Mad Money 9/26/25 | Audio Only

Key Concepts

• AI Data Center Buildout: The construction and expansion of facilities to support artificial intelligence computing.
• Hyperscalers: Large companies (e.g., Amazon, Microsoft, Google) that provide cloud computing services.
• Accelerated Computing: Using specialized hardware (like GPUs) to speed up computations.
• Generative AI: AI models that can create new content (text, images, etc.).
• Vendor Financing: Financing provided by vendors to customers to facilitate sales.
• Non-Farm Payroll: A monthly report on the number of jobs added or lost in the U.S. economy, excluding farm workers.
• PEG Ratio (Price/Earnings to Growth): A valuation metric that compares a stock's price-to-earnings (P/E) ratio to its earnings growth rate.
• Annual Recurring Revenue (ARR): The value of recurring revenue normalized to a one-year period.
• Spac Merger: A merger with a special purpose acquisition company to go public.

1. AI Data Center Buildout and Market Pessimism

• Main Point: Despite billionaire critics calling the AI data center buildout a bubble, Jim Cramer remains optimistic, trusting the judgment of leaders like Nvidia's Jensen Wong.
• Details:
  • Cramer acknowledges the "bearish AI shroud" but notes the Dow, S&P, and NASDAQ all advanced.
  • He contrasts the current buildout with the dot-com era, where vendor financing was prevalent.
  • He highlights that the current buildout is funded by the "smartest people on earth" running the "richest companies on Earth."
• Argument: The CEOs of these companies believe AI will be the next industrial revolution, and their track record warrants trust.
• Quote: "I will not call it a bubble because I trust the judgment of Jensen Wong."
• Counter-Argument: Cramer expresses discomfort with OpenAI and Oracle's spending, which exceeds their affordability.
• Nuance: He suspends judgment due to Sam Altman's statements about demand and Nvidia's roadmap for reasoning semiconductors.
• Analogy: Even if there was a dot-com implosion, Amazon and Google emerged as winners.

2. Upcoming Week's Game Plan

• Monday:
  • Carnival (cruise industry): Cramer believes the super bull market mode can continue due to cruises being relative bargains.
  • Jefferies (boutique investment bank): Will help determine if recent banking deals are justified.
• Tuesday:
  • Paychex (payroll processor): Provides insights into the state of small and medium-sized businesses.
  • Nike: Being reinvented by CEO Elliot Hill; Cramer believes a breakout is coming.
• Wednesday:
  • Kagra: Needs an upside surprise to reverse its stock's slide, given its high dividend yield (7.7%) and expected down earnings.
• Thursday:
  • Aggregate car sales, weekly jobless claims, durable goods data releases.
• Friday:
  • Non-farm payroll report: The most important data point, influencing the Federal Reserve's decisions on interest rates.
• Concern: Some parts of the economy (data center-related) are overheating, while others (housing, retail) are struggling.
• Question: Can the Federal Reserve save the rest of the economy without causing the data center economy to boil over?

3. Listener Call: Bristol Myers Squibb (BMY)

• Issue: A caller is "taking a haircut" on his Bristol Myers Squibb stock and asks if he should add to his position.
• Cramer's Response: He is questioning his bullish stance on Bristol Myers Squibb, as Johnson & Johnson (J&J) seems to be performing better in the same space.
• Action: Cramer will listen to J&J's plans before making a decision.

