now it probably takes a couple hours.

But can your AI agent reason with you about the citations like a smart colleague? That's what Jensen wants to get to. That's when the AI spending might wind down. The idea that we're somehow almost there, that's a fantasy. Oh, and when it comes to NVIDIA stock, don't fool yourself. It got hit today because of China. NVIDIA would be at $150 instead of $135. It went for our ever-worsening relations with the PRC. But we can't ask for China, at least not yet. Maybe next year.

When I sense it'll be probably a much smaller percentage of Nvidia's business. I'd like to say there's always a bull market somewhere. I promise I'm buying just for you right here on Mad Money. I'm Jim Cramer. I will see you Monday. All opinions expressed by Jim Cramer on this podcast are solely Cramer's opinions and do not reflect the opinions of CNBC, NBCUniversal, or their parent company or affiliates, and may have been previously disseminated by Cramer on television, radio, internet, or another medium.

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