4. Credo Technology Group (CRDO) - Homework Assignment

• Company Description: Semiconductor company specializing in connectivity solutions for data centers.
• Competition: Broadcom, Marvel Tech, Astera Labs, cable suppliers.
• Key Advantage: Higher bandwidth connectivity with lower power consumption.
• Financial Performance:
  • Stock up 357% over the last 12 months.
  • Last fiscal year revenue growth accelerated to 126%.
  • Earnings per share shot up from 9 cents to 70 cents.
  • Most recent quarter revenue up 274% year-over-year, operating margin at 42%, EPS at 52 cents (vs. 36 cents expected).
• Customer Concentration: High, with two customers accounting for 85% of sales (50% from the largest, reportedly Amazon, and 35% from the second largest, likely Microsoft).
• Insider Selling: Recent selling by the entire C-suite.
• Stock Performance: Pulled back from a peak of $176 to $143 recently.
• Recommendation:
  • Consider buying on pullbacks, especially in the low $120s.
  • Use the PEG ratio to justify valuation.
  • A 24% earnings growth rate justifies a PE multiple of 48, putting the stock at $123.
• Bottom Line: Credo is a special company with great products and financials, but price matters.

5. Resolve AI (RSV) - Homework Assignment

• Company Description: AI software for e-commerce, including chatbots and one-click checkout solutions.
• Red Flags:
  • Highly promotional company.
  • Flimsy partnerships with Microsoft and Google (reselling software through cloud stores).
  • Tons of press releases for trivial reasons.
  • Pursuing a Bitcoin treasury strategy.
  • Serial seller of its own shares (share count increased from 172 million to 284 million recently).
• Financials:
  • Essentially no revenue last year ($188,000).
  • Operating loss of $138 million.
  • Targeting $100 million in annual recurring revenue (ARR) by the end of the year (currently at $70 million).
• Recommendation: Do not chase the stock's recent rally.
• Bottom Line: Find an AI play with actual earnings, like Credo, not a money loser like Resolve AI.

6. Interview with Johnson & Johnson (J&J) CEO Joaquin Duato

• Investment in the US: J&J is investing $55 billion in the US over the next four years.
• Advances in Human Health: Combination of advances in biology and chemistry amplified by artificial intelligence will lead to cures for many diseases.
• Multiple Myeloma: J&J's cell therapy Carvykti has shown disease-free results in patients about to go into hospice, five years after a single administration.
• Bladder Cancer: FDA approval of Inlexo, a revolutionary drug delivery system that releases cancer treatment directly into the bladder, allowing patients to keep their bladder.
• Cardiovascular: Abomed heart pumps have shown to extend the lives of heart attack patients with cardiogenic shock by 600 days over a 10-year period.
• Talc Litigation: J&J is focused on the Daubert hearing to re-evaluate the junk science used by claimants' attorneys. They have not paid a single penny since returning to the tort system and have won 16 out of 17 ovarian cancer cases in the last 11 years.
• Drug Pricing: J&J is committed to ensuring that every American can afford its medicines.

7. Lightning Round Highlights

• D-Wave Quantum (QBTS): Take out cost basis and let the rest run.
• American Electric Power (AEP): Cramer has owned it for multiple years and is not backing away.
• One Oak (OKE): Buy more; Walter Hall (CFO) is doing an amazing job.

8. Costco (COST) Analysis

• Stock Performance: Crushed due to lower-than-expected membership renewal rates.
• Cramer's View: The sell-off is an overreaction; the stock had simply gotten too high.
• Key Metrics:
  • 245 million hot dog combos sold.
  • 157 million rotary chickens sold.
  • Enough bath tissue sold to reach the moon and back over 200 times.
• Valuation: Selling for under 46 times earnings after the pullback.
• Recommendation: Buy Costco; it's cheap at $915.
• Quote: "Costco. Always cheap to shop, never cheap to buy."

9. Synthesis/Conclusion

Cramer's message is one of selective optimism. He remains bullish on the AI data center buildout, trusting the judgment of industry leaders and highlighting the strong financial backing. However, he cautions against speculative plays like Resolve AI, emphasizing the importance of real earnings and sound financials. He sees value in beaten-down names like Costco, viewing the sell-off as an overreaction. He also highlights Johnson & Johnson as a strong player in the pharmaceutical space, driven by innovation and a commitment to US investment. The key takeaway is to focus on quality companies with solid fundamentals and to be wary of hype and promotional tactics.